In business world today, the main focus is delivering company’s core competency as to generate sustainable competitive advantage. The core competency is being described as what company does the best and in the same time, generates profit for the company. As the company focusing on their core competency, other components of the company require as much attention as the core to keep the company stable. However, it difficult for company to maintain all the aspect of their business at top level and even by that will cost them fortune. That’s when Outsourcing concept come into the picture.
Outsourcing is the alternatives for company to hired external company to be their part of function. The execution of specific function for the company will enable the company to focus on their core competency. One of the most commonly function of management to be outsources today is the human resources department. Delmotte, J and Sles, L. (2008) stated that their researches on outsourcing of Human Resources lead to better time management as well as resources that support both tactical and strategic contribution. These factors later on enable stable and longer focus on supporting the core competency of the company. In other words, once company enable their human resource to be handled by the expert of the fields, the company now can focus more on their main competency. As the expert of the field charge on the HR, better result is shown which coming back in enabling company to perform better on the overall view.
Extending the view from another point, the trends of outsourcing not just imply to company function that they are not well managed only. (Kosnik & Hoover, 2006) The situation lead to outsourcing might be caused by lack of expert on that field. Kosnik, T. and Hoover, K. (2006) find in their research that outsourcing in term of staffing firm enable a company to obtain more expert into the workforce. In a way, instead of hiring single personal that course higher, outsourcing for a team of expert to be combined with current staff will returned more than it should. This staffing firm method can lead the form to better manage their expenses to better portion of the company where it is needed. For example, Telekom Malaysia in their Unifi consumer service development has outsource their customer interface system to Accenture Sdn. Bhd. by joining force their programmer and system analyst to work side by side in completing the system.
Focusing on the outsourcing human resource of company, it leads to a chance for Host Company to have knowledge transfer from the external expert to the internal expert. Previously, considering staffing firm of expert to be part of the team, the host company can now develop their staff to be more expert. Schlosser, F., Templer, A., and Ghanam, D. (2006) discover in their research that organizational knowledge learning process can be enhance from the outsourcing of staff. Ads explained, the logic apply that to ensure everyone perform at the same level, internal training by the outsource expert will be done. This is to ensure after the contract done, the maintenance can be continue by the host company team force.
There are several trends that change the nature of human resource outsourcing in today’s world. According to Rosenthal (2010), the first one is by shifting adoption patterns in order to take much more focused approach. Current outsourcing clients have become more critical when evaluating the benefits that they gain from outsourcing their HR functions. They would likely to focus on outsourcing on one specific area at time instead of outsourcing a broad function of the organization. Rosenthal explained that the clients are more likely to compare their investment in outsourcing cost with the returns and benefits that they gain from it thus, lead them to only outsource one defined area.
Another trend stated by Rosenthal is integrating the benefits area and administrations together and outsource them. By doing so, the clients are able to ensure that every roles of the department can operates smoothly and efficiently. With that, any cost related to the employees’ benefits process can be kept at minimal thus, allowing the organization to provide more benefits for their people. For example, a more efficient off-boarding process can ensure that the people get paid no longer than it should moreover organization can minimize their healthcare costs with a wellness program to change behavior.
Outsourcing enables the organization to hire another company to perform and operates certain functionalities for them like Human Resources. There are several factors that lead organizations to choose outsourcing their HR functions such as to focus more on their core competency, the lack of expert on that field and to promote knowledge transfer from the external expert to the internal expert. In today’s world, there several trends in HR outsourcing for example shifting adoption patterns in order to take much more focused approach and integrating the benefits area and administrations.
DELMOTTE, J., & SELS, L. (2008). HR outsourcing: threat or opportunity? Belgium: EmeraldInsight. KOSNIK, T., & HOOVER, K. (2006). Outsourcing vs insourcing in the human resource supply. United State : Emerald Insight. ROSENTHAL, B. E. (2010, January 1). Four Trends That are Changing Human Resources Outsourcing – Article. Retrieved October 10, 2012, from Outsourcing Center: http://www.outsourcing-center.com/2010-01-four-trends-that-are-changing-human-resources-outsourcing-article-37457.html SCHLOSSER, F., TEMPLER, A., & GHANAM, D. (2006). How Human Resource Outsourcing Affects Organizational Learning in the Knowledge Economy. Canada: JOURNAL OF LABOR RESEARCH.