Outsourcing is common business practice that involves work being done by the other people instead of the usual full-time employees. In the contemporary business set up, labour outsourcing is widely practised by organisation in a complex and diverse ways and with different motivations. In most cases, cost cutting has been cited as the reason behind pursuit of labour outsourcing by most organisations. However, there are other factors related to effectiveness, nature of jobs and level of competence required. This concept of management became very attractive during economic down turn when most organisations were looking for ways of reducing the cost of doing business ( Scott-Jackson, Newham and Gurney, 2005) . It is so attractive that it finds its way in discussions among the business executives and senior managements. Its rising popularity nonetheless, labour outsourcing should be suitably aligned with the business strategic plan and focus. Such roles as iterative, administrative and clerical jobs are easily outsourced so that the full-time employees can engage in more challenging strategic roles. This will be of great importance in looking for a strategic human resources partner to help advance the interests of the organisation seeking outsourced labour. It is also important that the organisation understand the scope of outsources because not all jobs can be effectively done by the outside resources. The popularity of labour outsourcing in increasing in popularity and no longer a reserve of multinationals but also the government and private sector are embracing it because of a myriad of benefits associated with it. Some of the commonly outsourced labour services include training, recruitment, payroll, benefits and compensations, drug testing and background checks among others. This essay outlines the reasons why it is good for organisation to outsource some of its labour demands.
The reasons behind a motivation to pursue human resources outsourcing cover both operational and strategic level. Although the needs for organisations are different depending on the areas of specializations, the reasons for human resources outsourcing are largely similar. Particularly, the need for growth, profitability and increased productivity have caused the organisations to examine the internal labour processes and associated cost. While responding to the dire need for reduction in the cost of human resources services, the business has established a way of obtaining the same services from an external organisation. The organisation will then offload a team of employees who are considered to be currently engaged in less specialized roles and engage an outsourcing company in filling up the resultant vacancies. This will imply that the undisclosed benefits to the employees, that raises the cost of managing employees will be offloaded and new cost be aligned to the services only. In addition, the company resources will be concentrated on the main business activities only, thereby increasing effectiveness of the labour force. This cost is also adequately managed through enhanced productivity and flexibility from temporary contractors who are engaged on-need basis to take care of unstable labour demands. Through human resources outsourcing, the organisation is able to achieve just-in-time deployment of workers which will in turn bring about the benefit cutting cost. Cost cutting through just-in-time deployment is achieved through savings on indirect costs which include back up costs, training and recruitment, absconding, administration and labour relations challenges. Conversely, savings on direct costs come about due to reduced overtime and headcount.
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The second benefit that the organisation stands to enjoy after outsourcing its labour force is the transfer of the uncertainty and business operational risks to the outsourcing organisation. Outsourcing organisations plays a critical role in minimizing risks to the businesses seeking their services by taking up the implication of constant changes to labour and employment laws. There are constant changes that happen to these laws and the business finds it difficult to stay abreast with the emerging regulations, which would affect the business profitability. By outsourcing all matters that relate to human resources for a sizeable part of the organisation, the business can sit back and concentrate on growing the business instead of dwelling of emerging regulations. On the other hand, the human resources companies offering outsourced labour services will have a team of professionals whose is to keep up to date the changes in the sector. When engaged for the services, these organisations will help the business to not only comply with the laws but also avoid the risks of lawsuits from the employees or government agencies. Other than the emerging legal requirements, human resources outsourcing company will help the business avoid conflicts with its workforce by adopting the industry best practice.
Thirdly, the business intends to enhance its efficiency by outsourcing labour for some of the identified roles. In recognition of the need to maintain a productive workforce, the business has identified an opportunity of advanced technologies available in outsourcing companies. These technologies are going to help in streamlining the management of workers through better payroll analysis, administration of benefits, better training programs and compliance management. In addition, through labour outsourcing the business management is able to spend less time in doing clerical jobs such as paperwork and concentrate on the improvement of core processes. It is also notable that the labour obtained from external organisations are exposed to various organisations and in the process have developed wide scope of skills which will be of great importance in enhancing productivity.
Finally, the business is likely to benefits from labour outsourcing through better employee development and performance. The providers of outsourced services keep the employees alert because of the performance management plans in line with periodical reviews by the business. Since the service providers is subjected to periodic reviews, some are as frequent as monthly, they establish means of not only checking the performance of its employees but also sealing the loopholes through competence development. Through these initiatives, the business management will not be directly involved in enhancing performance of the workforce while at the same time enjoying the benefit of improved competence (Glaister, 2014).
In conclusion, it has been illustrated that the decision by the business to let go of a large section of the workforce and outsource such services to the human resources outsourcing company is informed by four anticipated benefits. These benefits include the projected reduction in the costs related to labour, better risk management through transfer of risks to the service provider, enhanced efficiency in the business processes and up to date human resource development initiatives. Therefore, with proper management of this decision, the business anticipates growth, profitability and higher productivity.
References
Glaister, A. (2014). HR Outsourcing: The Impact on HR Role, Competency Development and Relationships. Human Resource Management Journal, 24 (2), 211-226.
Scott-Jackson, W., Newham, T. and Gurney, M. (2005). HR Outsourcing: The Key Decisions. Executive Briefing . London: Chartered Institute of Personnel and Development.
