01 Jan

New to the consulting world after years of in-house HR, Kristie Willis candidly shares what leaders should consider when making outsourcing decisions. 

As a business leader, how do you decide what to insource versus outsource? These strategic decisions are made across all business functions with a growing trend towards outsourcing PART of Human Resources. The current research data shows a trend that human resources outsourcing is expected to reach $43.8 billion globally by the year 2024. (fianancesonline.com). 

The top five services offered by outsourcing consulting firms are: 

HR Consulting - 45%  

Benefits Administration - 36% 

Time Tracking - 24% 

Insurance Services- 19% 

Performance Management - 10% 

The dynamics and role of HR within organizations has shifted slightly over the last 18 months due to the pandemic, roller coaster economy, unprecedented job market, shift to a gig economy, and more. These dramatic shifts have arguably impacted HR services as much as or more than another area of our businesses. A hybrid approach to in-house services with some outsourced functions allows the organization to place investment in the areas which will have greatest impact on their business and culture. 

We asked Kristie Willis, HR Business Partner with DETS who has watched this evolution over two decades: Is it better for the organization to outsource all or part of its HR functions? 

“I don’t think there is a right or wrong answer to this question. I believe it depends on the individual needs of the organization. If they have an in-house HR department, what is the financial breakdown of employing those individuals, and what would it look like financially if some or all the components were outsourced?” 

Beyond the potential cost upside, what are other possible benefits from outsourcing some or all HR responsibilities? 

Kristie noted, “In addition to possibly being cost effective, the organization could ultimately save additional time that would generally be utilized for the in-house HR team to spend on administrative tasks thus allowing more focus on strategic plans. It’s also challenging in smaller HR departments without in-house counsel to stay up to date on compliance and employment law.” 

When is keeping HR in-house best? 

“When I think about possibly outsourcing HR functions within an organization, I can relate on both sides because prior to joining DETS, I had always led in-house HR teams. If I had to state, the biggest risk that is being taken when an organization decides to outsource, it would be the one-on-one dialogue that the in-house HR team has regularly with internal customers. Other questions to ask: 

  • How would this affect the culture, morale, and the organization’s internal customers?
  • What would working with an outside vendor look like?
  • How would we find the best vendor for our organization?
  • Will there be communication barriers? And if so, how would we resolve them?
  • With increasingly remote team structures, what does managing a remote team look like from an HR standpoint?
  • What if there is a breach in the contract, or a delay in the SLA (Service Level Agreement) how would that be handled?
  • What would adhering to confidentiality look like from an outsourcing standpoint?

 Ultimately these are all important questions that an organization will need to take into consideration when contemplating outsourcing its HR functions.” 

After weighing all the pros and cons, the final decision needs to be made based on what will be best for the organization, both short and long-term. Is it going to help the business grow, succeed, and minimize overall risks?

Kristie concludes, “I believe if the lines of communication are continually open between the two parties on a consistent basis, it could be a win-win for all stakeholders involved.” 

Kristie can be contacted directly at kristie@deependstrategies.com for more candid discussions on the pros and cons of outsourcing HR functions. 

At Deep End Talent Strategies, we have developed an assessment tool to help businesses understand their current HR maturity across four primary areas. We can then work with leaders to build a workplan to close some gaps between current and desired states. A natural part of the discussion is often whether those efforts are best tackled with internal resources, consultants, or a hybrid approach. Contact us www.deependstrategies.com or 866.442.DETS (3387).