As businesses continue to reduce costs, now may be the time to consider outsourcing your human resources (HR) function, or part of it. What are the pros and cons of outsourcing and how can you insure good service?

The HR outsourcing revolution began in the mid-1990s and involves transferring either all or part of your internal HR function to a third party. Companies, both large and small, outsource a wide variety of functions including payroll, human resources, legal HR and recruitment. Activities that require special expertise or regulatory and legal knowledge are good considerations for outsourcing.

Your business may not be able to afford a human resources director or manager, an employment law expert, a payroll and benefits specialist and a recruitment and training function. Therefore outsourcing can deliver immediate cost and time savings. As an employer, you will have access to the full complement of extended HR services and this can improve employee relations and productivity, reduce conflict and protect against employee attrition. However, choosing the right supplier is essential, and access to and availability of services are equally important. Confidentiality is imperative as information can be sensitive.

Employers should detail their requirement, examine suppliers in detail and extend the tender to at least three suppliers, seeking references. Employers should ensure any supplier has the skills to meet your requirements. An accreditation to the Chartered Institute of Personnel and Development is also important. Request a trial period where appropriate.

If you sign a retainer, often based on a yearly or monthly fee, get legal advice on the agreement, in particular the term and termination clauses. It is also important to detail a solid service level agreement and document your expectations over three, six and 12 months. The best way to ensure optimum delivery is to have a strategy rooted to your requirement and expectations. Employers should also ensure a good rapport with a key contact person, in case of emergency.

HR outsourcing should be incremental to avoid any transition problems, and good communication on the decision is required with employees and management alike. Engagement and understanding from your workforce is crucial.

Oisín Scollard is a Barrister and Director of Employment Clinic

www.employmentclinic.ie