Human Resource OutSourcing: Benefits & Challenges

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Outsourcing generally is a fast growing business practice worldwide with many government institutions and companies in diverse industries using business process outsourcing services, because of its enormous economic and financial benefits.  
It has been variously defined, viewing it from different perspectives. 
It is a strategy that profits company’s bottom-line. Nigerian Breweries Plc, GTBank Plc, Lafarge Plc, Coca-Cola, Mobil Producing Nigeria and others too numerous to mention are all in different ways involved, recognising the great benefits. Some of these outsourced their power supply.
Outsourcing is the delegation to an external organization of the performance and management of  operations or entire processes that are not fundamental for the clients and are not directly related  to their main market activities.
In other words, it is the business practice of hiring people/ services outside a company, to perform services that traditionally were performed within the company – the contract or subcontracting of none core activities to free up cash, personnel, time. The external service
provider performs and manages a specific business function, while simultaneously contributing to  its development and improvement.  
Examples of frequently outsourced services include HR, Payroll Processing, Power & Electricity, Accounting, Information Systems Maintenance and Support, Training, Fleet Maintenance,
Building Maintenance, etc.  
Many organisations, especially in the banking and Manufacturing sectors, outsource certain categories of staff. I was privileged to manage outsourced staff (Direct Marketing Representation, Customer Service Officers, Tellers, Admin Officers, Cleaners, Drivers, Front Desk Officers,
Clerical Officer etc) for top banks in the pre-consolidation era. This seriously exposed me to the benefits and challenges inherent in Outsourcing.
To be engaged in Outsourcing services, more especially in HR, there are legal requirements – registration with Ministry of Labour and Productivity and other regulatory authorities but I must state here that there have been lapses in its management from government angle. It should be understand that in some climes, non members of the professional outsourcing body are not licensed or allowed to practise as it is susceptible to abuse.

I must tell you that this has been the bane of our society where in many situations organisations in connivance with the outsourcing parties do not keep to the terms of engagement, leading to fracas between the parties involved. In some cases it has led to legal tussle, company picketing by labour etc.

If outsourcing is well managed the benefits are unquantifiable.

 • Allows organisations spend more time concentrating on core business processes.
• Gives company access to professional, expert and high-quality services.
• Enable organisations experience increased efficiency and productivity in non-core business processes.
• Lets company streamline their business operations.
• Helps Company save time, effort, manpower, operating and training costs, thereby giving her overall cost advantage.
• Increase flexibility to meet changing business and commercial conditions  
• Experience increased control of Company business.
• Saves Company on investing in latest technology, software and infrastructure and enables the external contractor handle the entire infrastructure.
• Give organizations the assurance that her business processes are being carried out efficiently, proficiently and within a fast turnaround time.
• There is always buffer to draw up from in cases of emergencies                                          
• Offshoring can help organizations save on capital expenditures.
• Company can save on team management problems as her offshore partner will be managing the team who does her work.
• Enables the company cater for the new and challenging demands of her customers. 
• Free up the cash-flow of the company.
• Share her business risks.
• Give the Company business a competitive advantage – increase productivity in all the  areas of her business.
• Can help organization cut its operational costs by a high percentage  
Outsourcing is not without her challenges.

• Does not give the outsourced employee the required confidence to stay on the job for long as they feel inferior                                                    
• The rate of labour turnover is high as there is no job security for employees                                         
• Exposure of confidential information to outsourcing partners could be a security threat to the business;
• Company might find it difficult to manage the offshore labour provider when compared to managing processes within your organization.
• It can create potential redundancies for organization and employees might express lack of interest or  lack of quality at work.
• Outsourcing staff provider might be catering for the needs of several companies and may not be able to give 100% attention.
• Outsourcing, though cost-effective, might have hidden costs, such as the legal costs incurred while signing a contract between companies.
• You might also have to spend a lot of time and effort in getting the contract signed.
• Organization might suffer from lack of customer focus.
• There can be several other disadvantages, such as, renewing contracts, misunderstanding of the contract, lack of communication, poor quality and delayed services amongst others.
Irrespective of the above challenges and shortcomings of OutSourcing, the benefits are out-weighting.

You are advised, before venturing into outsourcing as a Company, there is need to consult an expert.

Human Resource OutSourcing: Benefits & Challenges
Contributed by Agolo Uzorka Eugene, CEO/ Lead Consultant, Eugene + George Consulting Limited

Agolo Uzorka
the authorAgolo Uzorka

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