One problem which is faced with HRO is in accepting difficulty the changes by employees who are presented in the organization. Anxiety is also existed about control losing over outsourcing of lay Human Resource and the process:

Challenges and issues are off. Reaction of such employees normally creates some problems in outsourcing process. Resistance level will be higher when later added scope volume is large. Programs of change management and effective communication are crucial especially at this specific stage when scope which is new is presented by implementing platform of a self service. Such systems actually are not by instinct obvious. Employee help is needed in this new system adaption. There also are different risks associated with this HRO. One example for this risk considers risk of business which may occur due to cheap contracts of outsourcing. Spillover risk is also existed there that is confidential matters exposing to competitors.

Risks of political issues are another thing in outsourcing process. Such as in the US controversial issue during election time when outsourcing was blamed by opposition for unemployment and needed to be banned. In HRO another problem is sometimes threat is brought by it to the culture of organization and totally out of control is got by it if gone into unsympathetic outsourcer’s hands. Also organization of vendor should have good knowledge on laws and in compliance manner operations should perform with his laws and country of clients otherwise issues which are legal may crop up and adversely may affect organization.

Another problem which may occur is personal touch loss with employees. Because HR person of in house daily interacts with employees, more of interest is presented on your employees     by them. This is considered as main reason in why Stanley and Morgan decided to give services which are retirement planning in house. Internally the talent loss generated, fear of provider of service ceasing the trade, potential redundancies, concentration loss on customer and on the product more focus are other challenges or drawbacks of HRO.

When also a PEO is being used by an organization, to hire right is given and their employees are fired, for specific business may not be desirable. PEOs mostly maintain that to fire, hire and to employee discipline final right should be provided. In long run of organization this is not considered as healthy source. And if e-service usage is decided by the organization, same thing would stay with any ASP. When each thing is handled and stored by online, concern is presented about the potential crashes as well as the security, both of which be identified by any organization which is presented in business sector. Complaints which are common about outsourcing range of HR to payroll from payroll mix-ups not being dropped to deny claims which are medical on time.

Another major issue is selection of vendor in HR outsourcing. If wrong vendor is selected, then able fruits won’t be enjoyed which is HR expectation. Important requirement which is specified by many companies while making selection process of vendor for HR outsourcing is demonstrated of vendor process expertise of HR, which is considered as response of 95% respondents as specified in survey which is arranged by Hewitt associates in 2005 year.