Insights on Outsourced vs. In-House Leave and Attendance Management

Outsourced vs. In-House Leave and Attendance Management

Leave and attendance management is not an easy job for HR managers.

It’s a tricky and challenging task.

Staying up to date with leave laws’, keeping track of who is out, when they are off, and how long they will be gone is extremely difficult to handle.

Can you avoid this?

No, because attracting and retaining employees is critical to a business’s success. This is only possible by executing the leave management system in a fair and accurate way.

How do you ensure consistent execution of staff leave management system?

You have only two options: Manage leaves by

  • Inhouse leave management,


  • Leave management outsourcing.

Each leave management has its own advantages and disadvantages.

In-house, leave management is prone to error and time-consuming. But the best part is it allows an employer to have control over their workforce management. Whereas in outsourcing leave management, the third party will manage leaves, so leave will be out of sight and employers won’t have any control over their workforce.

With time cloud-based in-house leave management has been added. Innovations in leave management will bring new technology going further to simplify the process.

What are you planning for leave management? Want to manage leave requests In-house or Outsource it. Check the factors below.

Should You Insource Or Outsource?

This depends upon the organization whether they want to implement an upgraded leave management system in-house or they want to outsource the leave management. Many factors need to be considered before deciding about Insourcing Or Outsourcing.

1. Assess your organization culture

Does your organization have employee centric-culture? This means you allow your employees to share their views with the respective person before implementing any new system in the organization. Or You follow the hands-on approach.

2. What are the objectives of your organization?

Know your organization’s priority.

Do you want to implement the web-based leave management system?


Want to manage leaves complying with legal laws as per government?


Want to incorporate effective leave management policy?


Want to keep up organization culture?

3. Assess your organization capability

Evaluate a few things inside your organization.

Are your staffs and administrators capable enough to managing leave?

Do you have dedicated leave management software in place?


Are you planning to invest in one to support your staff?

4. Do the cost analysis for insourcing and outsourcing

Costing is the main factor before implementing any new system in the organization. So analyze the costing factor with insourcing and outsourcing leave management system.

In outsourcing, costing include an implementation fee and a charged employee/per month. This varies as per organization size, leave volume and many other factors. The insourced leave management system includes a onetime setup fee and then a yearly fee every year.

Keep in mind that the implementation of leave management software increases productivity and efficiency. Thus it reduces the staffing cost.

Bit confused! Let me give one example to clarify how it reduces staffing costs.

Due to automated leave management software. A single person can process more cases per case manager which reduces the workload. As a result of which additional staff can take on other tasks.

Thus insourcing is less expensive than outsourcing if you have more than 200 employees.

5. Find the perfect fit vendors

Research and find the vendors who can handle your leave management needs. Find one from the explored vendors that match as per your organization’s goals.

Check whether the vendor is supporting any other organizations of your industry?
Whether they have skilled staff persons to help your organization?
How quickly they can adapt and understand your organization’s needs?
Whether their technology integrates with your HR systems?
Are their current customers satisfied with their capability?

Review all the factors mentioned above set your leave management goals that work best for your organizational culture and then take a final decision.

Outsourcing leave management is rapidly growing.

Because outsourcing is a cost-effective and efficient way for employers to manage the challenges of compliance and leave administration.

Is it really beneficial to outsource leave management? Read the next section for it.

Benefits of leave management outsourcing

1. Reduce the administrative burden on HR departments

How Outsourcing helps:
      • Manage leave related paperwork and meet required deadlines
      • Track and report leave
      • Ensure consistency of process and regulatory compliance
      • Communicate between employers and employees on leave

2. Ensure Legal compliance

How Outsourcing helps:
      • Ensure that all the leave laws and regulations as per government are applied consistently, helping employers avoid costly penalties

3. Ensure standardization and consistency in applying the laws

How Outsourcing helps:
      • Prevent inconsistencies throughout an organization
      • Do not discriminate any employees and treat everyone as same

4 Realize better coordination of employee leaves

How Outsourcing helps:
      • Make it more convenient for employers to track the various leaves, any new leaves applied and change in the leave dates and expected return to work dates
      • Helps in identifying patterns and trends in employee absence and helps them understand the impact of these leaves on cost and productivity

5. Enhance return on investment

How Outsourcing helps:
      • It helps in maintaining productivity.
      • Relieves HR professionals from the time-consuming activities of leave tracking so they can use their time in other important tasks.
      • It also suggests ways for a disabled employee to stay at work or return at work, allowing them to remain productive during this time as well.

6. Minimize discussions about sensitive health issues

7. Increase privacy by shielding employers from the employee details

8. Prevent access to confidential employee medical records.

Now we will quickly see how the staff leaves are managed in the system.

Procedures of staff leave management system

A leave approval process looks simple from outside but actually takes a lot of time if you have not set up for it.

Manual leave management system:

In manual leave management process, a manager receives the leave request, evaluate employers eligibility, check for the compliance as per the leave policies, ensure sufficient staffing for the day and then arrive on an approval decision without impacting employee satisfaction.

This is a very tedious process as it goes through multiple request channels, many spreadsheets are flown and manual intervention is also mixed in it. This process can be straight forward and less time-sensitive. If you implement an inbuilt online management system?

The major drawback of this system is it happens on paper. All papers have to be properly recorded. Nobody has any idea how many leaves are approved, how many are pending. Bla… Bla… Bla… But there is no way by which you will remember all the leaves. A situation may arise when the actual day of leave comes, an employee may not want avail an approved leave and it should be added back to his account.

“An online leave management system is an automated leave management application that automates every step of the employee leave management process which allows employees to apply, approve and reject and manage leave requests from any time, and from any place, any time and from any device”

Online leave management system:

In the online leave management system, an employee can request leave from their desk or from home if they are sick. This leave request then reflects the relevant superior for approval.

If the leave request is denied, a reason for the rejection must be entered in the leave management system and the applicant will get notified.

If the leave application requires the second level of approval, the leave management system will notify and request their approval before notifying the applicant. The leave management system also notifies other parties who are required to be notified but their approval is not required.

Thus online leave management system itself manages all the record which can be accessed from anywhere. You can view the dashboard and check the leave history.


It’s clear that leave and attendance management is a crucial task for HR managers a but it can’t be ignored.

Execute the leave management system accurately by selecting in housing or outsourcing leave management system. Consider the various factors mentioned above before making your final decision.

Leave management outsourcing is the best choice if an organization is big. It is cost-effective and relieves HR from the challenges of compliance and leave administration. However, you don’t have any control over your workforce.

So take a call judiciously based on your organization’s goals and needs.