Human Resource Outsourcing

Meaning & Definition

Human Resource Outsourcing (HRO) is the process whereby HR processes like payroll, hiring, regulatory compliance, and managing personnel are outsourced to third-party professionals. The process ensures that businesses lighten their load, operate efficiently, and concentrate on their main tasks as specialists take care of HR activities.

Important Features of Human Resource Outsourcing

• Reduces the workload for internal HR staff.
• Facilitates hiring of specialized HR personnel and state-of-the-art technology.
• Enhances compliance and minimizes legal liabilities.
• Helps in controlling the costs of HR operations.
• Allows organizations to concentrate on their core functions.

Statutory & Policy Alignment 

However, while outsourcing various HR processes, employers need to ensure their legal accountability towards adherence to Indian labor laws.

• The employer will have to comply with the Payment of Wages Act, 1936, and the Minimum Wages Act, 1948.
• The vendor has to be compliant with PF, ESI, and statutory deductions, if necessary.
• Adherence to the Contract Labour (Regulation and Abolition) Act, 1970, is mandatory if needed.
• Service level agreement needs to be defined.
• Data protection and security are also essential.