Common HR Outsourcing Challenges and Their Solutions

HR plays a pivotal role in determining the success of any organization. From hiring the right team members to coming up with relevant policies and activities to ensure employees’ well-being, HR has essential duties to take care of. However, since HR outsourcing duties can be complicated and time-taking, organizations might struggle to put together a capable and diligent team. Therefore, many organizations rely on third parties to manage their HR outsourcing challenges effectively.

While it can free organizations from the worry of managing several operations by themselves, it can also put them under stress if they encounter unexpected hurdles.

In this blog, we will discuss eight common challenges that organizations face while outsourcing HR operations. We will also discuss how organizations can effectively combat these challenges and make the most of reliable HR outsourcing.


Detachment From Staff:

Every organization has its own culture and protocol for conducting various operations. And no matter how critically a third party might evaluate its operations, it can’t fully grasp an organization’s needs.

Because of this detachment, employees might also end up feeling like organizations are not addressing their concerns. Because of the disconnect between employees and HR, employee satisfaction and retention might also decrease.



To overcome this problem, you have to hire the right third-party HR professionals for your organization. The better understanding they develop of your organizational needs and culture, the better they will address your employee concerns. This, in turn, will lead to higher employee satisfaction rates that will also improve their performance and productivity.

Compromise on Organizational Culture:

Organizational culture is vital to ensure employees’ happiness and keep their morale high. However, when organizations outsource their HR operations, they resultantly change the culture that their employees might be accustomed to.

This can impact employee productivity as employees might be comfortable with a particular m culture. Adjusting according to the new needs and objectives can make them feel less valuable and not in control. Also, workplace politics can disrupt employees’ peace of mind because of the novel changes.



To overcome this problem, you need to ensure that at least one person in your HR team is from your own organization. This person then can communicate your organizational culture and requirements to the third-party team. This will ensure that the outsourced operations align with the culture so that employees feel included.



When you have in-house HR experts, they offer more flexibility in accommodating employees’ concerns. This is because they might know the employees more personally than any third-party resource. And employees might generally feel more comfortable discussing their concerns with someone from their own organization.

Also, since third-party resources don’t have a strong bond with the employees, they might be more skeptical and hesitant towards listening to their concerns. This might impact employees’ morale and productivity in the long run.



The right approach to combat this problem is to have a good mix of third-party and in-house professionals in your HR team. Since in-house professionals will know the employees in a personal capacity, they can communicate their concerns and ensure that employees remain satisfied. In this way, you can have a flexible approach towards HR operations.



Since a third party will be taking care of essential organizational operations, they can delay even normal operations to a great extent. Each organization has its protocols and processes, and third parties might take too long to understand them.

Therefore, normal operations like hiring new employees and distributing salaries can take months. These delays can frustrate employees and impact their performance. Also, third parties might take several weeks to fix minor errors about HR outsourcing challenges.


To fix this problem, you can conduct training sessions with third parties before letting them take control of your operations. A better understanding of your operations will allow the third parties to fast-track them. Going through customer reviews to know about the rapport of the third party in detail also helps. You should carefully choose a provider that meets deadlines and delivers quality work.


Less Organizational Control

HR is a crucial department for organizations. And handing over the responsibilities of this department to the third party can also mean that you will have to let go of control over several operations. This can impact operational transparency and visibility.

Since you will not be overseeing day-to-day operations, you will lose sight of how these might be functioning. Employees might end up unhappy with the processes, and you might be clueless about the situation.



You can combat this problem by getting a weekly report of all HR operations. In this way, you will stay on top of things. If you are not satisfied with how processes might be functioning, you can communicate your concerns to a third party. Also, you can take employees’ feedback on workflows and accommodate their concerns timely to ensure satisfaction.

Fewer Choices:

Depending on your budget and policies, you might offer several benefits to the employees. However, if you outsource operations to a third party, they will have their policies and benefits to provide to the employees. While they might be excellent in some cases, they might not be in others.

Budget constraints could be one primary reason. Therefore, they might not offer attractive packages to the employees. This will impact employee satisfaction and performance. In extreme cases, employees might leave because they might be unhappy with third parties’ packages.



Organizations can’t do much about the third parties’ packages. However, they can offer the employees some extra benefits on top of the packages. This will improve employee satisfaction and loyalty rates. You can also communicate your concerns to the third party and reach an agreement with them to improve the situation.


Compromise on Security:

If your organization’s software isn’t protected, your employee data can be exposed to threats and breaches. Many third parties utilize cheap and open software to conduct HR activities, thereby exposing private employee data to security threats and breakdowns.

For any organization, a security breach can be highly damaging for employee and customer data and its own reputation. And relying on unreliable third parties can heavily compromise your operations and privacy.



It would be best to always opt for third parties that use secure software for their HR operations. You should set up channels to receive feedback from their previous customers to ensure that they utilize secure networks and software.


Expensive Option:

Finally, while HR outsourcing challenges might free you from managing several operations, it can also be a costly option. This is because they will have their plans and protocols for managing workflows and processes.

And in case your organization has specific requirements, they will incur additional costs. This can disturb your budget and turn out to be a costly option in the long run.



You can resolve this issue by first making a budget and then outsourcing your HR operations according to it. It would help if you also had some cushion to accommodate unplanned assignments and additional operations expenses.

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