Pros and cons of outsourcing Human Resource Managment Functions - Research Paper Example

Organizations turn to outsourcing to slash their operational costs and improve financial position. Human resource outsourcing aims at reducing expenses by relegating official work to countries that provide HRM services at the fraction of what a company will pay at its home base (Ivancevich, 2004). European and North American companies are the main proponents of HRM outsourcing as they face the biggest challenge of financial constraints and relatively high turnover rates, despite the increasing recession.

The top management finds it much easier to transfer the employee hiring and management duties to an outside vendor that might have its operational base in some other country or region. The basic function of a HRM vendor is to recruit and manage employees while freeing the client of this daunting task. The company can divert its attention to improving its financial performance or introducing new technology or working procedures, among other things. The less pressure on the client company over the management of employees and the associated financial burdens, thus, results in a better performance and greater efficiency (Mullins, 2007).

The critics of HRM outsourcing, however, opine that divesting the employee management system to an outsider vendor can damage the reputation of a company. Additionally, it can also result in a breach of privacy as the outside vendor can delve deeper into the company procedure and hand it over to a rival company. They also say that transferring the salary and other accounting system to an outsider company might pave way for financial embezzlement, among other things. The biggest advantage of HRM outsourcing is the relative financial improvement and increased efficiency of a company.

Human resource issues consume a lot of money, energy, and time of a company management as they get involved in the employees’ matters and waste their precious time that they can use in matters that are more useful. Along with the wastage of