Why Outsourced Human Resources Functions Are Picking UpToday the human resource functions in enterprise level organizations have become quite vast and complex. So, most companies are therefore rapidly shifting towards outsourced human resources so as to save time. This lets them concentrate on their core business. Outsourcing the entire human resource function comes at a substantial cost to the management of a company. However, it translates into zero headaches for them in not having to manage and administer the human resources on their own. Outsourced human resources are generally supplied to an organization by professional employer organizations (PEOs). A PEO consists of an entire department full of HR (Human Resources) professionals. It provides professional quality management services in respect of the employees that are hired by an enterprise. So the so-called outsourced human resources enjoy a co-employment status with both their parent enterprise and the PEO which manages and administers them. The PEO provides productivity improvement services, employer liability management services, and administration relief to the management of an enterprise. For such a relationship to be realized, the PEO and the enterprise sign a service agreement that defines the compensation to the PEO. It also defines the details of the services that the PEO would be expected to provide in respect of the outsourced employees to the enterprise. As a result of the service agreement, the enterprise washes its hands off the administration, the management, and the contingent liabilities that the employees may otherwise have placed on the enterprise. In certain cases the liabilities portfolio may be shared between the PEO and the enterprise. This actually depends on the exact terms and conditions stipulated in the service agreement between the two parties. The PEO gets a service fee for providing HR administration and compliance services. The enterprise management clearly gains because it can then concentrate on the core areas of its business without having to simultaneously manage the cumbersome HR function. The employees continue to remain a part of the enterprise with their functioning still controlled by their bosses in the enterprise. However, their overall general administration and management is outsourced to the PEO executives. This is why they are known as outsourced human resources. Important fallout of the service agreement is that the management of the enterprise can use the time saved by outsourcing of the HR function in increasing the turnover and devoting to more important tasks. The outsourced employees are happy because their grievances are listened to by HR specialists of the PEO. The PEO gains in experience and are recompensed adequately by the fee governing the agreement. So all in all, outsourced human resources prove to be a win-all situation for all the three parties involved. It results in improving an enterprise's bottom line and also provides better benefits to its employees. |