One might think that the practice of outsourcing would necessarily limit the need for Human Resources, as outsourced work does not involve the same personnel concerns as regular employees. However, the procurement of outsourced labor, management of vendors, and workforce optimization concerns have instead become part of the auspices of the HR department. The management trend of studying workforce and labor cost optimization has, in many cases, strengthened the business case for the development of a strategic HR function.
Additionally, the management level functions of Human Resources have undergone a transformation from an administrative to strategic function. More outside consulting firms and contractors are entering executive and/or specialized HR practices because of this increased demand for business knowledge and sophisticated data analysis. Outsourcing, in this respect, is not only many times managed by HR, but is itself effecting the HR practice.
The practice of outsourcing is when a business hires contractors from outside of their organization to handle tasks or jobs for the company. This is usually done for one of two reasons: the expertise required for the job or task is not available within the company, or the economics of the job or task make contracting outside the company a better financial decision. Outsourcing is being increasingly used by many organizations in the technology age, as many tasks can be handled online through the management of virtual teams.
To think about outsourcing in its most basic function, we can consider a common practice: one of the most traditional and most used outsourcing methods is having a cleaning service to handle the cleaning of a brick and mortar building for a business rather than employing someone full-time for this type of responsibility. Other examples that are not new include uniform cleaning, maintaining office and restroom supplies. The practice in recent years of hiring IT companies to handle technological and development projects is a natural extension of this common business practice. Outsourcing has simply moved further up the competency/skill food-chain in recent years.
With the rapid increase in the online availability of outsourcing options, the practice is growing. This allows companies to stay lean while expanding their capabilities. Because the outsourced hire is not a company employee, Human Resources concerns such as benefits and employment law compliance is reduced, leaving only the cost of the labor to be considered. Examples of jobs that are becoming more popular to hire out include bookkeeping, development of written materials such as training manuals or white papers, website creation and maintenance, training, employee motivation, compliance, and HR itself. This trend is growing also because of the rising popularity of self-employment or working from home by individuals or small groups.
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