The digitization era is creating multiple changes and opportunities across industries, and HR is no exception. One of the most popular practices these days is to outsource certain departments to achieve maximum benefit with minimal financial investment.

While outsourcing development or design teams is common practice, more and more companies have started to outsource HR as well. For a long time, HR has been associated with in-house processes only, but its outsourcing could bring numerous benefits.

The pros of outsourcing the HR department

The process of outsourcing your HR department has some hidden gems that many company owners may not be aware of. But as soon as you see the whole image, you might consider trying outsourcing as well.

Reduced costs

The HR department doesn’t create any visible products (like software developers do) but at the end of the day, it’s up to HR to maintain a healthy work atmosphere and find the best talent for the company.

Logically, any company that understands the value of HR would want to have a well-organized and large infrastructure of HR specialists at their disposal. Unfortunately, not many companies can afford that. This leads to one of the biggest benefits of outsourced HR – the availability at relatively low cost.

Because the services of part-time outsourced specialists can cost less than full-time in-house services, it allows business owners to save money while retaining a high quality of work.

Different perspectives

In-house HR specialists tend to get used to the people and processes in a company, potentially overlooking certain issues due to the lack of unique perspective.

Hiring outsourced HR specialists will help you get an outside perspective that brings a fresh look and non-biased angle. Eventually, you’ll want your specialists to onboard and get used to the team as well, but outsourced specialists can usually pinpoint certain problems with your company, suggest possible areas for improvement and help you look at processes differently. And if the company experiences stagnation or cannot reach any significant progress, this is a really actionable method to try.

Better expertise

Outsourced HR can come at a relatively low price, while not harming quality of service. Outsourcing HR to specialists can even increase the chances of finding knowledgeable experienced professionals, with rich expertise who can deliver tangible results to your company.

When you have an in-house department already, collaboration with outsourced specialists can fill gaps in your in-house expertise. If your in-house team lacks a certain skill, but you can’t justify a full-time employee, an outsourced specialist will save the day and resolve the issue.

Focus on core processes

By outsourcing HR processes, businesses, particularly startups and small businesses with a core team, will free up your employees from the people management busy-work that was no doubt getting done out of scope. Once you assign specialists to work with the documentation and other processes you didn’t even realize could help your entire team, you’ll find more time for other role-focused tasks.

Outsourced HR helps a company focus on  core processes and ensure the company moves in the right direction. With dozens of minor tasks, it’s easy to become overwhelmed and shift away from the main goal.

The cons of outsourcing the HR department

Even though outsourcing HR seems like a good idea so far, there are some red flags to look out for, and other items that could mean it’s not for you.

Lack of loyalty

Companies spend a fair amount of time on their internal PR strategy, ensuring that all employees share the company’s goals and are loyal to it. So it’s interesting how some HR specialists who promote loyalty and engagement may not be so loyal themselves.

In the case of outsourced specialists, get ready for a low level of loyalty towards the company. Such specialists are not paid for loving your brand – they are paid for fixing certain issues. Though it may be a problem for some company owners, for others it’s acceptable to sacrifice loyalty if a specialist can get your processes back on track.

Lack of knowledge about internal processes

Even if your outsourced HR specialist comes up with a brilliant strategy, if it isn’t applicable to your business and team model, it won’t help you at all.

Whereas in-house specialists know the ins and outs of your company, outsourced HR professionals may not have such in-depth knowledge. This can harm their efficiency and could introduce problems in the pipeline.

Risk of losing confidentiality

Every good company cares about the confidentiality of its employees and their personal data.

However, because a HR professional closely works with people, they might obtain sensitive data. When not handled carefully (although uncommon), it can create data leaks.

When choosing an outsourced HR department, be careful to ensure trustworthiness and have the proper documentation in place (ie. NDAs and other agreements).


Outsourcing your HR department can improve your operations, but first you should define your business goals, current issues, and expectations.

It may happen that you already have all the needed assets and tools at your disposal and do not need third-party assistance. Or it may happen that only a third-party intervention can set things right for your company.

About the Author: Jocelyn Pick