Personnel outsourcing: description, features and benefits

Work with human resources requires a highly skilled personnel employee. Even if a high-class specialist is employed at the enterprise, all the same routine work is delaying and, as a rule, there is simply not enough time for personnel management and solving strategic issues. To solve this problem, many businessmen turn to the services of outsourcing companies.

The process of transferring non-key functions of enterprise management has long been handed over to outsourcing companies, including personnel management.

Possible functions that can be transferred to third parties

For a better perception, we combined all the functions in a table, which is presented below:

Corporate culture	- development of incentive programs for staff; - HR planning and reporting; - development and implementation of a common staff development strategy.
HR consulting	- employee training; - staff assessment; - recruitment, interviewing; - conducting seminars and trainings.
HR workflow	- posting recruitment announcements; - processing, collection and formation of primary personnel documentation; - formation and maintenance of the archive.
Payout management	- payroll; - Formation of a bonus fund and payments from it.

The last point is perhaps the most interesting. Especially if a Western company operating in our country is switching to personnel outsourcing. The complexity of the current legislation, including payroll, is often perplexing for foreign entrepreneurs and executives, which is why it is precisely such companies that most often give this function to outside specialists. Moreover, the calculation of remuneration does not apply to strategic action, but HR and accountants spend more than 60% of their working time on this.

The main reasons for contacting third-party specialists

Recently, outsourcing of HR administration has become more and more popular, and there are several reasons for this:

• many foreign companies “enter” our market that are not able to immediately delve into the features of our legislation;
• the founders of the company do not want to hire a lot of staff, take care of the purchase and update of special software, in other words, they want to save;
• the desire of the owners of the company will focus on strategic and priority tasks, without being distracted by the selection and control of personnel;
• a rapid increase in service units, in comparison with the low growth rates of the core business, that is, in fact, a reduction in costs due to lower personnel costs;
• there may be a reverse situation when the pace of the main production is much faster, and the service personnel do not have time to process and streamline everything.
• the company has many branches that have different locations, are scattered throughout the country, but all the data flows into the main (head) office;
• the need for an urgent search for qualified personnel, for example, to launch a new project;
• lack of specialists in the field of personnel selection, payroll.

Benefits of HR Outsourcing

First of all, if the company still has a personnel management department, then its employees can focus on solving important issues, that is, develop strategic plans related to personnel search, development, evaluation and promotion.

The second advantage: if an employee gets sick or quits even in the personnel department, then you do not need to immediately look for a replacement, an absent employee can always be replaced by an employee of a third-party organization.

The majority of the responsibility for outsourcing personnel lies with the involved company.

And the main advantage is cost savings.

Full and combined outsourcing

Personnel outsourcing of personnel is usually at the first stages only on a combined basis, that is, the functions of the personnel department are transferred only partially. Over time, when trust relationships are established between the company and the outsourcing company, the parties are satisfied with the relationship, then all functions are assigned to a third-party organization.

How to choose an external HR department executive

Before deciding on personnel outsourcing, the owner of the enterprise must understand for himself what he wants to get in the end. It is the answer to this question that gives a complete understanding of what functions should be assigned to an external company.

If there is no desire to outsource the solution of strategic issues related to personnel, then it makes sense to start cooperation with a partner on the terms of outsourcing HR management, and then transfer the function of payroll. In this case, the company's specialists are exempted from the routine and can deal with more important issues, for example, the development of a motivation program, deal with staff assessment.

If the main goal is the development and implementation of motivation, training and increasing loyalty to the company, then it is better to contact a consulting company. To begin with, the company will conduct an assessment of the state of affairs with the staff, and then offer seminars or trainings, team building and training events.

Life examples

A striking example is the need to develop a system of compensation and benefits. Such a program does not require constant adjustment, it is only once developed and, depending on the need, amended. In fact, this is a project work, so it makes sense to attract a third-party organization, whose specialists have experience in this field. In this case, just find the right company, determine the budget and determine the deadlines. As a result, the company saves money and time.

Often there are cases when personnel outsourcing at an enterprise involves only personnel selection. This option involves two types:

1. Recruitment is carried out on an ongoing basis;
2. Project selection, that is, the search or luring of high-class specialists or top managers.

Both options are quite expensive both in time and in investing money. In the first case, everything will depend on the regularity of personnel outsourcing services. Cost in the second case is a direct dependence of professionalism and the uniqueness of the profession, hence the considerable cost of solving the problem.

The dangers of outsourcing

In some cases, the cost exceeds acceptable standards, and without reason. And sometimes the proposals of third-party organizations surprise with their low cost. This may be due to many factors. For example, the company has no specialists, the entrepreneur is just starting his own business, and therefore dumping. Other companies, on the contrary, having decided that they have no competitors, are not interested in what is happening around. Therefore, it is very important for an entrepreneur to be very careful in choosing a partner, because business processes, though not the most strategic ones, are left to the mercy.

Another problem arises from this: transferring all the functions of personnel management, the business owner loses control, and if the outsourcing company performed its functions in bad faith, it will be quite difficult to restore order. As soon as the problem becomes clear, you will have to look very quickly for a new company that provides this kind of service, or to recruit new staff to your company.

Therefore, it is very important to carefully and attentively approach the choice of provider for conducting HR administration and personnel management.

Be sure to pay attention to the availability of professional liability insurance. True, its presence is not a panacea, and therefore, be sure to additionally study the insurance obligations of an outsourcing company, and specify the amount of the insurance amount.

How the price of services is formed

Depending on the chosen form of relationship, a price is formed. It will depend on a set of services, which may include:

• personnel accounting;
• payroll outsourcing;
• selection of staff;
• adaptation;
• psychological testing both when hiring, and after a certain period of work in the enterprise.

With regard to specific amounts, the cost of services, as a rule, varies markedly and is determined on a contractual basis. Specific figures are difficult to name, since it all depends on the pricing policy of the company, the specialization and qualifications of the employees you need, as well as on the term of temporary hiring. Therefore, we can only give averaged data: if the number of full-time and freelance employees in the organization is from 16 to 50 employees, then the monthly cost of services will be 100 USD + 25 USD for every 5 people over fifteen. But, again, the amount is rather arbitrary. All figures are negotiated directly with the representative of the outsourcing company.