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Many organizations outsource some of its functions to maintain its operational cost and business excellence; what are the advantages and disadvantages of outsourcing the HR and Finance function for a recently established small and medium enterprises?
finance and HR are two very important functions within the organization.
i would build everything in house.
when in house you can control your future as you already know what your need and know what direction you need to take.
my answer,will not outsource these two departments.
If you have your own HR department in SME then you need not to outsource its HR & Finance function initially with the number of employees less than100.
If the company does believe in financial control and cost savings it would not outsource it rather will try to expand it self with a full fledged HR department because a company should have all departments functioning and when outsourcing becomes a tedious job where its chaotic to handle so many recruitments and also handle every thing related to HR then some companies tend to outsource recruiting part , now days it common with IT giants all over the world
For small enterprise its not viable to outsource key functions of the organisation . It will be prudent that organisation have these departments under its control. Outsourcing requires lot of money it wont be good option. Finance is life blood of any organisation so management should have complete control over it.
For HR SMEs other option is to utlise the services of recruitment consultants as they can have potential candidates from large territory.
For economic reasons I would try to keep HR and Finance in-house as a SME. On the other hand, if we as an organization lack the professionalism or technical expertise to compete for lucrative contracts and expand business, I would then consider outsourcing to proven professionals as an investment.
No because small Almnchaet and institutions, the employer is the role of administration and human resources management for small enterprise and intolerances to a large number of employment.
There are various reasons for outsourcing; let management to assess the need based on several factors such as:
1. Improved and professional quality services (like detail analysis, talent acquisition, OD, etc).
2. Cost effectiveness (using Risk based approach).
3. Data confidentiality and sharing of customer information with Third party vendors.
4. Local regulations about outsourcing.
5. Does it provide a long term solution.
As most of our fellow Bayt members have mentioned here, Finance and Hr are critically important Departments in any Organization (big or small).
I would personally not outsource all functions of the HR or Finance Department since many decisions made by these departments can spell success or failure for a Company.
However if there are certain tasks like shortlisting suitable candidates (conducted by an outsourced team) for final interviews (by the internal HR Department), then yes I would be willing to outsource certain non critical tasks to an outsource agency.
Generally, outsourcing is successful if it is managed effectively. Outsourcers should be able to specify exactly what is outsourced and how to measure its success. For that to take place, the outcourcer must possess the expertise to manage the process.
Based on my experience, small & medium compnaies are better off hiring thier own staff and use consultants to thier management team to develop thier processes and staff.
As far as finance is concerned, all companies are required to have a leagal accountant and he/she could be the management consultants for small & medium companies.
As we know Finance plays important role to propose a solution for specific HR related problem. Cost – benefit analysis will be considered to evaluate the effectiveness of that problem, and no one is more expertise than Finance in an organization. HR is supportive to determine the problem with HR view only.
