76% of organizations outsource at least one Human Resources function. In Egypt, HR outsourcing has recently skyrocketed in popularity—businesses are starting to see its potential to streamline operations and cut costs.
Despite its benefits, some businesses remain hesitant about HR outsourcing due to the many myths surrounding it. They may need clarification about data security, compliance, the quality of service, or the potential impact on employee morale. These concerns are valid, but we’ll put them to rest.
Let’s debunk these HR outsourcing myths and shed light on its reality in Egypt.
THE 1ST OF THE HR OUTSOURCING MYTHS: IT NEGATIVELY AFFECTS EMPLOYEES
Many businesses fear that outsourcing HR will negatively impact their employees. For instance, they worry that a third-party provider will not prioritize their workforce’s needs, eventually leading to a drop in morale and productivity.
In reality, outsourced HR can do a lot for employee benefits. Since you’ll be leveraging the expertise and resources of a specialized HR provider, you’ll be able to offer better health insurance options, faster and more accurate payroll processing, and more benefits.
Don’t just take our word for it. Even the Harvard Business Review recommends outsourcing. Delegating HR responsibilities to industry specialists fosters a happier and more engaged workforce.
Many organizations that outsource HR functions report higher employee engagement levels than those that manage HR in-house. You may be surprised that outsourcing can boost employee morale and motivation.
MYTH 2: LOSS OF CONTROL OVER BUSINESS OPERATIONS
Many businesses also hesitate to outsource HR because they fear losing control over their operations. They assume that partnering with an HR outsourcing firm means giving up their decision-making authority. No leader wants to become overly dependent on the HR provider.
Studies suggest that doesn’t have to be the case! Outsourcing may even allow the company to make better decisions.
You retain complete control over critical HR functions like hiring, firing, and performance management while outsourcing. An HR outsourcing partner acts as a strategic advisor, providing support and expertise where needed. They won’t make any decisions without your go-ahead.
For instance, an HR outsourcing firm can handle the complexities of labor laws and regulations. This way, your business remains compliant and avoids costly penalties. But you fully control important decisions like talent acquisition and employee development.
MYTH 3: HR OUTSOURCING IS ONLY FOR LARGE COMPANIES
There’s also a misconception that HR outsourcing is a luxury only large corporations can afford. Many assume that small and medium-sized enterprises (SMEs) don’t have the resources or complexity to justify outsourcing their HR functions.
HR outsourcing services are intended for businesses of all sizes. Whether for startups or multinational corporations, HR outsourcing solutions can meet their needs.
Actually, small businesses often stand to benefit the most from HR outsourcing. Around 45% of small business owners spend at least one day per week on administrative HR tasks, such as payroll and benefits administration. Outsourcing these time-consuming tasks can free up valuable time for you to focus on growing your business.
This also explains the increasing interest in customized HR. Customized HR enables companies to outsource the aspects of Human Resources that overwhelm them. For instance, 50% of companies outsource talent acquisition, while a few opt for payroll outsourcing.
MYTH 4: HR OUTSOURCING IS TOO EXPENSIVE
Outsourcing HR functions is less expensive than one thinks. You may be worried that the cost of hiring an HR outsourcing provider will outweigh the potential benefits.
Contrary to popular belief, HR outsourcing can lead to significant cost savings. HR outsourcing providers use economies of scale and improve operational efficiency, which allows them to deliver services much cheaper than in-house HR teams. Studies have shown that companies can save up to 30% on HR administration costs by outsourcing.
HR outsourcing providers often have access to cutting-edge HR technology that can automate processes and reduce manual labor. This unlocks even more cost savings and higher work efficiency. According to a recent Deloitte survey, 78% of companies are satisfied with the cost-effectiveness of HR outsourcing.
MYTH 5: OUTSOURCING WILL REQUIRE FIRING IN-HOUSE HR STAFF
Many businesses fear outsourcing HR will lead to layoffs within their existing HR department. They assume they must fire their valuable employees to make room for a third-party provider.
In reality, HR outsourcing often complements in-house teams rather than replacing them. Once you outsource non-core functions like payroll and benefits administration, your HR team can focus on strategic initiatives that drive business growth. Higher job satisfaction and better career opportunities for in-house HR teams won’t be far behind.
Studies have shown that outsourcing in SMEs has little impact on employment. Only 3% of firms lay off staff, and 6% transfer their staff to vendors. This way, you can still work with your beloved team while reaping all the benefits of outsourcing.
