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December 11th, 2019 | Sterling

To Outsource or Not to Outsource, That is the Question

It’s not uncommon for outsourcing to be confused with offshoring, but the reality is, there are significant differences between them. But how do they vary, you might ask?  Well, Outsourcing refers to the movement of an internal operation to an external organisation, whether this be within the same country or overseas. Whereas offshoring involves the process and the geographical activity of relocating a business function to a different country, this can be external or internal to the organisation in question.

While outsourcing may incorporate aspects of offshoring, there are multiple benefits that can be leveraged to the advantage of your organisation, including:

Managed Growth: Often, a key consideration for businesses when choosing to offshore is that they can usually benefit from cheaper economies, allowing costs to be controlled whilst the business scales.

Non-Core Competencies: Your organisation has the ability to secure competencies or skills you may not have in-house, which allows focus on what you do best.

Shared Ownership: Technology and organisational infrastructure can prove to be a costly investment, as part of your service you may have the ability to share this and ultimately, outsource the associated costs.

Understand the Organisational Drivers and Business Context
Your organisational drivers may give you insight to answer the important question of whether to insource or outsource. There may be no wrong or right answer to this, but this is very much driven by the organisational needs at the time and may depend on the business unit in question and future direction of the organisation. For example, perhaps your main driver is risk management, where outsourcing may provide your organisation with better oversight. The new provider may even have better technology, more up-to-date controls and improved regulatory compliance processes that help mitigate risk – in this case outsourcing could be seen as a viable option. However, its important to remember that the decision to outsource shouldn’t be made on one driver alone.

In contrast, how do you decide whether to bring a service back in-house? One factor that could contribute to you bringing back internal customer services in-house, may simply be that your organisation knows your customers better than any external organisation could hope to.

Whilst, drivers are key it’s also vital to consider the business context and the strategy of the organisation itself. Perhaps an organisation is acquiring and may require HR to be flexible, which may prove to be problematic if the HR function isn’t set up in a way that would enable this. Additionally, if you have a cost-based driver you may want to consider the economic uncertainty surrounding aspects such as Brexit. Outsourcing shouldn’t just represent a one-way opportunity, but rather a process that is continually reviewed.

Question Your Current HR Delivery Model
Once you understand the drivers, and the context of this within your business, you should ask the right questions of your current HR delivery model. This will help form a more complete picture of the steps you should take. These include:

  • What’s currently outsourced or insourced and whether it’s currently working well?
  • What’s core to your business?
  • Are you currently investing or planning on investing in certain areas?
  • Do you understand the volumes?
  • How much does it currently cost to deliver the service?

Sustaining Future Success
Planning forms a critical part in supporting the transition to a partial or fully outsourced model. Having people in-house or even within the supplier’s organisation to oversee the transition can help when it comes to sustaining future success. Not only that, but setting expectations prior to outsourcing rather than allowing a carte blanche approach can help to ensure results are delivered. Your organisation will also want to consider checking KPI’s as frequently as needed, with clear escalation routes in order to resolve issues quickly. But most importantly, don’t be afraid of celebrating the success when things go right, this will boost moral and further improve your relationship with your supplier.

The Case for Outsourcing Background Screening
In our webinar “The Why, When and How of Outsourcing to Improve your Hiring Programme”,  89% of our audience, believed compliance surrounding background checks has become more complex in recent years. Which comes as no surprise, when you consider the growing complexity of the landscape. Our trends report, corrobates these finding, as 31% of respondents reveal that the most common justification for conducting background checks is to improve or meet regulatory compliance. Working with a screening provider such as Sterling that possesses global reach and local knowledge, can help guide an organisation into what’s legally permissible across the globe, but also what’s culturally acceptable. By taking a collaborative approach with the organisation in question, a trusted screening provider can help to recommend the right course of action for improving or establishing a robust screening programme. Employers may also leverage the compliance and industry expertise of the supplier, who should have deep-market knowledge and work to the standard of the sector.

For detailed insights of whether to outsource or bring your services back in-house, catch-up with our webinar on-demand, where HR expert, Ian Williams and Sterling EMEA MD, Steve Smith reveal all.

This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.