In order to successfully choose from which agency your human resources will be outsourced, it is very important that you find out just the right amount of information to aid you in deciding this. In fact, after enough investigation, you could probably end up deciding that HR outsourcing is not necessary for your business.
The first thing that must be done in deciding whether to outsource your human resources or not; is to investigate the basic concept HR outsourcing. Simply put, HR outsourcing simply involves getting your human resources from a third party agency. After knowing what it is, the next step to do is to determine whether the outsourcing of human resources will actually help the objectives of your business or not. As for most businesses, the main objective is to make profit for its owners. Outsourcing human resources are very likely to contribute to this objective. However, it should still be noted that minimizing costs isn’t always the better end of the deal when compared to improving human resources, which could multiply the revenue twice or even thrice.
It is important to analyze the cost of HR outsourcing, the possible opportunity costs and the cost of any failure caused by the newly outsourced employees. Since the newly outsourced employees are not yet familiar with the work processes of the business, chances are likely that they would commit mistakes as they do the job. The cost and the losses that can be triggered by such mistakes should be carefully considered and the returns of outsourcing should always be greater than the losses it may cause. Also, instead of entering into an outsourcing contract, the business may just simply lay off some of its employees and keep the ones that performing well in order to cut costs.
After analyzing the costs and weighing the effects of HR outsourcing when compared to increasing the expenditure for human resources, the business may now then look for possible providers of human resources. When looking for potential partners in this business, there are three factors that must be examined aside from the cost of the contract.
The first factor to be considered is the decision rights regarding the employees between the business and the provider. The most important aspect of this factor is the degree of control that the business has over the level of employees. The business should be free to increase and decrease the level of employment, provided that it is not iniquitous. If the contract does not include this or a variation of this in the stipulation, it would be better to find another provider.
Next is the contract length between the HR outsourcing company and the entrepreneur/business owner. The favor of this factor would vary, depending on the requirement of the business itself. The length of the contract would of course be followed by the termination date and the possibility of the renewal of the contract. The renewal of the outsourcing contract should of course be determined by the discretion of the business, and not of the agency.