July 14, 2024
Marketeer
July 14, 2024
Consultday has many years of experience at the intersection of HR and IT. The sourcing of HR administration and/or payroll is a challenge that many organizations are exploring. Often, the available information focuses on the benefits of outsourcing. In our previous blog, we already shared our views on that. In this blog, we will tell you more about the four main benefits of insourcing.
The field of HR Operations has become increasingly complex over the years. A major driver is the developments in HR-IT combined with the typical HR professional’s DNA. Due to technological advancements, systems have become more complex and there are many more HR applications being used. On the other hand, the average HR professional chose the field because of a focus on people. For many HR professionals, processes, rules, and systems are the opposite of what they signed up for. This is where HR Operations can be the healthy exception. Within HR Operations, the employees are those who enjoy thinking in processes and working with numbers and systems. By handling HR Operations internally, a ‘nursery’ can be created for future functional administrators, process analysts, HR analytics specialists, compensation and benefits specialists, and other types of HR managers.
By outsourcing, your organization gives away a portion of its future savings. Developments such as Machine Learning, AI, RPA, and further optimizations will ensure that even fewer employees will be needed in administration in the future. By retaining responsibility for HR Operations internally, HR will have the opportunity to invest these future savings in other projects and/or reduce the operating costs of the business.
A major risk of outsourcing is the lack of knowledge that develops within the internal organization. This problem grows over the years. A common situation is the assumption that the BPO partner has full oversight. In reality, the BPO partner is responsible for a different, smaller scope. This can lead to mistakes for which the organization is ultimately accountable. Another risk is that there may be insufficient internal corrections towards HR advice and management. Additionally, BPO can create a lock-in with the BPO partner, especially when combined with HR software. Due to the lack of internal knowledge the quality of the service cannot be adequately assessed, creating an incentive to stick with the same software package. By choosing an insourcing model you can avoid these risks.
As an organization you remain in control of a crucial business process. This means you’re not dependent on the performance and availability of a BPO partner. HR Operations can also adapt more easily to internal developments such as improving internal HR processes or transitioning to a new software package. As an organization you maintain full control over the entire HR function. Moreover, there is never a guarantee that the partner you contract with today will be the same partner in 3 to 5 years.
Both insourcing and outsourcing of HR operations have their own advantages and disadvantages. Making the right choice is not always easy. We hope that these tips have provided you with a better overview of the pros and cons, making it easier for you to decide what’s best for your organization. Haven’t read all the benefits of outsourcing HR operations yet? Be sure to check out our previous blog.
