HR outsourcing

Outsourcing to an external provider can offer benefits, such as increased efficiency and access to expertise. But it can also present challenges, such as loss of in-house knowledge and processes, and fragmented HR services. Payroll is the most commonly outsourced HR activity, followed by providing advice on specialist topics.

This factsheet introduces HR outsourcing and its use by organisations. It outlines some of the alternatives to outsourcing, such as shared services, employee self-service, and buying-in consultancy services. It highlights the need to consider the business case, and the questions to ask, when deciding whether outsourcing is appropriate. Finally, the factsheet offers guidance on selecting a provider and what to consider when managing the move from in-house to a third-party service.