HR Outsourcing

Outsourcing of HR functions has proven an efficient tool towards optimising and developing the best processes. The incentives for choosing to outsource are among other things profitability, the freeing of resources to focus on the company’s core business and access to specialised knowledge and expertise, cost savings, scalability and risk minimisation. The company can adjust the efforts and thereby the costs to match the current market situation. This transfers the risk, and fixed costs are made variable, says Anders Jørgensen, Head of Recruitment at People & Performance. However, he emphasises the fact that it takes a lot of preparation to streamline processes and map internal workflows before entering into a dialogue with your outsourcing provider.

“To many companies, the various functions that an HR department manages today are too comprehensive and complicated for the companies to maintain in-house. When the company has done its homework, and has developed a business strategy, it is time to enter into a dialogue with a potential outsourcing partner who is able to deliver on the company’s strategy. In this way, the company is able to achieve the bottom line advantages of outsourcing. In our experience, the best results are achieved when the two parties have a smooth and efficient cooperation,” he says and elaborates: the best results are achieved when the company appoints an internal vendor manager to navigate and facilitate a free flow of feedback and learning between the organisation and the outsourcing provider, ensuring that the service always matches the current business needs. HR outsourcing does thus not eliminate the need for good management or strategic HR in the company.

Clarity in the contract

The partnership is based on a contract specifying the nature and scope of the work. Clarity and flexibility are important ingredients in a contract. 

“Transparency is important to make it clear how to terminate the contract and also which jobs are part of the deal. Using KPIs helps you keep track of how the work is progressing. The more specific the contract, the better results you will achieve,” says Anders Jørgensen and points to the many possibilities of using outsourcing of the company’s HR department or functions.

“Recruitment has long been an obvious outsourcing service, but other areas are growing as well; development activities (managers and employees), analyses and even strategic activities such as strategy processes and general strategic advice are outsourced,” he adds.

Flexible outsourcing opportunities

According to Anders Jørgensen, large industrial companies with a lot of employees are often looking for a permanent solution, for example the implementation of a long-term strategy process. Here it is possible to adjust the competences to the company’s current need for HR functions; to make internal costs variable rather than fixed.

An interim solution is also an option, where you bring in the right competences and knowledge when they are needed. In this way, you still solve the tasks efficiently using your professional outsourcing partner when needed.

“You need to find an outsourcing partner who offers a flexible solution, and who has extensive competences within different HR services, rather than finding a purely specialised partner. Demand a transparent contract, which can be changed, and which you have a right to terminate if you are not satisfied with the cooperation. That gives you peace of mind while ensuring full freedom and flexibility for the company.“

You can also read about our five steps to a successful HR outsourcing in our blogpost Incorporate HR in your business strategy.