MGT3045 WK 3 Discussion

Outsourcing © 2017 South University

Page 2 of 2

Human Resource Management

©2017 South University

2 Outsourcing

External Recruiting and Outsourcing

XYZ Inc. is expanding rapidly and decides against hiring new HR personnel. Instead it plans to outsource some HR functions, including payroll. XYZ Inc. may hire a firm such as ABC Corp., which provides payroll services. The HR department of XYZ Inc. no longer needs to collect time cards, calculate the pay, Social Security and other withholding, or create paychecks. Instead the employee submits timesheets, signed off by the supervisor, over the intranet and ABC Corp. performs all the associated activities related to payroll. The paychecks are delivered by overnight mail and given to employees on payday. XYZ Inc. benefits both directly and indirectly from using the services of ABC Corp.: • There are no payroll and associated costs such as Social Security

and benefits. • There are no worker's compensation requirements. • There are fewer legal requirements that apply to outsourced

workers than for employees. It is the responsibility of ABC Corp. to provide safe and equal employment to their workers. But XYZ Inc. too has a few responsibilities. In view of Wal-Mart's recent problems with outsourcing illegal immigrant labor, XYZ Inc. can be held liable if it is aware that the outsourced company hires illegal immigrants.