In-house HR vs Outsource HR

HR or Human Resources are the company department which is accountable for finding, showing, employing and training job candidates, as well as managing employee-profit programs. As companies rearrange to increase their competitiveness, human resources play a significant role in helping companies cope with a fast-changing environment and attracting more top-quality employees.

There has been found six key people-related activities that human resources must successfully do to increase the company value. These are:

1.    New Staffing

The accomplishment of recruiters and occupation specialists, in general, is designed by the number of positions they stop up and the period it takes to fill those positions. Recruiters, who work from home are responsible for recruiting and staffing services, play a vital role in developing the employer’s personnel. They present job positions, source applicants, screen candidates, conduct introductory interviews and organize hiring of the staff along with managers in charge of making the concluding selection of applicants.

2.    Job Protection

Workplace security is a key issue. Employers have a responsibility to offer a safe operational atmosphere for employees. One of the key occupations of HR is to support in workplace safety preparations and preserve federally instructed logs for workplace damage and fatality reporting. Additionally, HR safety and risk professionals often work watchfully with HR payroll specialists in solving the company’s workers’ reimbursement issues.

3.    Employee Dealings

In a combined work environment, the employee and employment relations roles of HR may be united in one and held by one professional or there can totally unrelated functions accomplished by two HR specialists with definite proficiency in each range. Labor relations functions are one of the keys to building successful teams.

4.    Employment Agreements and other paperwork

Signing an employment agreement and following the implementations of labor law is a core HR function. HR staff needs to be aware of federal and state employment laws such as Title VII of the Civil Rights Act, the Fair Labor Standards Act, the National Labor Relations Act and many other rules and principles.  

5.    Training and Progress

Employers must provide employees with necessary tools for achieving their missions in the company, which, in many circumstances, means training them for moving into a new organizational environment. Many HR sections also provide leadership training and professional development. Leadership training may be required for the recently hired and stimulated supervisors and managers on topics such as presentation management and how to handle employee relations at the department level. Specialized development opportunities are for employees looking forward to promotion or employees who want to achieve personal aims such as graduating from the university. Programs such as tuition support and tuition reimbursement programs often are within the purview of the HR training and progress area.

6.    Strategy planning

The last but the most important function of HR department is to set up company`s HR strategy that surely goes along with overall company`s strategy. Today, human resources are recognized as a very strategic part of a business. Yet in many companies, HR professionals are still seen as paper pushers. And they are still stuck dealing with the more manual and transactional sides of HR.  Here, HRs usually do long-term planning and then divide it into smaller short-term. Nowadays, more and more CEOs value Head of their HR departments as their adviser on strategic decisions they make every day and this is the future of HR. 

 HRs, like the other departments in the companies, have their current challenges. One of the biggest ones that HR specialists face is globalization. In the world where no borders and limits are there for digital works to be done, HR does not compete for a new talent with only the companies that are in the same location but with all the companies that are willing to give freedom of location for their staff. This is one of the reasons companies are now keeping a large group of HR people in-house but prefer to have some of the HR functions outsourcing through independent companies or freelance recruiters.

The most popular function of HR that is being outsourced is of course recruitment. This approach is very popular among IT companies that work with remote teams or just have many international teams. In this case, they usually keep in-house strategic HR, who is the head of department and couple of freelance IT recruiters, who work on contract basis.

Another big challenge that HRs are facing is growing demand for IT specialist and not the same amount of supply in the market. Headhunting makes hard to keep good specialists and keeping the retention rates of employees is getting more and more important KPI in HR matrixes.  Generation Z that is willing to work on their own rules and needs a challenge for all the classic HRs, as they know their value and sometimes even grade themselves higher than the employer.  If a company wants to be adaptable to a changing generation of wants and needs, then it pays to learn about the people you’re going to employ very soon.

In a fast-changing environment, outsourcing some of the functions of HR is a more efficient way of dealing with challenges than sticking to old-fashioned in-house office people.

Let’s look closer to some pros and cons of outsourcing overall and HR functions especially.

Here, we need a first glance at the size of the organization. For small sized organizations or start-ups outsource HRs are the best way to organize mentioned above service function. Some of the advantages are:

  1. Savings!!! Saving money, time and resources for training a new person. CEOs will need to pay a 12-month salary for functions that can or needs to be done only 6 to 7 times a year. They save time, as usually freelancers have already experience and network to cover the current needs of the organization.
  2. Companies avoid needs of buying and implementing new HR information systems, or develop reports, as outsourcers usually have already all these set upս from previous projects.
  3. Wide knowledge of professionals: as many outsource work with different industries they can also be helpful in other business decisions and bring their own opinion on the table.
  4. The company stays out of risks, as usually, they have short-term contracts with freelancers that are easier to cancel then regular employment contracts in case of any financial shortages.
  5. The company can “buy” specific needed package of services, for example only employer branding and recruitment, or payroll and admin part of HR. This allows them to have the freedom to customize the functions they need toward their needs at the moment.

Sure they are some cons of outsourcing HR functions as well. Here are some of them:

  1. It is always demotivating for the employees when someone from outside comes and tells what and how to do. In all organizations, some of HR functions exit and somebody or group of people are taking care of them. Now, when you bring in a new person those employees feel less important about them.
  2. It takes time… as for all newcomers, the same is here. It will take time and even more time for a person to get to know all the ins and outs of the company working as an outsourcer then for a regular employee.
  3. Luck of bonding may be another disadvantage of outsourcing HR, as the person does not feel that he/she belongs to the organization.

In many cases, as with all business decisions, the question to outsource HR or keep this functionality in-house needs to be decided by the top management along with other priorities at that particular time.


About the Contributor:

Jason Sturman is a technical writer at and writes about HR, data, and technology. He has co-authored a number of guides and white papers for HR professionals.

FG Editorial Team
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