Disadvantages or risks in HRM outsourcing

When there is a decision to be made on outsourcing by managers, there is necessity to retain the required skills for fulfilling the role of intelligent customer and also of vendor-manager. This is required to ensure an exit with fewer costs involved in case the arrangement with outsourcing does not work. But this necessity is often overlooked.

The following points can be drawn with outsourcing of Information systems.

Ø      Degradation or loss of services available internally.

Ø      Control loss.

Ø      Issues with corporate security.

Ø      Qualifications of personnel brought from outside.

Ø      Negative effect on the morale of the employee.

There are serious doubts expressed on outsourcing regarding the quality of services it provides to users as it is driven by a motto of cost reduction. Also differences in HR requirements as required by various strategies can imply changing needs for outsourcing of HR. The questions which arise for these points are how outsourced HR functions can be linked to organisational strategy and what criteria is to be used for measuring the skill of service supplier of HR.

In outsourcing of HR, quality control is difficult as the process involved is external. When a process is internal, tools to improve quality can be applied by the company. By receiving a solution or product that is off-the-shelf, there can be problems relating to its quality. Also the flexibility of a company decreases when it depends on its suppliers through outsourcing.

With HR outsourcing, there can be loss of commitment and trust on the part of the staff. Staff can be affected by survival syndrome which is an outcome of delayering. This can lead to increase in staff turnover and significant decrease in productivity. Some researchers believe that outsourcing of HR is a fad and will go to a greater extent as is predicted. They feel that it is not wise to let a vendor take decisions on important tasks like payroll and feel that a person with the company can do such tasks well compared to an external source

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