What is HR outsourcing CIPD?
The term ‘HR outsourcing’ refers to when a company has no internal HR resource, instead of using a third-party company to fulfil any HR needs they have.
Generally, companies doing this are start-ups and SMEs (as well as Third Sector organisations) who don’t have enough employees to justify an in-house HR person or team. It makes sense for businesses such as these to use a third-party provider, as and when they need HR support and advice.
Some larger organisations may opt to outsource certain aspects of their HR function to an external organisation, for instance, any specialist HR support required (eg. reward, etc.) or standalone projects (eg. change, restructuring, etc.)
Outsourcing has the added benefits of ensuring that HR is seen as being impartial.
What is the role of HRO?
HRO – Human Resources Outsourcing – is used when an organisation does not have their own internal support, from an HR person or team.
A company might not have HR internally if it doesn’t have enough employees to justify this. As a rough guide, companies with fewer than 100 employees may opt to outsource their HR requirements to a third party.
The HRO company is either paid a monthly retainer or in the case of Hunter Adams, clients pay upfront for a ‘bank of hours’ which they can call off any time HR support is needed.
This gives companies the peace of mind that, although they don’t have their own HR specialist, HR support is on hand as and when required.
What HR services can be outsourced?
Any and all HR services can be outsourced. Generally, SMEs will outsource everything, and larger companies may only opt to outsource HR services that they don’t have the expertise for internally. For example, a medium-sized business may have a couple of in-house HR generalists, but the generalists may not have the specialists skills required to manage, say, a change project.
Larger companies, even those with a sizeable HR team, may outsource HR projects if the in-house team is too busy managing the day-to-day stuff.
Finally, companies with internal HR resources may opt to outsource HR support for employee-relations issues to ensure full impartiality, thus keeping them right and ensuring they can’t be accused of any bias further down the line.
Why HR outsourcing is important?
For small businesses with no internal HR support, HR outsourcing is very important as it means they don’t need to invest in a permanent HR resource to be part of their team when they don’t need it. Of course, they will need elements of HR support at times, and that’s where the HR outsourcing company comes in.