Plus, many organizations outsource only certain HR functions, such as payroll processing or employee benefits administration. That means they only need to let go of a few people to transition to outsourcing.
MYTH 6: TRANSITIONING TO AN OUTSOURCED MODEL IS DIFFICULT
Some businesses worry that moving to an outsourced HR model will be complex and disruptive. Concerns often center around operational disruptions and data security risks. However, reputable HR outsourcing providers are equipped to ensure a seamless transition, offering tailored support at every step.
Key Steps in the Transitioning Process:
- Understanding Your Business Needs
Leading HR outsourcing firms start by thoroughly understanding your business’s specific requirements. This includes assessing your current HR processes, identifying pain points, and aligning with your strategic goals. 40% of companies consider “understanding our business” a top priority when choosing an outsourcing partner (source: Deloitte). - Developing a Customized Transition Plan
Providers collaborate with you to design a clear and detailed transition roadmap. This plan outlines the sequence of activities, timelines, and responsibilities, ensuring all stakeholders are on the same page. - Secure Data Transfer and Integration
One of the first practical steps is securely transferring employee data to the provider’s systems. Reputable firms adhere to strict cybersecurity standards to safeguard sensitive information—31% of companies rank this as the top indicator of an ideal outsourcing partner (source: Deloitte). - System Setup and Optimization
The next step involves configuring or integrating HR tools and systems tailored to your needs. This may include setting up payroll systems, benefits platforms, or compliance management tools to streamline operations. - Employee Training and Support
Providers often offer training sessions for your team to ensure a smooth adjustment. This helps employees understand and adapt to the new processes and systems, reducing resistance and confusion. - Ongoing Communication and Feedback
Regular check-ins and updates throughout the transition process ensure any issues are quickly addressed. Providers remain accessible to answer questions and adjust strategies as needed.
Outsourcing providers minimize disruption by breaking the transition into manageable steps and helping your business adapt quickly. The result? A streamlined HR function that saves time, boosts efficiency and supports your overall business goals.
MYTH 7: OUTSOURCING COMPROMISES EMPLOYEE CONFIDENTIALITY
Finally, many businesses are concerned about the potential for sensitive employee data to be mishandled when outsourcing HR functions. They worry that third-party providers may not have the right security measures to protect confidential information.
Reputable HR outsourcing providers usually use advanced data protection measures like encryption and firewalls to secure sensitive employee data. They also often sign strict confidentiality agreements to handle employee information responsibly.
A recent PWC survey says 95% of HR professionals now rely on technology to manage people. Maintaining confidentiality in the digital world is more important than ever. HR outsourcing providers understand this and take proactive steps to protect employee data.
THE REALITY: KEY BENEFITS OF HR OUTSOURCING FOR EGYPTIAN BUSINESSES
The reality of HR outsourcing is very different from the myths surrounding it. Partnering with a reputable HR outsourcing provider can do you more good than you think. It allows Egyptian businesses to get access to all kinds of benefits that can transform their operations, such as:
- Agility: HR outsourcing allows businesses to scale their workforce up or down as needed quickly. Outsourcing HR can be highly beneficial if you operate a business in tourism and hospitality with high seasonal fluctuations. Research from the Mazandaran University of Medical Sciences shows a direct relationship between outsourcing and organizational agility.
- Compliance: Staying compliant with Egypt’s complex labor laws is tough. HR outsourcing providers have the expertise to ensure your business is always up-to-date with the latest regulations. Not only do you avoid the risk of costly penalties, but you also make your business easier to trust.
- Cost-Efficiency: Outsourcing non-core HR functions allows you to reduce overhead costs and improve operational efficiency. 70% of executives say they choose outsourcing to save money and aren’t disappointed.
- Access to Expertise: HR outsourcing providers have access to highly skilled HR professionals who can provide strategic advice and support. When your business attracts and retains top talent, you can expect employee engagement and a strong employer brand to follow quickly!
CONCLUSION
Now that you’ve read our guide, you no longer have to be misguided by the many HR outsourcing myths in the industry. It’s time to embrace the truth: HR outsourcing is a powerful tool that can take your business to the next level.
Partnering with a reliable HR outsourcing provider like NAOS Solutions allows you to find out the full potential of your workforce and enjoy sustainable growth. The best part? You don’t just have to outsource HR — we can help you outsource any aspect of your business.
Take the leap today and contact NAOS Solutions to see the benefits of HR outsourcing firsthand.
