21 of February, 2025

Is human resources outsourcing necessary? This is a common question in all types of companies.

And responding is not always straightforward, although we will try to answer it as best as possible. After all, the outsourcing of the HR department will be a strategic decision.

This is not something that we can leave to chance, as it plays a critical role in the success of the company. Before making a decision in one way or another, one must analyze the pros and cons of HR outsourcing.

What benefits does it have for the organization? What issues could arise from outsourcing this department?

What is human resources outsourcing

Human resources outsourcing is a practice that consists of commissioning HR management to a third-party. This allows the company to rid itself of some functions that might partially hinder its performance. When the organization needs their services, it turns to the external company.

Imagine that you need to hire three workers. They must meet certain requirements, but you don’t want to handle the process, or the company doesn’t have the capability to do so.

If you’ve outsourced the HR area, you go to the other company to carry out the recruitment and staff selection process.

Thus, you provide all the information and requirements, searched for profile and qualities. The other company activates its machinery and presents the candidates to you.

In this case, the candidates won’t have direct contact with anyone from your company. And the organization focuses on other areas, delegating the HR functions.

What HR outsourcing offers

There are several reasons to opt for HR outsourcing.

Furthermore, the HR area’s outsourcing can occur in companies of any size. It’s not something exclusive to SMEs without a specific HR team, it can also occur in large companies.

It’s advisable in these cases:

Human resources tasks are developed by workers from other company departments.
The business structure isn’t large enough to have a human resources team.
We invest a lot of time in HR tasks, but we don’t get any benefit or value from it.
The organization doesn’t have resources to hire new employees or cover the cost of a human resources team.
We have an HR area, but it doesn’t have enough personnel or capacity to fulfill the different tasks.
We’ve had trials, lawsuits, labor inspections or similar problems for not complying with labor laws.

Often, the final decision depends on the business model and the situation the organization is experiencing.

The goal should be to maximize ROI in human capital, optimize internal processes to achieve business objectives. It also partly depends on the problems the organization may have.

A final case where HR outsourcing is advisable would be the hiring of technical profiles in high demand. These are very specialized profiles that are hard to find. We can’t always get them, and we turn to external companies. This is a common issue in the tech sector.

What HR area outsourcing is used for

Many concerns can lead us to consider this measure as a highly favorable point for the company’s interests. It can be due to both economic and management reasons.

Perhaps we are allocating significant economic resources to carry out all these tasks, and thanks to outsourcing we achieve higher effectiveness at a much more adjusted cost.

If we take the example of staff selection, we may not have the necessary skills to know how to choose the ideal candidates for a job, so the investment of time and resources may not be worth anything.

Often, good intentions are not enough to carry out some tasks, specific knowledge is needed to help us work much more efficiently. Outsourcing may be the solution your company needs.

You’re likely identifying with some of these situations. As you know, this management system is often necessary in many cases, as it results in significant savings in managing certain aspects of the HR department.

These are some of the functions that we can manage externally thanks to the outsourcing service.

Open recruitment and staff selection processes.
Set everything related to occupational risk prevention.
Ensure compliance with labor legality.
Payroll management.
Attend to worker incidents.
Manage the work climate, as well as training.
Establish plans aimed at motivation and wellness.

Outsourcing of human resources: when it’s NOT advisable

Common sense leads us to think that we will avoid HR area outsourcing when the company can handle it.

And also does it efficiently and profitably.

But even if you opt for HR outsourcing, there are HR functions that should not be outsourced:

Resolution of internal conflicts
Support to the worker in difficult times
Employee care: knowing their needs
Decisions on the future of workers
Development of the corporate culture and engagement

For this reason, it’s advisable to have an HR manager in the company. Matters such as allowing a talented worker to leave the company without trying to retain them cannot be left in the hands of third parties. There should always be someone dealing with the human side of HR.

Don’t forget that some HR functions require interaction between people. The total outsourcing of human resources will hinder this task.

Pros and cons of HR outsourcing

As we mentioned earlier, before taking the step, we will have to evaluate the pros and cons of HR outsourcing.

We’ve already mentioned that it can be a significant resource for the organization. But it also has some risks, and that must be considered.

Among the main benefits of outsourcing HR are the reduction of HR costs or time-saving. This way, we can focus on valuable tasks.

It also provides access to more specialized profiles. Not to mention that it ensures compliance with legal obligations, something that’s not always easy.

But outsourcing HR functions also has its disadvantages. Among the most striking are the loss of control and flexibility.

In many companies, the HR team is the heart of the organization. If we leave these tasks in the hands of a third-party, we lose control and feel constrained.

The fact of leaving human resources in the hands of a third-party can also bring changes in corporate culture. The company can lose part of its essence, what made it attractive.

There’s usually a difference in visions between the company and the HR provider, something that’s not always easy to manage.

An excellent alternative to HR outsourcing is a HR software like Sesame HR. Discover on our blog the different functions that will help you manage your company’s HR.

How to apply outsourcing in your company

At Sesame HR, we understand that there’s not just one method on how to apply outsourcing in your company. But if there’s one thing we’re sure of, the first step is a deep analysis of the current situation.

This will determine whether the entire HR department should operate through outsourcing or not or just parts of it. Also, this analysis should provide an answer, is it possible to outsource the service? What will its economic cost be?

Human resources software as an alternative to outsourcing

Our software provides everything necessary for this task to be executed according to the real needs of the company, without having to worry about much more.

Similarly, the versatility of this system allows us to adapt it conveniently, avoiding complicated management or high consumption of human resources.

We offer any company a software that is characterized by its versatility, capable of integrating very diverse aspects into a single application.

How can a software help you?

At Sesame HR, we’ve divided the software into three main groups:

Employee management.
Talent and culture.
Time management.

All of them meet the usual requirements of any company, regardless of its size. In this way, we can offer a suitable, versatile, useful service that allows us to work much more comfortably.

Efficiency is the predominant tone. Centralizing all services in a single platform results in significant savings in resources and money.

The prelim analysis before resorting to an outsourcing solution will provide the necessary data to estimate whether its use is advisable.

There’s no doubt that more and more companies are outsourcing HR management to achieve greater efficiency, better management and considerable cost savings.

If HR management of your company has become burdensome, hard to handle and costly, applying outsourcing is one of the necessary measures to turn the situation in our favor.

This article has surely given you more insight into a service highly demanded by companies of any size. Ensuring that human resources management is much more effective often means outsourcing it.

Outsourcing provides countless advantages and is a key factor to start working in a different, much more efficient and economical way.

Don’t know how to apply outsourcing in your company? At Sesame HR we invite you to try our human resources software and explore everything it can do for the management of your company or business.

Professional with over 20 years of extensive experience in various areas of Human Resources (Recruitment, Training, Occupational Risk Prevention, and Personnel Management). Experience in the Management Department: Broad understanding of the company and HR.

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cristinamartin

HR Content Specialist

When is (and isn’t) outsourcing human resources advisable