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Organizations prefer to outsource HR functions to gain a competitive edge and improve efficiency in an era of globalization and heightened competition. Essentially, this is the process where a third party is involved in a business operation as part of the practice. The act has grown in popularity and is now widespread in the 21st century. In the modern business environment, such as the healthcare sector, outsourcing is seen as one of the major forces promoting efficiency. While many managers are presently using outsourcing to save costs, streamline crucial activities and improve productivity, the process has been associated with information leaks and dependency or loss of control leading to poor performance of employees.
One significant advantage of outsourcing HR functions is the ability to lower operations costs. An effective method to reduce the administrative costs of running a healthcare organization is to outsource HR-related duties. According to Edvardsson and Óskarsson (2021), businesses that outsource HR tasks experience greater cost reductions in HR services, financial expenses, equipment purchases, and accounting. Essentially, these companies may focus more on cost-cutting and are more proactive in outsourcing than firms that do not contract HR.
Another advantage of outsourcing is the ability to streamline vital activities and increase productivity. Administrative staffs in many organizations, especially in the healthcare sector, have other crucial tasks to worry about other than HR functions. In essence, this was proven effective during the COVID-19 crisis when there was a need to reduce redundant roles. Human Resources Shared Service (HRSS) programs are growing even while companies struggle and cease operations owing to the pandemic (Sahoo & Goute, 2021). Generally, specialists would likely be better suited to handle the HR responsibilities. Therefore, designating duties to external parties can improve performance, reduce risks, and improve overall efficiency.
Outsourcing has been linked to some adverse outcomes besides the benefits. One disadvantage is that sensitive company information may be disclosed while outsourcing HR tasks. Essentially, this can be devastating in industries like healthcare because they deal with classified details. Security breaches pose a rising concern in healthcare, resulting in attacks on infrastructure and medical instruments, data loss, and financial fraud (Jalali & Kaiser, 2018). Generally, it is frequently required for a vendor to have access to classified data regarding a business’s operations, product details, or other internal workings for them to deliver better service. When giving confidential material to an outside organization, there is always a chance that it will leak, whether on purpose or accidentally.
Another common disadvantage of outsourcing is the over-dependency on the external partner leading to loss of control and eventually poor employee performance. Executives may cede too much influence over the firm’s human resource responsibilities after outsourcing to a supplier, or the company may become overly reliant on the outsourced service. Reliance on others increases the risk that the firm will not be able to function successfully. Organizations strive to concentrate on rare capabilities and prized resources that are challenging for rival businesses to copy in light of the growing worldwide competition (Edvardsson & Óskarsson, 2021). Therefore, focusing on these talents and keeping them in-house is advocated for businesses, whereas outsourcing makes sense for non-core, low-value-added personnel.
The legality and ethics surrounding background checks are controversial issues today. In my view, it is legitimate for employers to take a quick look at a candidate’s social media profile. It makes sense because HR managers need to know who is applying to work for the firm. One can learn more about a person’s personality and how they behave inside and outside the workplace by looking at their social media accounts.
In brief, outsourcing HR duties reduces expenses, streamlines essential tasks, and boosts output. Administrative staffs in many firms, particularly in the healthcare industry, have important obligations outside HR duties to accomplish. As a result, crucial resources are reassigned to other operations, lowering management costs. Despite the advantages, the approach has been linked to information breaches, dependency, or lack of control, which has caused employees to perform poorly.
References
Edvardsson, I. R., & Óskarsson, G. K. (2021). Outsourcing of human resources: The case of small- and medium-sized enterprises. Merits, 1(1), 5-15. Web.
Jalali, M. S., & Kaiser, J. P. (2018). Cybersecurity in hospitals: A systematic, organizational perspective. Journal of Medical Internet Research, 20(5). Web.
Sahoo, M. B., & Goute, A. K. (2021). Outsourcing HR shared services in the times of COVID: Role of technology and customer needs fulfillment. International Journal of Business and Economics, 6(1), 53-62. Web.
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