William R. Tracey, in the Human Resources Glossary defines HR as. “The people who staff and operate an organization, as contrasted with the financial and material resources of an organization…the organization that deals with the people.” Businesses that don’t have the staff, the money and the knowledge to deal with the HR management resort to HR outsourcing. It is a wild decision to make on which function to assign and which provider to choose.

A business may need to outsource a few or all of its HR related tasks to one or more providers as the case may arise.

HR Outsourcing Services can be basically categorized into 4.

1. PEO(Professional Employer Organization) -provides outsourcing of payroll, workers’ compensation, human resources and employee benefits administration. It does this by hiring a client company’s employees, thus becoming their employer of record. It then leases them back under contract to the original employer. This practice is known as co-employment, employee leasing, or staff leasing.
2. BPO (Business Process Outsourcing) – refers to all fields of outsourcing but when dealing with specific HR work, BPO services are the ones that would make a company’s business adapt with the latest technology.
3. ASP (Application Service Provider) – an organization or company that manages and provides software based services and solutions. ASP is an outsource service for all the IT requirements of a business.
4. E-services – this means the over-all services on the internet which include e-commerce transaction which handles online orders, application hosting by ASPs remote bulk printing which may be done at a website, and other processes obtainable on the internet.

HR outsourcing services can meet your company’s HR requirements. A specialized HR department sees the welfare of the employees of a company and sometimes costs a great deal, so outsourcing is the best solution.

Here are 5 basic advantages of HR Outsourcing:

• You can save money and be free of complicated obligations that go with a Human Resource Department.
• When your business undergoes rapid growth, expanding can cause you greater need for both human and financial resources. Outsourcing those activities which are important can let you focus on core business goals and save time.
• You can choose to look for the HR outsourcing provider for the service and quality that fits your company. They have expert employees to serve your needs who may have greater knowledge than your in house staff.
• HR outsourcing helps promote satisfaction and retention for employees and employers alike.
• HR outsourcing can help develop skills among in house employees through the project that will bring in people from the service provider who are skilled in the HR services outsourced.

HR outsourcing poses a significant change in a business organization. A well managed transition from in house HR to HR outsourcing is necessary to avoid harming relationships among staff, managers and other employees who will likely be affected with the outsourcing process.