Influence of outsourcing human resource activities on organisational performance

The global economic challenges of resource limitations are increasing pressure on a firm's competitive advantage.

To compete in a business, a company requires finding robust ways to deal with this changing environment.

An organisation's progress depends on many factors such as productivity, cost efficiency, profitability, and successful strategic human resource management. In a dynamic environment, human resource outsourcing has become an essential tool for the strategic management of a company.

Outsourcing is a contractual affiliation for providing business services by an external provider.

Companies outsource human resource activities to get advantages such as lowering human resource costs, cultivating diversity of competencies, increasing capacity of flexibility, spreading and sharing risks to improve firm performance.

Human resource outsourcing searches for external expertise to functions and services that are not core to the organisation — organisational performance results from the services and or functions of the organisational goals. Outsourcing enables companies to focus their resources on core business activities to increase efficiency.

Corporate performance can be improved by human resource outsourcing implementation. Many companies outsource all or some human resource activities since they cannot let talent in all sectors of the operations in the organisation, either part-time or full-time.

HRM practices are outsourced in several activities such as payroll, benefits, recruitment, selection and training and development.

Human resource department often transfer recruitment and selection activities to an external provider.

The recruiting activities are advertising, job fair hosting, applicant tracking and some selection process such as extensive skill testing, organisation and background testing. It is an excellent way of acquiring talent.

Recruitment outsourcing is a vital aspect that directly affects organisation quality and performance. An organisation should hire the right people at the right time and at the right place so that employees can deliver their best performance.

Payroll processing might be the most often outsourced and transactionally repetitive human-resource-related human resource management job. 

Payroll is a process that contracts with an external business service to systemise all or part of the compensation activities for employee services. The activities include salary payments, wages, bonuses, and deductions from incomes.

The human resource department can get good service and lower costs from vendors because vendors often might have resources that the organisations might lack, such as advanced technology.

Payroll services have technologies that can enhance security.

Another activity the companies often outsource is training. Training is the act of increasing skills and knowledge of an employee for doing a particular job.

An organisation wants to outsource training to obtain new concepts and knowledge, and achieve "out of the box" thoughts by outsourcing.

The business can bring in cost savings by effective budget control with learning and successful employee skills when deciding to outsource its training function.

Outsourcing of training can give innovative knowledge and use high-quality technology. Organisations may achieve greater innovation and stakeholder performance, by outsourcing training by outside specialist groups, which tends to increase firm performance.

Firms must have a good relationship with the service provider when outsourcing HR activities; by doing this, the company will gain the maximum from those activities.

The organisation is aware of which areas they can do well; they take the capable employees for outsourcing, increasing performance and allowing the organisation to be more flexible. Increasing outsourcing can improve both the quality and the service.

The outsourcing of services of strategic value enables the company to decrease costs and improve its competitive position. Companies that make affiliation by trusting external sources have better results, decline risks, and enhance the quality ratio while increasing their capacity for innovation and flexibility.

Outsourcing enables a company to get the work done at a meager cost and much more efficient way.

As there is cost reduction, companies will be able to accomplish economies of scale, that an outsourcer can provide which would improve the organisational efficiency. Hence, cost efficiency had a positive impact on firm performance.  

The effects of outsourcing on productivity are broadening efficiency, job satisfaction for employees, returns, and the potential or value for enterprise output. Outsourcing results in increased productivity in organisation.

Bangladesh has been chosen as one of the best spots for IT outsourcing; there are many outsourcing jobs, including IT related, Data entry, graphics design, website development, and SEO. Digicon Technologies Ltd is a dominant outsourcing organisation in Bangladesh, with an industry-leading edge in the vertical of BPO and IT/ITES solutions.

It is a Business Process Outsourcing (BPO) company that assists its clients in saving costs by outsourcing some departments to Digicon Technologies Limited. Their clients are Grameenphone, Airtel, Transcom, and so on. By outsourcing, these companies can reduce their cost, increase efficiency, productivity, flexibility, and profitability.

In a nutshell, outsourcing enables companies to accomplish business objectives, add value and alleviate risk.

Firms should focus on human resource outsourcing as a strategy to increase organisational performance. Hence, an organisation must emphasize more on factors of human resource outsourcing that align with a strategic goal by focusing on human resource outsourcing.

Recruitment outsourcing, payroll management and training and development are all directly linked with organisational performance. Outsourcing human resource functions have an important role in the in enhancement of organisational performance in terms of cost efficiency, productivity and flexibility. Thus, the management should evidently understand and improve them to gain human resource outsourcing as a strategy.