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This article examines the outsourced Human Resources benefits , as well as potential pitfalls and ways to mitigate them.

outsourced human resources

Reduced Costs

Not all organisations are in the financial position to employ an HR department.  Outsourcing to an HR provider will avoid such costs, as well as reducing costs that might be incurred from approaching HR management in a less than effective manner, based on not having the specialised knowledge.

Increased efficiency, flexibility, and speed

Specialist HR providers have the knowledge and experience to be flexible to your specific needs – a level of flexibility not available when following a rulebook with little applied HR knowledge.  HR problems are often time-sensitive, and there may not be time available to research resolutions in a book or an HR guidance website, and even then, the information won’t be tailored to your situation.  An HR provider offers speedier responses and actions necessary for such cases.  This frees you up to focus on the strategic operations of your organisation

Access to expert HR processes and IT systems

Organisations specialising exclusively in HR provision will have access to expert HR processes and supporting HR IT systems, often unavailable to those outside of the HR industry.

Reduced risk

Outsourcing to an HR provider will reduce the risk of making mistakes in managing the function yourself. Employment law carries some finer points that can easily trip up a business owner without specialist knowledge.  An HR provider can ensure the law is followed and all processes accurate, giving you peace of mind in knowing that your organisation won’t be prone to inadvertent errors, particularly when now faced with operating under unprecedented pressure.

Potential Pitfalls and How To Manage Them

outsourced human resources

Outsourcing what you don't understand

The risk with outsourcing functions you don’t understand is that your HR provider may not provide you with a solution ideally suited to your company or perspective. Having limited HR knowledge means you may not see this coming.  To mitigate this risk, employ the services of an HR provider who is willing to work with you, not just for  You should not employ an HR provider with the intention of simply dumping your HR workload upon them – it should be a two-way agreement, where solutions are created through discussion and collaboration, not just delivered to you without your input.

Becoming complacent after handing over responsibility

Employing the services of an HR provider may give you the subconscious (or conscious!) feeling that you are absolved of some level of responsibility with regards to people management. In fact, you are still responsible for the overall provision of HR services and management of your people.  The ultimate responsibility comes back to you, not your HR provider.  To mitigate the risk of becoming complacent, feeling that everything is taken care of in the hands of your HR provider, it is key to remember that they aren’t only there to solve people problems – they are also there to provide advice, guidance, documentation, and legal support.  Use their services as part of your overall business strategy, not just when you need to get out of trouble.

Having little knowledge of what is going on

There is the risk, when using an HR provider, that there will be some loss of knowledge of the day-to-day HR functions and processes for the business owner. Indeed, some business owners hesitate in considering an HR provider, for fear that they may lose some control over their operations, with all the knowledge, processes and systems becoming the property of the provider. To mitigate this, again, make sure you are working with the HR provider, and not simply paying them to work for  Make decisions and formulate action plans in collaboration, and ensure you stay abreast of developments at every step – you could proactively do this or request your HR provider keeps you updated.


With the continuing pressure to seriously tighten up business processes and procedures, health & safety, and people management practices, to accommodate the likelihood of unforeseen scenarios and that the effects of Covid-19 will be with us for some time, outsourcing your HR function to trained professionals who can help develop and support your strategies may be a great place to start.

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