Outsourced HR VS In-house Team: How to Decide?

A company can only achieve its full potential if it has a thriving workforce. As the HR team takes charge of the managing and recruiting, it’s also a must for entrepreneurs to maintain a highly competitive human resource team. Doing this is the key to keeping the company’s top talent. The best thing in today’s business is the availability of a lot of options when it comes to organizing an HR team. You can either have your own in-house HR team or partner with a recruitment agency to outsource this department.

Are you still in the process of making a decision between having an in-house or outsourced HR team? If yes, you can start by evaluating how each option benefits you. Also, take time to compare the drawbacks of each.

Pros and Cons of Outsourcing HR

Entrusting your HR processes to a third-party recruitment agency is a great option for many reasons. For a start, this is a cost-effective move, especially if you pay per project and avoid having any additional ongoing contracts. Your company can also gain more specialized talents without spending too much time. You can also expect to get your job done faster, considering the wealth of outsourcing professionals you can tap.

Despite the benefits of outsourcing, it’s not without disadvantages. As you hire third-party professionals to handle the HR tasks, their services might only be available as needed. You might also need to set up a solid communication system to ensure consistent dialogue with them. And as third-party providers, outsourced professionals might need more background of the project and the company to guide their hiring process.

Ultimately, communication and goal alignment are the keys to make outsourcing work, especially for the HR team.

All About Managing an In-House HR Team

On the other hand, an in-house team is also worth considering if you want more control over your HR department. You can monitor the training, productivity, and development closely. Team discussions are done in the office. And as you know the team better, communication, engagement, and alignment wouldn’t be that hard. And most importantly, you wouldn’t be too worried about intellectual property infringement.

Although beneficial for a lot of reasons, an in-house team could also be a challenge to handle. This option isn’t a budget-efficient and time-friendly one, considering that you need to handle everything. Hiring, training, and creating a compensation package are solely your responsibility. Negotiating and interviewing applicants is time-consuming. And if they leave, you’ll have to start hiring and training again, which could drain the company’s budget.

An in-house HR team is great in terms of ease of monitoring and confidentiality. But this move also requires you to invest time, talent, and money to maintain.

Considerations When Deciding Between an In-House or Outsource Team

It’s best to take time in deciding between outsourcing the HR tasks or having an in-house HR team. To guide your decisions, be sure to consider the following factors:

• Company size – If you’re running a startup company with at most 10 employees, it would be wise to opt for outsourcing. Doing this helps you tap the expertise of a reputable recruitment agency. Remember, doing everything on your own could be exhausting. And you’d want to avoid burnout, especially during the early stage of your business. You can start having an in-house team when you think your workforce is stable enough.

• Expansion plan – Are you planning to open other branches in another state or country? Are you looking to digitize your business? Whichever is the case, know how an outsourced or in-house HR team can help you with that.

• Impact on your company’s core value proposition – Deloitte’s 2016 Global Outsourcing Survey shows that 57% of companies opt to hire a third-party HR team so that they can focus more on the core business values, services, and propositions.

• Cost – Lastly, compare the cost of having an in-house HR team and hiring a third-party recruitment agency. You’d want to spend more company resources on income-generating projects and asset acquisition.

Your HR team plays a crucial role in helping you keep your company’s top talent for a long time. Whether you’d like to nurture an in-house team or outsource this department, keep in mind how this department is going to affect your workforce. Take time to weigh the pros and cons of each option. Or better yet, avail of consultancy service or find a mentor to guide you.