Assessing the effectiveness of personnel outsourcing: what it is and how to conduct it

In Ukraine, there is a growing interest in outsourcing across various business sectors. Consequently, there is a need for evaluating the effectiveness of this practice, with a particular emphasis on organizational aspects, investments, and an analysis of potential risks. Assessing the economic efficiency of outsourcing helps avoid significant losses and enables the right decision-making in case of negative trends.

Every company engaged in personnel outsourcing employs a calculation methodology primarily based on financial benefits. However, the analysis of potential losses and risks often remains underestimated. This sometimes leads companies to abandon outsourcing after implementation, reverting to more conventional working methods. But why is outsourcing beneficial? This approach makes it easy to hire specialists through an intermediary company, essential for delegating tasks and reducing the workload on the company’s management. This approach allows focusing on company development without enduring the lengthy process of searching and recruiting necessary professionals.

Features and effectiveness of personnel outsourcing for businesses

Why is outsourcing advantageous? This approach allows companies to reduce costs in the HR and accounting departments, downsize staff, and pay for employee services based on task completion. Moreover, it provides a significant opportunity to attract the most qualified professionals and reduce the burden on company management. In Ukrainian business circles, outsourcing fully encompasses functions such as:

• Personnel management;
• Accounting;
• Research;
• Technology.

Today, outsourcers take on not only auxiliary functions such as outsourcing loaders or warehouse services but also key functions. This approach has become a trendy trend applied by both new companies and large corporations.

Evaluation of personnel outsourcing effectiveness: process specifics

Evaluating the effectiveness of outsourcing implementation is crucial for identifying potential financial risks after its adoption. The analysis should cover both the expenditure and income components of the business. The evaluation of outsourcing effectiveness can be divided into three main parts:

1. Compiling a list of functions for outsourcing: it is necessary to determine which functions or processes can be delegated to a third party for execution.
2. Analysis of the effectiveness of delegated functions: an assessment of how successfully the outsourcing provider performs the assigned functions.
3. Determining the cost-effectiveness of outsourcing: an analysis of financial and other benefits from delegating specific functions to a third party versus internal implementation.

This analysis helps identify which functions or processes have the most potential for outsourcing, and also helps avoid risks associated with potential business deterioration due to inadequate outsourcing services.