The rise and use of consultants in the HR field has been dramatic in recent years. The groups now on my workshops are often a mix of those working for internal HR teams and those working for consultants/outsourcers. As you can imagine the debate then on “internal supply” versus “bought in or outsourced” services is a lively one. Here’s how it goes.

Using external expertise reduces fixed costs and allows specific spend on improvements in service as business demands.

Medium and small businesses in particular struggle to afford permanent HR teams of a size that can deliver all the impactive services needed and buying in ad hoc services as required makes economic sense.

As projects complete or contracts expire commercial bids for further work ensure continuing cost management.

It is difficult for internal HR teams to manage the change and improvements in impactive HR service that business demands as they focus on managing day to day issues.

External expertise often has broad exposure to a range of improvement initiatives delivered to their customers and can bring that experience to any business that needs it.

Consultants often focus on developing and offering specific and deep expertise in one or a small number of HR services allowing firms to buy in one or more services where they do not hold that expertise internally.

The more you use consultants the less opportunity to develop internal expertise and short term flexible costs may turn into a longer term expense when no alternative has been built for the future.

Deep expertise in a small number of services may mean that whatever the improvement question asked by the business the consultant answer is engagement, or organizational design or NLP etc. ie. what they can supply, not necessarily what is needed.

The internal team managing “day to day” argument is misleading and misrepresents the progressive role of internal HR today ie. their JOB is to manage change and improvement.

Consultant expertise and capability may not be as advanced as believed and there is no reason that a business cannot hire, retain and use the “best of the best” HR talent to provide the services it needs.

Internal teams have to live with the longer term consequences of the changes and improvements they implement – and make further improvements as implementation progresses – consultants often do not.

Consultants rarely say no, understandably so when their main interest is their own commercial success.

I spent a lot of my life developing high quality internal teams so that an objective view could be taken on where and when we could deliver improved and impactive services ourselves and where it was best to buy in a specific service. As a consultant for several years I now spend much of my time building market leading internal HR teams for clients – so those teams can make the same, informed judgement.

Even in smaller businesses finding one “best of the best” broadly experienced HR generalist can be the determining factor in deciding what can be built and delivered internally and what needs to be bought in.

There are obvious areas where an external service makes sense – all the traditional work of administrative pay, benefits etc., large scale recruitment and parts of training/learning (particularly technical). But engagement, organizational design, all the aspects of talent assessment, development and progress etc.? These are either core to business progress and HR’s relationship with business leaders and/or key to the employees seeing HR providing an employment brand that is attractive.

On occasions a response can involve using expertise from inside and outside the business e.g. someone runs and collates all the engagement data for a business from their platform but translation and actions required as a result are delivered and progressed internally.

I would argue then that an internal HR team has to develop to the point where it has the depth and breadth of generalist and specialist expertise to offer the business the best “advice and counsel” on how to meet demands. If it does not develop to this stage it is in danger of being overtaken or replaced by the range of services constantly offered to their business leaders from external sources.

Where it does progress to this “best adviser” state then the business will get the best of both worlds, from the right sources at the right cost and HR will be perceived as a value added service given increasing license to manage and deliver services needed for strategic intentions to be realized.