Common Mistakes to Avoid When Outsourcing HR  

Outsourcing HR Mistakes

For startups, small-scale, and mid-sized businesses, managing an internal HR department can be a daunting task. Therefore, most businesses opt to outsource different HR functions.

This strategy provides them with numerous benefits, including cost-effectiveness and time efficiency. However, availing of such a service is not free from mistakes. There are potential errors that you must watch out for before deciding on your provider.

If you have made up your mind to outsource your human resource department, keep reading. This article will shed light on the common mistakes to avoid when outsourcing HR.

Top 5 HR Outsourcing Errors to Watch Out For

There is no doubt that outsourcing HR is the best strategy to streamline all your processes in a workplace. However, while doing so, you should watch out for different errors. These mistakes include opting for the cheapest provider, not having clear goals, lacking control, ignoring communication, and neglecting data safety and compliance. Let’s discuss each of the above mistakes separately:

1. Opting for the Cheapest Provider

The most common mistake that businesses make while outsourcing HR is that they opt for the cheapest provider. This makes them overlook the quality of service the selected provider offers and other crucial aspects.

Budget is undoubtedly a crucial factor to consider when you are looking forward to hiring external professionals for your human resource functions. However, it must not overshadow other critical elements, such as:

  • Expertise and skill of the provider
  • The range of services you need from them
  • Their competence to live up to your expectations

Otherwise, you will end up with an inexperienced and unprofessional provider. Businesses often opt for HR outsourcing service companies in Dubai to ensure cost-effectiveness as well as professionalism and quality work.

2. Not Having Clear Goals

Sometimes, startups rush for HR outsourcing without defining clear goals. Not having proper objectives is one of the most common pitfalls. It can result in miscommunication and misunderstanding.

This error happens when you think you want everything without determining what “everything” means. As a result, the provider lacks a proper understanding of your business’s needs and requirements. Ultimately, you will have to face the following consequences:

  • Unavoidable issues with your provider in the future
  • Unsatisfaction with their work
  • Not meeting the objectives

This will either lead you to be stuck with a burdening contract or replace your current provider. Both of which are not economical options. Hence, you must have clear goals when outsourcing your human resource functions.

3. Lacking Control

Most of the time, while outsourcing human resource management, organizations give full control to their partners. This means they will not be able to control even the basic HR functions in their workplace.

This is a mistake that you must avoid. Giving full access to a provider can be daunting as well as dangerous. This can land you in an ocean of troubles, including:

  • Security vulnerabilities
  • Lack of customization
  • Poorly managed or totally transformed company culture
  • Losing the sense of ownership

The best way to achieve more control over various tasks is to set a boundary. You can do so by clearly defining and transparently communicating your goals with the partner.

4. Ignoring Communication

When outsourcing your HR functions, ignoring the importance of communication is a grave mistake. You should avoid making this error for a smooth and transparent workflow.

When you are trying to outsource human resource management, there are two stakeholders you must communicate with:

  • Your service provider who will look after the assigned tasks
  • Your employees who will be affected by this decision

That is why you need to take both parties on board before finalizing the strategy. On the one hand, your HR partner must be informed well about the responsibilities you are handing over to them.

On the other hand, you must ensure that your employees are satisfied with this decision. This is because your service provider will be handling their sensitive data, payrolls, and benefits.

5. Neglecting Data Security and Compliance

Another blunder that you can make while outsourcing HR is to neglect data security and compliance. Among all, this mistake is the most detrimental one. The reason is that your HR vendor will be responsible for managing your company’s sensitive data and compliance with local laws.

If you fail to make sure that your partner is capable of ensuring compliance and providing robust security, it can have dire consequences. Your service provider must be familiar with several laws, such as equal employment opportunity laws and labor laws. Otherwise, you might end up entangled in various legal issues.

Additionally, their security measures should be up-to-date to protect your employees’ personal information. It will help foster an environment of trust and avoid different threat incidents. You can contact HR outsourcing to avoid data security problems and compliance issues.


In the present age, outsourcing HR functions has become essential to achieve cost-effectiveness and efficiency. However, you must watch out for several mistakes while finalizing your vendor. These errors vary from goallessness to lack of control and ignoring data security. Contacting a reliable accounting and HR service provider can help you avoid the issues mentioned above.