Advantages And Disadvantages Of HR Outsourcing

The advantages and disadvantages of HR outsourcing are usually argued on cost. The more useful frame is which parts can genuinely be handed over and which cannot.

Transfers well. Payroll processing, award interpretation, recruitment administration, contract templates and policy drafting. Specialist, rules-based and improved by scale.

Transfers badly. Anything requiring knowledge of your people. Performance conversations, complaint handling, culture, and the judgement calls that depend on knowing the history.

Does not transfer at all. The legal responsibility. An employer remains responsible for record-keeping, correct payment and its duties to workers regardless of who processes it. Outsourcing moves the work, not the obligation.

That last point is the one organisations discover late, usually at the moment a provider’s error turns out to be their own liability with the regulator.

The Fair Work Ombudsman covers employer obligations. This is general information rather than legal advice, and obligations vary by state and territory.

See Sentrient’s HR management system and records management software.