The Human Touch vs. the AI Advantage: Finding the Right Balance in HR Outsourcing?

In HR outsourcing, we used to think that tech progress typically happens inch by inch – one area at a time. However, recent innovations in artificial intelligence, including the introduction of ChatGPT, have disrupted this pattern and accelerated the pace of change.

In fact, the difference was so great this time that even the question appeared whether these technologies will eventually render humans obsolete in the HR area. Spoiler: not yet. Now it’s all about finding the right balance between human touch and AI advantage.


  • What is HR outsourcing in the first place?
  • Why is HR outsourcing more viable than in-house HR hiring?
  • Why is human resources outsourcing important for small businesses?
  • How can the HR landscape change with the introduction of AI technologies?
  • Types of HR outsourcing services you may leverage for your business
  • Advanced HR outsourcing services with MWDN

In this article, we’ll explore how to strike that balance in HR outsourcing, specifically in the context of software development projects. We’ll look at ways to leverage HR outsourcing with maximum efficiency and find the right expertise for your business needs.

What Is HR Outsourcing in the First Place?

HR outsourcing is contracting with an external service provider to handle some or all HR functions of your business. This can include recruiting, onboarding, payroll processing, benefits administration, and compliance management. By outsourcing these tasks, the provider takes on the responsibility, allowing the customer to focus on its core business functions.

HR outsourcing has gained even more relevance recently due to the ongoing COVID-19 pandemic, which has disrupted many businesses and forced them to rethink their operations. With remote work and the need for social distancing, traditional HR functions such as recruitment, onboarding, and training have become more challenging. 

HR remote work

Outsourcing some or all of these functions to external providers can help you manage these challenges more effectively, ensuring that HR tasks are handled efficiently, even in the face of unprecedented circumstances. Additionally, as businesses continue to adapt to the changing landscape and new technologies emerge, outsourcing providers can help you stay up to date with the latest trends and best practices in HR management.

While companies seek to build up their internal expertise, it’s not always the most viable option in terms of cost-effectiveness, especially for smaller companies that may not have the resources or expertise to take care of all these tasks in-house. The speed of markets and the need to introduce innovations into processes are so great today that slowness can kill any idea. This is the main reason for the attractiveness of outsourcing as an approach to finding talent.

Why is HR Outsourcing More Viable than In-House HR Hiring?

Every business is different, so in-house hiring may be more appropriate depending on the situation in your company. HR outsourcing can offer a number of advantages over having an in-house human resources department, particularly for organizations looking to streamline their operations and improve their HR functions. While in-house HR may be more appropriate for large and complex functions, HR outsourcing can be a cost-effective option for small businesses. Here are some situations where HR outsourcing is a more viable option:

  • Cost savings. By eliminating the need to hire, maintain, and train dedicated HR staff, outsourcing helps you cut costs and maintain HR systems and infrastructure.
  • Access to expertise. Thanks to specialized expertise in various HR functions of human resources contractors, your business can stay up-to-date with the latest trends and best practices.
  • Scalability. Your business can scale HR operations up or down as needed without having to hire and train new staff or invest in new infrastructure.
  • Risk management. Outsourcing helps manage compliance risk and reduce legal disputes, as your staffing contractor assumes responsibility for compliance and other legal requirements.
  • Focus on core business functions. By focusing on your core business functions, you can improve productivity, efficiency, and overall performance.


Why Is Human Resources Outsourcing Important for Small Businesses?

For startups and small businesses, outsourcing human resources can be crucial for several reasons. 

  • Firstly, it allows them to focus on growth instead of spending valuable time and resources on HR tasks. 
  • Secondly, outsourcing can provide access to HR expertise and technology that may not be affordable for a small in-house team. 
  • Thirdly, outsourcing HR can help ensure compliance with legal and regulatory requirements, as HR laws can be complex and time-consuming to navigate. 
  • Additionally, outsourcing offers greater flexibility and scalability, allowing businesses to adapt to changing HR needs as they grow. 
  • Besides, outsourcing is a way to avoid extra expenses, which is vital for companies with limited budgets.

How Can the HR Landscape Change with the Introduction of AI Technologies?

AI and HR

Automation of repetitive tasks

The introduction of AI technologies has had a significant impact on the HR landscape. The biggest potential of AI is certainly to automate repetitive HR tasks, such as resume screening and interview scheduling, freeing up HR professionals to focus on more strategic work. AI-powered chatbots and virtual assistants can provide candidates with a more engaging and personalized experience, answering questions and giving feedback in real time.

Better Recruiting Process

AI-powered recruiting can help streamline and optimize the hiring process for companies of all sizes. In particular, AI can help eliminate bias in the recruiting process by analyzing job descriptions, resumes, and candidate data to identify and eliminate discriminatory language and practices. 

