HR outsourcing is the contractual agreement that an employer signs with a third-party provider, where the employer delegates all management and responsibilities of HR functions, like payroll, benefits administration, compliance, recruiting, etc. From small-size companies that outsource all, of their HR functions to medium-sized organizations that want specialized support; many employers choose to work with human resource outsourcing (HRO) providers.
With human capital management having an increasingly important role to play in businesses, this is the right time to consider how you can leverage the power of HR outsourcing services.
Why Outsource HR Services?
Partnering with an HRO provider can deliver multiple benefits, from leveraging industry-leading expertise to potentially cutting expenditures.
Here are the top benefits of outsourcing human resources functions:
1. Access High-Class HR Knowledge
The days of HR being just transactional are long over. The field has become more complicated, and an organization’s human function is now managing the end-to-end employee lifecycle, including:
- Recruitment
- Employment relations
- Compensation and benefits
- Performance management
- Payroll and tax administration
- Learning and development
- HR technology
- HR operations
Thankfully, the right HR outsourcing partner can offer access to experts in all these categories.
2. Maximize Compliance
Non-compliance can be disastrous for businesses, leading to fines and reputational damage that’s difficult to fix. So, HR compliance issues should be strongly managed. However, repeated changes and increasingly complex legislation can make it hard for employers to keep up.
From employment relations specialists to payroll and tax professionals specializing in multistate workforce compliance; partnering with an HR outsourcing provider can offer solace knowing your HR operations comply with all applicable legal requirements.
3. Minimize Risk
Organizations cope with a certain amount of business risk, but without proper mitigation, employers have to pay fines, face reputational damage, and more. For example, if an employer unknowingly discriminates against an employee, their brand may become tainted, making it hard to hire and retain talent. The incident can also cost the earth and end up in legal suites.
Different HR aspects, including managing grievances, disciplinaries, and dismissals, can be extremely sensitive & complex. Having auxiliary support for these high-stake actions is often wise, and HR outsourcing is the right approach. Experienced HRO partners can navigate complex HR issues and also assist businesses in mitigating these risks and become employers of choice.
4. Potentially Minimize HR Expenditure
For small- & medium-sized businesses (SMBs), managing HR expenses opens the possibility to improve efficiency and competitiveness. However, offering attractive employee benefits, implementing learning and development solutions, and hiring the best talent can be tedious and expensive.
HR outsourcing providers can handle all the above in a relatively low cost.
5. Increase Efficiency
Efficient processes and systems increase the chances of success; however, many businesses face HR-related inefficiencies.
Can you find time to develop and continuously improve HR-related business processes? Are you comfortable selecting next-gen HR technology and maintaining it as needed? If your answer is no, working with an HRO partner may benefit your company.
The Sum Up
These are the 5 benefits of outsourcing human resources that any SMB should capitalize on to grow their business and increase profit.
