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OUTSOURCING

HR management outsourcing, a good option for SMEs

SMEs usually find it very expensive to have a functional area committed to managing human resources. Resorting to outsourcing services and leaving the task to professional subject-matter experts can be an excellent strategy to fully focus on core business areas. 

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Published by ConnectAmericas

HIGHLIGHTS

  • There are different HR Management Outsourcing levels: full or partial
  • Fees vary greatly among services and among the different providers
  • Technological developments enable outsourcing to work at its best 

Personnel management responsibilities can be daunting for small and medium enterprise (SME) owners. They entail creating competitive benefits, complying with government regulations, ensuring proper organizational communication, managing payroll, hiring and training and development, among other things.

The Internet website Emprende PYME, describes the difference between SMEs and large companies in that the former generally do not have the required support to shoulder the costs involved in setting up and maintaining a Human Resources Department to undertake these tasks. These are frequently carried out by the owner who may not have either the time or experience to manage them more favorably.

As a result, SMEs are turning to an alternative consisting of outsourcing HR management responsibilities to companies experienced in providing these services. These providers rely on HR management professionals and offer a variety of support functions that free businessmen from having to absorb the cost of developing an area exclusively dedicated to this.

Options

According to CNN Expansión, the majority of small and medium enterprises, despite acknowledging the benefits of human resources outsourcing, are not taking full advantage of this opportunity. It is wrong to assume that only large companies require outsourcing services since SMEs generally have fewer resources to allocate to non-core business functions such as human resources management. 

There are also different levels of HR Management Outsourcing options that offer SMEs the flexibility of choosing an ideal level of coverage depending on the company’s needs and financial support. For example: 

  • Full: where all human resources functions are transferred to an outside company and the guidelines and priorities are designed in conjunction with the company’s directors. In general, this level of outsourcing is initially more expensive. However, freeing up resources for strategic business areas may generate more operational efficiency and profit throughout time. 
  • Partial: some of the company’s functions that the company cannot cover, or decides not to address due to strategic purposes, are delegated. For example, staff selection or training in certain areas. This option is usually more cost-effective and advisable for SMEs that would like to try outsourcing for the first time or that do not require integral management of all human resources functions.

Worth considering

SME Toolkit underscores that there are no clear price ranges with respect to human resources management. Fees vary greatly among services and the different providers. Aspects such as the number of employees, the level of outsourcing used and the geographical location will impact the total cost. 

Once price estimates are received from providers, they should be compared with the average salary and cost of maintaining a director and/or human resources staff inside the company. This way it will be easier to evaluate if it is worth outsourcing this function or not. 

To obtain specific benefits, a human resources strategy should be developed jointly, focusing on particular actions geared towards the mission and the corporate culture. It is also advisable to design systematic and measurable talent development processes together. 

Technological developments serve as excellent tools for outsourcing work in the best way possible. They enable permanent and fluid communication between you and the service provider. This ensures that the company and provider will work better as a team and have the same level of commitment as if they were part of the same organization.  

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