Labor costs might not be the high overhead variable affecting overall costs it was 30 years ago, but it still a cost reducing solution managers choose to utilize when they feel pressures from upper management and shareholders to lower costs. Outsourcing of employees is not the evil predicament many think it is. It is simply a solution that provides flexibility and allows costing reduction in different compensation areas. Outsourcing of a firm's workforce can occur in various ways. A company can choose to hire employees through job agencies in order to acquire a staff that is legally not theirs. Under this type of work arrangement the employee belongs to the job agency, but performs work and it is supervised by the manager of a firm. Once integrated into the company's system in reality the job agency employee and the directly recruited employee is treated equally and there is not way to differentiate them within a work setting. This alternative is chosen to reduce fringe benefits compensation costs and to have flexibility of not being forced to retain an employee after the typical short probation period expires.
An outsourcing arrangement occurs when an enterprises hires a consultant to perform work in any type of project within the organization. A third way and the reason the typical American worker feels outsourcing is evil to outsource work that used to be performed in-house to third world countries to save on operational costs. The fact of the matter is that this shift was necessary and most of the time the type of work being outsource are functions which are perform at a fraction of the cost oversees. For example a Chinese worker earns approximately 95% less per hour than a person working in the United States or Europe (Ceglowski & Mawr, 2005). By reducing costs and outsourcing this type of work a company is able to hire more employees to perform other duties. The world environment of developed countries has shifted from manual work to a knowledge economy. There is not turning back and people in developed nation must educated and train themselves to compete in this new economy. Human resources must adapt and to the change by understanding the different contractual requirements of the various employees working directly and indirectly for a company.
Another emerging trend in the business environment of the 21st century is online recruiting. The internet has become a part of the everyday life of humans. There are over 1.1 billion online users worldwide (Plunckett Research, 2007). Since there so many people online spending multiple hours daily in the internet, a great way to find and attract talented professionals is to find them at this time. Online recruiting is great because it provides access to a large pool of potential candidates, but it has many other benefits for human resource professionals.
Online recruiting allows HR to find potential employees in places there would have never been able to find them in the past. It allows firms to recruit international players with ease. This must be done because there is shortage of talented professionals in a lot of technical fields such as accounting, information systems, scientists, nursing among many others. The HR field is adapting to the reality of marketplace talent pool shortage and in the future it is projected that the gap between demand and supply for talent will only increase.