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Should You Outsource Your HR Function or Manage It In-House?

Many organizations have chosen to outsource their HR functions. But, is it good to outsource or just manage it inhouse? Well, the decision is not easy. Most importantly, you should choose the practice that benefits your business most.

Managing it inhouse means allowing your HR department to handle all HR functions. On the other hand, outsourcing HR means getting third parties to get the job done. You can decide to outsource all HR functions. This means handing over the HR department to the outsourcing companies. Alternatively, you can outsource some functions.



  1. HR Function: Outsource or manage it in-house?
  2. Benefits of outsourcing your HR function
  • Savings on operational costs
  • Reduced turnover
  • Increases efficiency
  • Acquisition of new skills
  • Management of smooth operations
  • 3. Some of the HR functions for outsourcing
  • Compliance
  • Administration of benefits
  • Recruitment purposes
  • Promotes rewards and recognition
  • 4. Advantages of inhouse HR
  • You have options, make a wise decision


Benefits of outsourcing your HR function

This comes with many benefits. These benefits can be enjoyed by all types of businesses. This includes small sized or large businesses. Below, we provide a list of some benefits your business will enjoy from the outsourced HR function.

  1. You save operational cost

Outsourcing means that more people are not hired to complete HR functions. This means you get to save some money. You also avoid costs for adding office space for more employees.

It reduces liability risks. These occur when a business fails to meet the employment regulations. By using this function, you get to avoid expensive lawsuits.

  1. Reducing turnover issues

One of the problems slowing down business operations is employee turnover. Whenever an employee in the HR department leaves a business, a certain activity is affected. For example, if employees in the benefits management leaves, your business may face a crisis. Luckily, this problem can be avoided. Outsource HR function and business operations will continue running smoothly.

  1. It increases efficiency

When you outsource your HR function, experts streamline HR activities. For example, outsourcing companies use new technology streamlining HR activities. In this case, employees spend less time focusing on HR functions. Instead, they focus on other activities which have increased efficiency.

  1. To acquire new skills

Sometimes a business may have a new operation. In such a situation new skills are needed. Instead of getting new employees and training them, you should outsource. This means you get experts who can help in running the new operation. They can also help train employees on the new operation. This means that the business runs with no disturbance.

  1. Running smooth operations

Outsourcing help you get experts taking care of these functions. This means facing less problems in running the business.

HR functions for outsourcing

There are many functions that businesses can outsource. This is because the HR department is responsible for many functions. Let us discuss some of the functions that are commonly outsourced.

  • Compliance

There are many regulations that businesses have to comply with. For example, employers have to comply with payroll tax, hiring process, and sexual harassment among other regulations. This function tends to be hard for HR. The problem is that failure to comply may lead to problems with lawmakers. Outsourcing this can help reduce the burden. There are third parties with skill in this function. Outsourcing their service can help save time and costs. For example, outsourcing a third party for tax compliance means that an employer will always meet the requirements.

  • Administration of benefits

You can outsource HR functions to get help with the administration of benefits. Experts would make sure that employees know about available benefit options.

  • Recruitment

Currently, many organizations are testing outsourcing the recruitment function. It involves selecting a recruitment partner. One of its benefits is getting talents. This is good for the success of your business. Due to increased competition, the HR department may have challenges reaching talents. But, there are experts in this function. Working with these third parties can help in hiring the right people. Managing this function inhouse may lead to costly mistakes of hiring  less qualified and incompetent employees. This is especially possible when the recruitment process becomes expensive and tiring.

  • Rewards and recognition

The HR department is responsible for employees’ motivation through rewards and recognition. Fulfilling this task tends to be time consuming for the inhouse team. But, hiring outside vendors can make it easy to handle these tasks. This means that HR would be free to handle other important tasks.

Advantages of inhouse HR

Though most people are going for outsourcing HR, inhouse HR has some advantages. First, inhouse HR is more customizable to employee’s needs. Second, inhouse HR makes sure that some functions run smoother. For example, when an error has occurred in compensation, the inhouse manager can easily access the information and make adjustments. But, an inhouse HR requires more time and manpower that tends to be limited.

Make a wise decision

When choosing between inhouse HR or outsourcing, take time to weigh the options. Likewise, consider the options with the most benefits for your business. If you choose to outsource, start with few functions. This will also help you learn to build effective relationships with third parties essential for achieving success. Then, later you can decide which functions to outsource.

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