Outsourcing for specific departments has been widely normalized since the start of the pandemic. For many businesses, they have utilized outsourcing their HR department and made in-house HR teams a thing of the past. Businesses are finding it more productive to outsource their HR teams than to hire in-house employees. If you’re currently reconsidering your in-house HR team, then this article might be for you. Here are some of the top disadvantages to having in-house HR.
Outsourcing your HR team allows for a more flexible budget for your business. Having to pay an in-house HR team can get very expensive. An in-house HR team requires salary, health benefits, and in many instances a 401k or other employee retirement program. Outsourcing your HR department allows you to save money in employee overhead. The extra cash you save from not having an in-house HR department can be reinvested into your business, furthering its long-term growth. On average, companies that rely on in-house HR employees tend to spend 18% more on HR than companies who outsource their employees.
Hiring the right employees can be headache when trying to find the perfect HR team. Not only can the process be stressful, but it is also very time consuming. Can you trust the employees you are hiring? Hiring the wrong employee can erase week’s worth of hard work. To avoid the hiring process completely, it is recommended to outsource your HR department. One of the top disadvantages to having in-house HR is that the hiring process is so long and complicated. You are assigned to the talents within your geological location, whereas outsourcing your HR department allows you to find talent from all over the world.
The effort that is put into constructing in-house HR departments can be tiring and often take a lengthy amount of time. All the time and resources that are put towards your in-house HR department can be used in better ways that grows your business. Outsourcing your HR team allows you to focus on the most important tasks for your business, ultimately prioritizing productivity. You should put all your energy towards growing your core business, not your HR department. Outsourcing employees allows you to focus on what’s important in your business strategy.
This disadvantage is applicable to all in-house employees, as you constantly run the risk of employees leaving. Whether employees leave suddenly or with a two-week notice, it can be stressful for a business to have to replace the talents they once had. When you outsource your HR department, you are able to entirely bypass the risk of employees resigning. When employees leave, their expertise also leaves with them. Outsourcing your HR department allows you to get exposure to reliable specialized expertise. You no longer have to worry about employees leaving suddenly and taking their expertise with them.
When you choose to hire in-house HR, you also run the risk of having a lack of compliance. HR employees need to be compliant with state and federal laws, as this is a huge portion of their job. In-house HR expertise may not always be up to date on the latest laws regarding state and federal regulations. Many businesses chose to outsource their HR departments to lower the risk of non-compliance. Companies who only outsource HR have a better understanding of updated laws as these employees are more experienced and are insured under their employer to comply with state and federal laws. A business who outsources their HR avoids the risk of lawsuits, as another company is strictly handling the human resources department. Having an outsourced HR department handle the compliance of regulations lessens the risk in your business strategy, as there is no source for potential lawsuits or financial compensation.