Which concept describes the practice of using external vendors to perform HR services such as leave administration?

• A. Human resources outsourcing (HRO)
• B. Shared services
• C. Business process reengineering
• D. Offshoring

Answer: (A)

Using external vendors to perform HR services such as leave administration is HR outsourcing. The core idea is contracting out HR tasks to a third-party provider rather than handling them entirely in-house. This approach lets organizations access specialized HR capabilities, improve service levels, and often achieve cost or scalability benefits. Leave administration—tracking time off, accruals, approvals, and compliance—can be efficiently managed by an external firm with dedicated systems. This is different from shared services, which centralizes internal activities within the organization; offshoring, which focuses on moving work to another country (though it can be part of outsourcing, it’s not the general concept by itself); and business process reengineering, which is about redesigning processes to improve performance rather than outsourcing the work.