According to CIPD research, the main element of the HR function organisations outsource is payroll, followed by the provision of complex advice (including case management). Outsourcing can offer benefits, such as increased efficiency and access to expertise; however, it can also present challenges, such as loss of local knowledge and processes, and fragmentation of the service provided.

This factsheet introduces HR outsourcing and its use across organisations, outlining some of the alternatives to outsourcing, including shared services, employee self-service, and buying-in consultancy services. It highlights the need to consider the business case for outsourcing HR work and the questions to ask in deciding whether HR outsourcing is the most appropriate solution. Finally, the factsheet offers guidance on selecting a provider and sets out some of the issues to consider when managing the move from in-house to third-party service.

This factsheet was last updated by CIPD staff.

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