The Top 10 Benefits of HR Outsourcing | Pro & Cons Explained

Are you at capacity when it comes to resources and are considering outsourcing certain functions? Here are the top 10 benefits of HR outsourcing.

80% of companies now outsource at least one HR activity. A human resources firm can manage new staff paperwork, severance pay, payroll and much more.

HR outsourcing allows companies to manage their HR needs effectively. It also frees up management to focus on revenue-generating aspects.

This is why many small businesses rely on HR outsourcing. However, even large organizations could benefit from outsourcing some or all of their HR activities.

Here are 10 benefits of HR outsourcing that could benefit your business. Read on.

1. Cost Savings From HR Outsourcing

The costs that come from HR services are astronomical. This cost (including the office space and HR staff) is something that many small businesses can't afford.

HR outsourcing reduces a company's costs. It also allows you the ability to drop office expenses that do no generate revenue.

HR outsourcing fees are variable and dependent on the number of employees and so on. This allows organizations, especially small businesses, to pay less as their needs change.

Outsourcing HR also allows your company to pay fewer office taxes. The benefits of HR outsourcing in terms of cost savings are two-fold. You save on employee-related costs and on infrastructure costs.

2. Efficiency

Efficiency in the workplace means more revenue-generating work gets done in less time. Lack of efficiency leads to costly downtime and interruptions to a company's operations.

Outsourcing HR functions improve an organization's efficiency. Your outsourcing providers will use the latest technology. This will streamline payroll, compliance management, and benefits administration.

As a result, management can spend their valuable time where it matters most. Instead of doing paperwork.

Request side-by-side HR outsourcing quotes for your business.

3. Payroll and Accounting

Did you know that keeping payroll staff is more costly than outsourcing payroll?

HR firms handle everything from pay slips to answering deduction questions. They even provide payroll analysis.

With this off your plate, your employees will have more time to deal with employee situations that arise as well as with calculating payroll.

4. Risk Management

Protecting your company's best interests as well as those of your employees can be a lot to juggle. Especially due to the constant flux of labor laws.

An advantage of HR outsourcing is that you can let someone else worry about up-to-date workplace regulations. The company you hire for HR outsourcing will ensure that you follow state and federal employment laws.

HR personnel at the outsourced company will conduct audits of your organization's policies and procedures. This will help you be in compliance with all laws and help you avoid lawsuits.

5. Reduce Managers' Admin Work

Outsourcing HR functions goes a long way towards allowing your managers to focus on their most important work.

HR providers can take care of leadership development in employees and monitor their performance. They ensure that each employee is in compliance with all your policies and procedures. In turn, HR providers give you a report on their findings.

This removes a part of your managers' administrative duties from their plate.

7. Compliance Expertise

As HR laws become more complicated, companies are under more and more pressure to stay compliant.

It can be a real struggle for small companies to stay current on the laws that relate to regulating benefits, hiring, and managing insurance claims.

This is no small thing as failing to comply could result in heavy financial consequences. A good HR provider will help you set a plan in motion so that you can comply.

8. Reduce Employment-Related Expenses

For every 10 organizations, 6 have moved some HR functions to an external service provider to cut back on employment expenses.

Expenses related to health insurance premiums, workers' compensation insurance, recruiting fees, payroll processing, and legal costs are all reduced with HR outsourcing.

9. Take Advantage of Global Talent

One of the top benefits of outsourcing human resources is the ability to get the greatest people for the job. Period. Distance is no obstacle when you outsource.

The best HR professional can handle your needs regardless of where they are in the world. You also don't have to worry about paid relocation. And you are not limited to professionals in your region.

10. Avoiding Technology Investment

HR outsourcing means that you don't have to eat the cost of the latest technology to do the job. A good HR provider will already have the best tools they need that will benefit your organization.

What this means for you is that you don't have to choose between making a large financial investment in HR technology or getting the job done without the right tools.

By outsourcing, you can enjoy the benefit of the cutting-edge industry tech while using your budget for other needs in the organization.

Important Outsourcing Considerations

We hope you've found these top 10 benefits of HR outsourcing useful. If you feel that HR outsourcing is the right step for your business, great.

Make sure you're careful when you choose your new partner. If you choose one company for all your HR needs you will likely get a better rate. Look for an HR firm that is flexible in working with your unique needs.

You want an HR provider that can assess which aspects of your company need immediate attention. They should come up with a detailed action plan that will meet your needs.

Before you settle on a company ask questions.

What size company do you support most of the time? How often would you provide reports? How long is the implementation process after signing the agreement?

You want to know as much as possible before you sign on the dotted line. Review this year's list of the best HR outsourcing companies.

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