Decision to outsource

Outsourcing HR

Outsourcing HR is one of the most likely functions to be outsourced. Many smaller companies and organizations are choosing to outsource administrative and human resource functions. According to the Society for Human Resource Management (SHRM), there are “several reasons, including cost savings and the freeing of human resource professionals to focus on more strategic efforts. As a result, HR professionals are being asked to identify outsourcing solutions for businesses and guide organizations through vendor selection and management of the outsourcing relationship.”

There are many considerations regarding the choice to outsource some of the human resource function. As an organization grows, there are likely to be more human resource issues. If there is a significant challenge that requires organizational focus, it may be the considering outsourcing rather than dealing with multiple challenges at the same time. Now that hiring qualified candidates is so challenging, there is a particular need to find recruiting help. There are a variety of considerations for choosing to outsource including: developing an outsourcing agreement and transitioning in-house to third party management of some human resource functions.

The case for outsourcing is clear for smaller organizations as they may not have had an HR function previously or if the HR function is needed to focus on other strategic issues. The Society for Human Resource Management makes that case that. “The process of deciding whether to outsource HR functions begins with consideration of how outsourcing could help an organization and includes how well positioned HR would be to help the organization manage a transition to outsourcing. It is important to analyze how the company is currently delivering HR and to identify whatever gaps may exist between the organization’s HR needs and HR functions. Employers should also research the outsourcing industry and its trends and analyze how industry trends could affect their organizations.”

An article in SHRM provides a helpful set of considerations that any employer could use to evaluate the question of whether to outsource some or all the HR functions. These questions are provided below.

” When deciding whether to outsource, an organization should be able to answer questions designed to analyze its HR needs, its current HR processes, its business plan, and its outsourcing options such as the following:

  • Can HR handle outsourcing without disrupting the current operation?
  • Do HR staff members have the time and experience to deal with outsourcing?
  • Is the HR department sufficiently staffed to manage the outsourcing relationship?
  • Is HR providing excellent service with existing staff and processes? Is HR meeting all the organization’s needs?
  • Most importantly, will the CEO and top management team support and pay for an outside vendor?
  • Does the company have a clear mission and vision? Have company values been established?
  • Does the situation merit outsourcing?
  • If so, what type of outsourcing solutions would best fit the situation?

In addition, it is important to know the ways in which an outsourcing arrangement can fall short of expectations and to mitigate such risks.”

A separate article in the Hire Outcomes HR blog will address the risks of outsourcing and ways to mitigate these risks.

We help our clients review their hiring needs and the strategic value of the roles that need to be filled.  The purpose of this analysis and review is to help determine if outsourcing the recruitment process is a good fit for your organization.  We have developed a hiring assessment tool that helps in this review.  To see this hiring assessment tool, please go to

Source: Outsourcing the HR Function (


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