14/10/10

By IntaPeople

Every business has its own view on the merits of outsourcing. Some will always feel uneasy at the idea of relinquishing control to an external company, while others will accept that outsourcing is an inevitable part of running any business.

For those firms that have already decided to take the plunge and outsource a portion of their business, it is interesting to examine the value that this has as time goes by. Should outsourcing be treated as a quick way of plugging gaps in the knowledge of staff members? Or is it actually a vital component of business that firms cannot ever afford to be without?

Looking specifically at the activity of HR departments around the UK, outsourcing has continued to grow in popularity. In 2009, the Chartered Institute of Personnel and Development (CIPD) revealed that 20% of its respondents had experienced significant increases in HR Outsourcing (HRO) during the five years previous.

The upward trend in HRO could easily be said to mirror weighty changes in employment law. Often decried by businesses as growth-restricting ‘red tape’, the constant revision of employment law has left many firms with no choice but to seek outside advice in order to stay inside the law.

Although the coalition Government has pledged to reduce red tape, employment law is a notoriously complicated area that can only be simplified to a point. This means that unless a business is fortunate enough to have HR staff with exceptional legal knowledge and the time to keep on top of regulation changes, outsourcing is likely to remain a popular option for a while yet.

What about other aspects of HRO, though? The creation of company policy, employee benefits and wider HR strategies are all areas that businesses continue to pass on to specialist agencies. This may be ideal for start-ups with little expertise, or global outfits with bottomless pockets, but for those in between these are duties that could probably be managed in-house.

Looking after these tasks from within brings numerous benefits too. Employees will have a far greater understanding of their company’s values than any agency could, and this insight should be called upon when company policies are produced. It is also well-acknowledged that managing an outsourced operation can be a full-time job in itself, so bringing this work in-house could even result in more work getting done.

Recruitment outsourcing is another matter that can divide the opinions of HR departments across the country. According to the most recent research from the CIPD, 47% of businesses outsource at least part of their recruitment and selection strategies. The effectiveness of some consultancies is frequently called into question though.

There are some agencies that do little more than collect and dispatch thousands of CVs with little consideration along the way. This keeps costs low in the immediate term but the quality of these candidates is likely to be poor, which will ultimately delay the recruitment process and eat into the time of the hiring company. In this instance, recruitment may be better carried out in-house.

On the other hand, there are specialist consultancies that manage every stage of the process and maintain a number of ‘warm’ candidates who can be quickly and appropriately placed. Where there is an urgent demand for staff or a skilled requirement that is proving tricky to fill, having a longstanding relationship with a consultancy like this can make a genuine difference and deliver a solid ROI.

It is clear that the relationship a company has, and ought to have, with outsourcing really depends on the size of the business. Managed correctly, outsourcing can reap countless rewards and play a pivotal role in the long term success of a business — especially in handling more complicated areas like employment law. That said, gradually clawing back outsourced operations can be of great benefit too.

The bottom line seems to be being able to understand the strengths of staff members and working around these accordingly. Those in charge may be pleasantly surprised at just how much employees already know or have picked up from relationships with external agencies. After all, if the knowledge is there, they may as well use it.

IntaPeople is a specialist IT, Engineering and Legal recruitment consultancy that helps businesses across the UK and Europe with their staffing requirements. If you would like further information about their range of services, please visit http://www.intapeople.com/.