Human resource outsourcing (HRO) is a way for enterprises to outsource one or several functions of human resource management to other enterprises or organizations in accordance with their own needs, in order to minimize human resource cost and maximize efficiency.

Traditional HRO services include file management, recruitment of new employees, dismissal of current employees, establishment of social security insurance program, etc. However due to the intensification of the competition in this field, the demand of HRO services have grown more complex including such services as: compensation and payroll management, regulation consultation, staff training, and personnel dispatch.

Despite the reality that the professional HRO service institutions in China is not growing up to par with the international demand, due to a lack of professional education, the progression of professional HRO service institutions is still gaining more attention from international enterprises all over the world. For example the few companies that have risen during the past few years who do offer a full scale HRO professional service, have nearly became internationally renown over night. The demand for such professional HRO services is bound to attract more investors and entrepreneurs into the field.

What concerns the economists is whether or not this growing enterprise of HRO services will eventually take over all the functions that are carried out by current administrative departments of human resources? Scholars and CEO’s have generally agreed that the answer is that it won’t. HRO services are not everything to a company. Human resource management is far too important of an aspect for a large enterprise to outsource. Other aspects that are the very core of an enterprise, including the business culture, internal policies, employer relations, performance evaluation, etc., simply cannot be outsourced without enormous risk being involved in the company. Thus, despite the growing attraction of complex HRO professional services, the limit to this expansion is foreseeable.

Nonetheless, the growing HRO services are still considered an invaluable asset to major corporations. HRO services can help administrative departments of human resources resolve petty details and greatly reduce expenses in order to optimize other services that are not outsource able.