What is HR Outsourcing?

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.

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.