Human Resource Management Outsourcing

Human Resource Management Outsourcing

Introduction

A business transaction encompasses any activity which involves the exchange of cash or any other mode of payment in return for certain services offered or the sale of a product. Initially, business transactions were limited to small shops and small business setups run by a single owner but with time, the concept of organizations came forth. Companies were formed with hundreds and even thousands of employees working for that company. This created a need for companies to have a department dedicated to hiring and facilitation of employees. Organizations grew so large that they needed manpower to manage the manpower. Hence, the concept of human resource management grew stronger. Today, every organization has a human resource department and personnel dedicated to the management of the workforce.

Similarly, with the growth of companies came the growth of their business processes. The larger the company, the more business units it has and the more processes get involved in making a final product or service ready for sale. Subsequently, the costs associated with business operations increase as the processes increase. This created the need to outsource certain processes and led to the creating of outsourcing companies. The main purpose of such outsourcing companies is to facilitate other companies with one or some of their processes and functions.

HR Management

Human resource management encompasses all the functions related to an employee working within an organization. For instance: recruitment, hiring, job description formulation, salary and compensation, facilitation and layoffs. It is the management of the workforce of an organization. Efficiently managing the workforce of an organization is called Human Resource Management.

HR Functions usually outsourced

Companies in third world countries such as India, China and Philippines have many outsourcing companies handling different processes for renowned companies of the world (Blyth, 2006). Apple for example, gets all of their manufacturing done in China. Similarly, most airlines have their sales and support outsourced to companies in India. Some companies, to reduce their costs, assign outsourcing companies with some or all of their HR functions. In this case, the outsourcing company makes reports and plans and then presents them to the parent company for a certain price. The parent company then implements the plan onto their organization.

Usually the HR functions that get outsourced to India are:

Salaries and compensation planning

Online recruitment and selection

Employee feedback and facilitation

Issues associated with outsourcing HR

Strategic

On the surface, outsourcing of functions seems like the wise thing to do because of the evident cost cutting and reduction in the business processes. Outsourcing seems like the smart thing to do and this is one of the main reasons why it was so easily accepted by most companies when the trend was in its initial phase. However, outsourcing has its own disadvantages. The biggest and most important disadvantage of outsourcing is the strategic gap it creates and the failure to fit it with the companies strategic planning, mission, goals and vision (Burman, 2006).

When another company makes the plans for the parent company, it is likely that the formulated plan ...