Human Resources Outsourcing (E)
What is the Human Resources Outsourcing? What is the Difference between employment and outsourcing of Human Resources? What are advantages and disadvantages of human resources outsourcing?
Posted: Jan 2009
One of the most vital resources of the company are the human resources. The human resources play the significant role, since some aspects are more difficult to maintain than some other resources.
For example, if company decides to buy a specific piece of machinery necessary for the operation of the company, then the machine purchased will have its projected output, with relatively stabile performance within the projected life span. The performance of the machine is easily predictable. We know the purchasing cost, capacity, maintenance requirements and approximately the moment when the machine needs to be replaced.
With human resources the situation is quite opposite. Employment does not have that huge initial cost. But the employee will cost a lot of money on the long run. Employee needs the constant training. Employee’s performance output can vary significantly. Yet no machine still can replace the human resource intelligence, creativeness, wisdom and experience. Human resource is precious for the company, since experienced and trained employee is difficult to be acquired.
Still, growing base of the company employees can be a burden at the moments. If the company have specific business with seasonal activity fluctuations, then the employee base that is needed for the peak season activities can be a cost burden during the off season period. Simply you are paying employees that are not fully utilized.
Another problem of a large employee base is the focus loosing. For example, the sales oriented company have a strong need for developed sales, marketing, financial and logistic department, but does not really need to put significant focus to supporting services as maintenance, security, cleaning, canteen...
The solution for modern company is the human resource outsourcing of seasonal and non-vital employees. Simply, hiring the external agency that deals with human resources outsourcing that will "land" employees of needed qualification is a easier way than giving the employee contract to every individual engaged in business activity. Actually, there is no real employment by the company, since the company is renting and paying for the given service of human resource outsourcing, instead of the employment salary.
The human resources outsourcing have positive business impact. There is no need to seek for employees directly. There is no need for interviewing, administration, while the training is either minimal or is not needed at all. All this should be provided by the external agency that enables the human resource outsourcing service. Also this type of work force engagement is cost efficient, since you engage service when you need it, while you do not pay the service in the period when is not needed.
On the other hand, the human resource outsourcing has its drawbacks. Outsourced employee is not directly motivated for the work process. Supervision is indirect. Motivation of outsourced staff is lower than when it comes to regular permanent employees.
The key is to use human resources outsourcing in a balanced way, as it is required by the business itself. There is no universal blueprint of setting the layout of human resources across an organization. Basically, the human resources outsourcing should be tailored according the specifics of the company.
This is an example of the Sales oriented organization that outsourced some services partially, while some other fully...
The human resources outsourcing pattern can be different for some other organization. For example, the company that is oriented on research & development and production can actually outsource the sales department. Usually, these companies are not well know, while their products are well sold. The Compal Electronics company is probably not well known, even for the people who consider themselves to be computer literate. In fact, Compal is the second biggest producer of laptops in the world! Reason why this company is not perceived as well known brand is the fact that they fully dedicated to development and production, while leaving outsourced companies to brand, advertise and sell laptops.
So, there are many different ways to utilize human resource outsourcing. The outsourcing of human resources should be done according the specifics of each business needs. Primarily, human resources outsourcing should be mostly focused on seasonal and non-vital functions. Although, the Compal case shows how the outsourcing of the vital business function as the sales and marketing can be possible. Whatever method of human resources outsourcing is chosen it is important to achieve the organizational efficiency, flexibility and cost efficiency that will bring the completive advantage to the company.