Personnel outsourcing is when parts or the whole functions of the personnel is contracted out to external providers, instead of performing all the personnel functions in-house. Personnel outsourcing could mean simply transferring non-core activities to external providers, such as payroll and benefits administration, or the outsourcing of recruitment, training and sometimes, personnel strategic planning.
Companies expect their personnel managers to be more responsive, flexible, efficient and to contribute to the strategic human resources decision of their organizations. This paradigm shift have forced many personnel managers to make use of the outsourcing tool to meet these demands.
Reasons to outsource
Outsourcing seems to give companies and organizations the opportunity to address and reach the following goals;
Although the costs of assets are increasing as the global financial crisis impacts corporate coffers, the high level of competition in today’s markets makes it almost impossible for organizations to increase their production cost. They therefore find it necessary to search for strategies that would lower asset costs. They do this by outsourcing their non-core competencies, and gain a competitive advantage by maintaining customer service and other core processes.
Core Competences Focus
Among the variety of factors motivating the HR outsourcing trend, cost saving and the need to concentrate on core competencies stand out. Personnel is being regarded as a function that adds strategic value has significantly driven the growth of outsourcing personnel activities.
The personnel function is increasingly becoming more strategically important to organizations. The more the personnel management perspective change from operational and administrative to strategic, the more they seem to better align with the goals and strategies of the organizations that use them. The shift has also made the personnel function outsourcing to increase to a point where it has now become part of the strategy of the contemporary HR.
It has been suggested after a research study that organizations can have an edge over competitors if they can isolate their personnel management function. The research further showed that outsourcing both training and payroll in addition would lead to higher possibilities for organizational creativity and innovation. Outsourcing the training activity should lead to higher stakeholder performance and an increased addition of value to the trainees. Employees that were trained by outsourced officials also tend to improve in their supplier-customer relations, because of the level of the expertise demonstrated by the professionals who trained them.
In conclusion, personnel outsourcing is just right for any organization that wishes to go with the trend of best practices and an increased production in a competitive market in most industries, while at the same time minimizing cost.
Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! Inspires entrepreneurs build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.