Should you outsource the ‘people’ part of your business?

When might an SME consider outsourcing HR?

HR is one of the non-core activities that many SMEs – especially those in their early phases – often struggle to manage effectively. The time and cost it requires can eat into revenue-generating activities, yet as a business grows it becomes more and more essential. One solution becoming increasingly common is outsourcing HR.

Outsourcing brings access to skills, knowledge and better quality support than – possibly – you’re able to provide in-house. Although it adds a third-party cost, it can actually save budget overall – especially if your HR needs don’t justify paying a full-time employee, or if freeing up the person who had taken on HR functions enables them to return to revenue-generating work.
But when does it make sense to outsource? Here are five questions to consider.

How big is your company?
Generally, SMEs with less than 50 employees rarely have a dedicated HR specialist or team. Instead it’s often a manager or finance director providing HR alongside their other duties. If this sounds like you, outsourcing can offer real benefits.
If your organization is bigger than 50 people, you will probably find it easier and more effective to have in-house HR. But you may still value outsourcing certain specific areas.

Is there a ‘tipping point’?
When HR-related processes begin to slow down your SME’s productivity, then it’s time to consider outsourcing (or hiring) HR. Equally, if employees start to become unhappy, then you need to act. Remember: good employee relations are vital, as they can directly affect future profitability.

What does your PRO offer?
The UAE is fairly unique in having the ‘PRO’ industry. PRO companies can help with many HR-related aspects, such as visas and payroll. While their contribution is mostly ‘administrative’, you should certainly factor them into your plans. For example, if your PRO provides these functions, and your remaining HR needs are relatively small but specialized, then it may make sense to outsource those too.

What services might you need?
Let’s say you have a PRO sorting visas and payroll. An outsourced HR function could then focus on employee relation issues, such as discrimination claims, redundancy, grievances and dismissals. They could also handle recruitment for you.
In addition, you might want to pay on a ‘meter’ basis, or a monthly retainer. It’s important to be informed about this before you enter negotiations, and to avoid being locked into an inflexible contract. The best HR providers will be willing to advise, and even to set up a trial period, so you can both find a level that works.

Do you want ‘personal’ service?
You might want to outsource an individual; someone who gets to know you and your business, staff and culture, and who can be flexible in what they do. Alternatively, you can sign up to a HR support line – a less personal option, but one that may suit your business. Such services are increasingly available online, but make sure it’s an organization with UAE experience: standard ‘global’ offerings are unlikely to give the knowledge you need.


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