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What is HR Outsourcing?

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  • Written By: G. Melanson
  • Edited By: Bronwyn Harris
  • Last Modified Date: 27 October 2016
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HR outsourcing is the business practice of procuring an outside human resources (HR) professional or firm to handle an organization’s staffing needs. Some of these needs may include recruiting, screening, hiring, and sometimes training new personnel for the organization. An organization may consider HR outsourcing if it lacks a human resources department or qualified HR professional to properly recruit the best possible employees. Organizations that attempt to recruit new staff without knowledge of effective screening and hiring practices risk higher employee turnover and loss of resources spent on hiring and training the wrong people for the job. The firms which organizations turn to for HR outsourcing are sometimes referred to as employment agencies, temp agencies, or head hunters.

Employment agencies typically employ a series of their own professionals to facilitate HR outsourcing, including a receptionist to greet and pre-screen incoming job candidates, an account manager to liaise with clients and place job ads for them, and salespeople to land accounts with clients and handle billing. Some employment agencies specialize in the placement of temporary staff who are hired on a short-term basis to fill positions left by staff members on a temporary leave of absence such as vacation, maternity leave, or sick leave.

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In these cases, the “temps” are direct employees of, and paid by the employment agency rather than the organization they’re temporarily working at. If temps needs to call in sick or have an issue with their work placement, they contact the employment agency rather than their workplace. If a client of the employment agency is happy with the temp provided, they may “broker” with the agency to hire the employee as a permanent staff member once his or her contract with the agency is up.

Employment agencies that specialize in executive recruitment typically handle clients looking for a permanent staff member rather than a temporary one. They will often take greater care in actively sourcing (headhunting) executives to fit the needs of their client, compared to the more passive practice of turning to a database of resumes to fill temp positions. An executive interested in finding employment with a new organization may contact an executive employment agency in confidence to see if he or she is a good match for any of the agency’s clients and vice versa.

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candyquilt
Post 3

Well, I didn't even know that companies can do this. It sounds like a good idea, especially if a company is starting out and is trying to limit costs and maintain a profit margin. It can always invest in a human resources department later on when it has the time and money to do so. If I were a company, I would definitely take advantage of outsourcing.

serenesurface
Post 2

I think that HR outsourcing is fine if it matches up with the objectives of the organization. I'm sure you guys have heard about government outsourcing HR to private firms right? Saving tax-payer money seems like a good idea, but I'm still concerned.

At the end of the day, government agencies are public organizations and not private. So if the HR needs of the government were to be supplied completely by the private sector, there is a danger that the government policies might become privatized.

I still think that the government can benefit from HR outsourcing, but it has to keep the control and have the private firms serve them and not vice verse. If the vendor firm's objectives match up with that of government agencies', then outsourcing will work just fine.

What do you guys think?

SteamLouis
Post 1

Saving money, having a better quality human resources department and finding more time to develop our human resources were the reasons why my company decided to outsource.

We were definitely satisfied with the cost aspect because we ended up saving money by outsourcing HR employees. As for the quality, I think my company expected too much. I think the management sort of expected outsourcing to completely change and improve the way HR worked.

But it doesn't quite work that way. You can benefit from outsourcing when your HR team isn't what it needs to be. But it's not going to solve the inherent problems. The company needs to continue investing and improving its HR, even while outsourcing. I think that we just wanted to pay the firm and expected everything to fix itself.

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