Issue: More organizations are jumping into outsourcing, but many aren't impressed with the results.
Risk: Farming out the wrong functions can actually lower HR efficiency.
Action: Determine which functions would yield the biggest benefit from outsourcing.
If you're under pressure to bring down HR costs, you may be looking to outsource some HR functions. You're not alone. HR is the number-one outsourced area of business, according to a study by research firm Gartner Inc.
Your HR peers outsource for three main reasons:
1. Save money.
2. Improve compliance.
3. Free up time to focus on big issues.
Don't just follow the crowd by farming out the most-outsourced functions.Identify why you need to outsource and make it part of your long-term strategy, not a quick fix. Quantify your cost savings before jumping in. Take these additional tips to reap the biggest benefits from outsourcing:
Don't outsource unique functions. If your job contains unique HR functions or they're managed differently than at most other organizations, be wary of farming them out.
Reasons: It's difficult for outsourcing firms to learn unique HR practices, and you could spend more time and money bringing the vendor up to speed than it's worth.
Don't outsource pieces of a function. This should be an all-or-nothing deal. Retaining a slice of the function defeats the purpose: to help you concentrate on bigger issues and/or save time and money.