What is human resource outsourcing? | HR Glossary by Leena AI

Glossary/H/Human Resource Outsourcing

What is human resource outsourcing?

Human resource outsourcing (HRO) allows an external provider to take up the responsibility of various HR functions. It is a cost-saving practice that lets organizations free up their HR professionals’ time so they can concentrate on lesser mundane tasks.

There are several different HRO models. Organizations can choose to outsource a particular HR function or outsource all the functions of the HR department.

Not to be confused with:

Human resource consulting

Human resource consulting is the process of seeking advice from a third-party expert to optimize the efficiency of HR operations within an organization.

PEO

A PEO is a type of human resource outsourcing often used by small and medium-sized companies. A PEO ...

Not to be confused with:

Human resource consulting

Human resource consulting is the process of seeking advice from a third-party expert to optimize the efficiency of HR operations within an organization.

PEO

A PEO is a type of human resource outsourcing often used by small and medium-sized companies. A PEO ...

Human resource consulting

Human resource consulting is the process of seeking advice from a third-party expert to optimize the efficiency of HR operations within an organization.

PEO

A PEO is a type of human resource outsourcing often used by small and medium-sized companies. A PEO ...

Human resource consulting

Human resource consulting is the process of seeking advice from a third-party expert to optimize the efficiency of HR operations within an organization.

PEO

A PEO is a type of human resource outsourcing often used by small and medium-sized companies. A PEO ...

Human resource consulting is the process of seeking advice from a third-party expert to optimize the efficiency of HR operations within an organization. This may or may not include implementing new policies and procedures that HR consultants recommend. In contrast to HRO, human resource consulting does not involve the outsourcing of any HR processes and also does not free up HR professionals’ time.

PEO or a professional employer organization offers to take over certain HR processes or a group of processes, such as worker’s compensation, payroll, and recruiting. PEO becomes a co-employer with the client organization, remains the employer on record, and shares employment responsibilities with the client organization. Unlike HRO, PEO is not a purely outsourcing-based model.

Do you need to go for HRO?

While every organization will need to make specific assessments before they go for an HRO, you should consider outsourcing your HR functions if:

It expands your bandwidth to help focus on your core processes

It ensures both direct and indirect cost savings.

It allows you to look beyond internal processes and meet the business goals.

It ascertains compliance with legal, regulatory and best practice conditions.

The present staff has inadequate experience or expertise in a particular HR function.