What Should You Hire In-house or Outsource Hiring Team Post COVID

Outsourcing HR services or employing a HR team has become a mainstream issue for the companies that are under cost pressures
  • BY Shantanu Saha

    Founder and CEO, The Recruiter

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  • Jun 16,2020
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  • 14 Mins Read

In the changing times, corporations work through cost-reducing approaches. It can be seen from how a company functions, from trimming down production expenses to hiring the outsourcing services. In the HR context, the decision to make or buy is a critical management resolve. Outsourcing HR services or employing a HR team has become a mainstream issue for the companies that are under cost pressures. 

Companies that are working on low-cost projects outsourcing is a preferable option, while large-sized organisations can employ HR teams. To comprehend the needs of the company, it is vital to know the difference between outsourcing and internal hiring HR teams, and accordingly take a move. 

  1. Outsourcing gives access to specialists in a particular area who have economies of scale. For example, if a company’s hiring needs are intermittent or maybe at times like the current situation, is diminished to replacement hiring. In this case, the company will end up paying costs of an in-house hiring team and have an additional task of keeping them motivated. To utilize the internal hiring team gainfully when it is not needed for the hiring process, then the company may try to use it in other areas wherein the team is either not trained or come at a higher cost.
  2. Smaller organizations with less than 100 people need not build a full-fledged HR team but can hire a virtual Chief human resources officer (CHRO). They can also outsource almost every HR activity easily and get the best in class HR services. The CHRO can give the actual HR advice needed or help create HR systems and processes as needed. Such an organization, if it tries to hire a full-time HR Head will only attract someone junior as the scale of operations would not attract a senior person with in-depth experience. The employed junior HR Head will also not have much work in a small organization to be fully occupied, but would try to justify his salary by cost-cutting in areas that may not be beneficial for the organization in the long run.
  3. There is a crucial difference between a line function and a staff function. An outsourced HR team or a virtual CHRO performs a revenue-generating role for an organization and will be evaluated on several metrics. They will be forced to give an optimal performance so that the organization continues to get the business. while a staff function, a person working in an in-house hiring team does not directly generate revenue and may not get evaluated in terms of costs saved or any other hiring metrics. If the performance of the person or team dips, then the company will find it hard to sack them as it would have a demotivating effect on all employees. A vendor, on the other hand, can be easily changed or removed for non-performance. The vendor would not want his performance to fall as he wants to renew his contract with the firm.
  4. As things will certainly move virtual and online in the post Covid-19 world, another argument that used to be given is no longer valid. The argument in favor of having one’s own team of permanent employees that can be present in the office premises on all working days. Assessing the present situation, working professionals, as well as companies, are getting used to online video consultations and remote working, so a remote vendor is not only effective but will also help the company save on office space.
  5. An external vendor is also perceived by most employees as neutral and unbiased, unlike internal teams that build relationships with their colleagues and might have inherent biases because of those bonds. This is very helpful for HR role while performing many tasks like appraisals, designing incentive plans, conducting employee satisfaction surveys, doing exit interviews, etc.
  6. An external hiring vendor can not only give a company benchmarking data of the market but can also pick candidates or headhunt from its competitors. This is a tricky area and considered unethical when done directly by the HR team of the company.
  7. Another thing when an employee leaves a recruitment firm to join a corporate, he mostly expects that the corporate role will have less pressure vis-a-vis revenue targets as in the recruitment firm where he gets evaluated constantly on ROI. Also, it is only in a recruitment firm where one sharpens one’s headhunting skills, so if an individual has worked only in a corporate then he would rarely be good at sourcing.

In the end, it is recommended for firms to keep a balance between both in-house and external vendors and not completely tilt towards one. Each firm has its own individual needs for HR and hiring which their business heads can comprehend better, provided they keep the above factors in mind, and use it as a checklist.

The article is published by Shantanu Saha, Founder and CEO, The Recruiter
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