HR Outsourcing-ul (HRO) refers to the outsourcing of certain activities related to the human resources function of a company. The activities that are chosen to be outsourced depend on each activity performed or on how much control you want to have over the Human Resources function.

Most of the time, companies resort to outsourcing for activities that involve the administration of salaries, and thus, the opportunity is created for the management to focus more on the key aspects of the business and on the general activity carried out within the organization or on other important activities carried out within the Human Resources Department (such as staff recruitment and selection, motivation and communication at the organizational level, staff management strategies etc).

Outsourcing is used for most of the activities carried out within the human resources department, especially when it comes to small companies or firms that do not have sufficient specialised in-house resources to perform these activities internally. The most frequent outsourced activities are those of calculation and administration of salaries (Payroll services) or staff leasing.

Payroll Services are provided by companies specialized in such services, since they represent an external Payroll Department that deals with the calculation and full management of salaries for employees of client companies. Personnel leasing services are services provided by specialized companies, which act as an employer for the staff working for client companies.

According to the law, this concept implies that the temporary work agent provides a company with an employee employed under a temporary employment agreement. This type of temporary work can be done only in two situations: either when the employees go on vacation, or when the company needs seasonal labor. Also, the clients must know that a temporary employment agreement has the same value as the agreement for an indefinite period of time, it grants seniority and imposes the same financial obligations, both to the employer and to the employed person.

Personnel leasing has become a form of labor increasingly used in Romania, especially due to the market entry of multinational companies with fluctuating activities, which have hired staff to cover crowded periods of sales (during Easter or Christmas holidays). The (most relevant) cases in which staff leasing can be used are as follows:

• low number of employees: situation often encountered in multinational companies, due to internal policies;
• insufficient number of employees: during the annual or medical leaves or due to promotions and organizational changes. The long period of time up to the approval of a new position: although the need for a new employee is often urgent, the approval of a new position can take a rather long time;
• budget restrictions: as a rule, they apply to payroll budgets or to other categories, except for the budget for subcontracted services, i.e., the exact budget under which the cooperation with such a specialised company falls.
• insufficient or inadequate internal resources: could mean the absence of a Human Resources Department, or insufficient resources assigned to such department in order to cope with a large volume of work required for fixed-term projects.
• Trial period employment: is a rather frequent method requested by some clients in order to test the skills and competences of some future employees, through leasing companies, during the trial period, and subsequently to hire them on their own payroll.

HR outsourcing advantages

1. Company’s possibility to focus on its key businesses.
2. Possibility to budget and follow more easily the expenses incurred for certain administrative activities.
3. Reducing the risks connected to the correct application of all legislative changes, as a result of using the services of a specialised and certified human resources company.
4. Increase in productivity and simplification of the employees management process.
5. Time and money savings.
6. Constant flexibility, depending on the requirements of the client company, by preparing summaries and reports in the format agreed by the parties.

Within an organization is very difficult to apply only one of the outsourcing or insourcing methods, that is why they should be used together, since they complement each other.

Sources: Infoeconomic nr. 18, 8-14 august 2007