In-house vs. Outsourced HR

The two available HR options for organisations are to have their own in-house HR team or to outsource it to an external provider. Each of those choices has its pros and cons and we will look at them in this blog, to help you decide which is right for your organisation.

In-house HR

Pros

Dedicated focus

If you have your own internal HR team, it will be focused solely on your company. You will also have complete control and oversight of its processes and of any decisions that it makes.

Culture building

An in-house HR team will already be immersed in the culture and values of the organisation. That can make it easier for them to explain these to new employees and build that culture throughout the organisation.

Strategic integration

It will be easier to integrate an in-house HR department into the strategic aims of the organisation. This is because it will already be familiar with that organisation’s culture. That can lead to a more unified approach, which is vital if you want to succeed in growing your business.

Cons

Higher costs

An in-house HR approach will produce higher fixed costs for an organisation. It will mean employing staff on full-time salaries and also providing a benefits package for them. You will have to think about pay rises too. Then there is the additional cost of office space for the HR team.

Resource limitations

Most in-house HR teams lack the depth and breadth of expertise offered by outsourced consultancies. This can leave an organisation without the necessary resources to deal with complex disputes or obscure areas of employment law. That can ultimately be costly in terms of employee retention.

Risk

The comparative lack of expertise offered by the majority of internal HR teams means that an organisation is exposed to greater risk. Mistakes in areas of compliance can be very expensive for an organisation – as well as leading to reputational damage.

Outsourced HR

Pros

Cost-effective

Outsourcing all HR responsibilities can be the more cost-effective option – especially for smaller companies. This is because it means that the salaries and benefits for the HR staff are paid by the consultancy not by your business. It also allows companies to use smaller premises, as they do not have to house an HR department on-site.

Expert access

Outsourcing to a consultancy means that a company gets access to expertise on a variety of HR issues. From employee relationship management to complex legal compliance matters, these consultancies have staff who know all there is to know.

Continuous coverage

With outsourced HR, your coverage will be continuous. This is down to the fact that you do not need to worry about gaps during periods when your own HR staff are on leave or off work due to illness. That reduces the overall risk for the company.

Cons

Potential for less integration

There is the possibility that an outsourced HR team will be less integrated into the culture of the company than an in-house one. This has the potential to make it harder for them to find employees who are a good culture fit during the recruitment process.

Data security concerns

Using an outsourced HR consultancy will mean that some sensitive company data is stored in external locations and on external systems. Because of this, the company has less oversight and control of that data, which can result in concerns about its security.

Limited in scope

In some cases, the services a company gets from an outsourced HR provider can be more limited in scope than from an in-house one. In the majority of cases though, providers will have more than one package available. These can range from simple HR admin to a full suite.

Which is right for your business?

There are pluses and minuses with either option; so which will be the right one for your business is likely to depend on the size of it. If you have a large company with more than 100 employees, you will probably be best with in-house HR. Your budget should be enough to cover the overheads.

If you are running a small or medium-sized firm, outsourcing will be more cost-effective.

For comprehensive outsourced HR services in Hertfordshire, contact FiveRivers Consulting right away.