For example, AI algorithms can analyze resumes and cover letters to identify the most relevant candidates based on skills and experience and rank them according to their suitability for the role. AI can also help reduce the time and cost of recruiting by automating administrative tasks, such as scheduling interviews and sending follow-up emails to candidates.

Improved Talent Management Processes

AI can be used to analyze employee data to identify patterns and predict future performance, allowing HR to target training and development programs better. AI can help streamline talent management processes, such as performance reviews and succession planning, by automating data collection and analysis. Overall, AI technologies present exciting opportunities for HR to work more efficiently and strategically, leading to better outcomes for both businesses and employees.

Types of HR Outsourcing Services You May Leverage For Your Business

There are several types of HR as a service outsourcing, each involving outsourcing different HR functions to external providers. Let’s explore some of the most common types of HR outsourcing services and how they can benefit customers of all sizes.

Recruitment Process Outsourcing (RPO)

In RPO, a third-party provider performs some or all of its customer recruiting functions. The RPO provider handles the entire recruiting process, from sourcing candidates to onboarding new hires. This includes job posting, candidate screening and interviewing, background checks, and even extending job offers. The RPO provider acts as an extension of its customer’s HR department and works closely with hiring managers to identify their hiring needs and find the right candidates for their open positions.

Payroll Outsourcing

This type of HR outsourcing includes calculating and processing employee salaries, deducting taxes, and ensuring compliance with government regulations. The payroll outsourcing provider also handles tasks such as generating pay stubs, issuing direct deposits, and providing tax filings and reports. By outsourcing payroll, you can save time and reduce the risk of errors, as well as ensure compliance with changing regulations. The payroll outsourcing provider reinforces its customer’s finance or HR department and works closely with them to ensure accurate and timely payroll processing.

Benefits Administration Outsourcing

This type of outsourcing includes enrollment, plan design, employee communication, and ongoing benefits administration. BAO contractor ensures that employee benefits programs are in line with the company’s goals and are effectively meeting the needs of employees. The provider also works with insurance carriers and benefits providers to negotiate rates and ensure the organization is getting the best possible benefits package for its budget.

Learning and Development Outsourcing

Learning and Development (L&D) outsourcing can include assessing training needs, designing and delivering training programs, evaluating program effectiveness, and managing learning technology platforms. By outsourcing L&D, you save time and resources while also leveraging the expertise of external providers to develop high-quality, effective training programs. This can lead to improved employee skills, increased productivity, and better overall organizational performance.

HR Consulting

HR consulting provides guidance and advice on various HR-related issues, including recruitment and selection, performance management, compensation and benefits, employee relations, and HR strategy. HR consulting can be particularly useful for smaller organizations that don’t have an internal HR department or for larger organizations that need additional support for complex HR projects or initiatives. Consulting services can be provided on a project basis or through ongoing support and can be tailored to meet the specific needs of your business.

HR Outstaffing

In the world of HR outsourcing, there exists a model that is gaining popularity known as HR outstaffing. This model offers a unique approach to outsourcing that is different from the traditional one. With HR outstaffing, a third-party vendor hires and manages employees who work directly for the client. This model allows for a more flexible and cost-effective approach to HR outsourcing, as well as greater control and management of the workforce. In HR outstaffing, the provider takes care of the entire hiring process. They also take care of the administrative tasks related to hiring, such as payroll, benefits administration, and compliance.

Advanced HR Outsourcing Services with MWDN 

MWDN is a leading IT staffing company that offers advanced HR services to help businesses find the right talent to build their teams. With over 50 dedicated teams and a global presence in Israel, Canada, and Europe, MWDN has helped over 200 companies across various industries achieve their business goals.

At MWDN, we understand that finding the right candidate is a critical part of building a successful business. That’s why we take a profound approach to candidate selection, using the latest technologies and industry expertise to ensure that each hire is not just qualified for the job but also a perfect fit for the team.

With our HR outsourcing services, we take care of all HR-related tasks, including recruitment, onboarding, payroll, and benefits administration. This allows businesses to focus on their core operations and growth while MWDN takes care of the time-consuming HR processes.

MWDN is the go-to partner for businesses looking to build top-performing teams. Thanks to our vast experience, deep industry knowledge, and advanced technologies, we can help businesses of all sizes and industries find the right talent to drive their success.

If you are interested in exploring the benefits of outstaffing and how it can help your business grow, we invite you to contact us. Our team of experts will work closely with you to understand your needs and provide tailored HR outsourcing solutions that can drive business results.

MWDN team

If you’re a tech specialist looking for a dream job, visit our career page to learn more about our current job openings and join our team. At MWDN, we believe in providing a positive work environment that fosters creativity and growth, and we are always looking for talented individuals to join us.

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