Now it's not only telemarketers, automobile manufacturers and the like being replaced by automation and third party companies. Talent management programs and Human Resources work is being outsourced as well.
The new trend is to have HR functions like payroll and benefits administration outsourced to third parties (Galagan, 2007, p.1). Did you know that companies with more than 10,000 employees can save as much as 20% by outsourcing human resources? (Oshima, Kao & Tower, 2005, p. 7). That is not chump change, my friends!
This does actually make a lot of sense to me. Currently, more than 60% of companies outsource at least some part of their HR administration (Oshima, Kao & Tower, 2005, p. 7). Giving these duties to outside parties can save money and free up company human resource staff for the important stuff, like employee engagement and training and development.
I do not feel it is wise to outsource these HR duties, however, as they are integral to corporate strategy. A third party is not available to engage employees and they may not be familiar enough with corporate strategy to take part in training and development. I feel like those are best kept in house.
Oshima et al feel that talent management can be outsourced as well. But agree that certain HR functions that are vital to business strategy should stay in house. Included in this list are HR strategy, executive coaching and organization, problem solving, budget management and HR program design – this would include the design of programs that would be run by a third party, such as benefits, talent management and staffing (Oshima, Kao & Tower, 2005, p. 8). I couldn't see outsourcing these functions either, as it is necessary to work closely with the C-suite to design these functions.
So, while I feel it is wise to outsource certain talent management functions, I feel like the meaty, strategy-driven portions of HR should be kept in-house where they can be developed to best suit the corporate strategy and thus, better benefit the business.
References:
Galagan, P. (2007). Trend watch. T+D. 61(2). 1.
Oshima, M., Kao, T., & Tower, J. (2005). Achieving post-outsourcing success. Human
Resources Planning. 28(2), 7-11.
Nice research, Ginny! Outsourcing has its highs and lows, depending on how you will benefit from it. It's advantageous for some companies and a waste of money to some. If you own a company, then you should know whether you need to outsource or not. Outsourcing is there to make your life easier unless you hire them for the wrong reasons.
ReplyDeleteDavid Allman @ Omega On Demand