Benefits of Outsourcing Your Human Resources

Human resources outsourcing

With the turbulent business climate over the last few years, it’s no surprise that many companies are looking for innovative solutions to cut costs. As a result, human resources outsourcing is becoming an increasingly popular solution for many firms. It is an attractive option since it can often save money without losing any business value.

With human resources outsourcing, your business hires an external company to cover all or some of your human resources tasks. Human resource companies can offer a broad range of services when you outsource, including day-to-day tasks, long-term strategic initiatives, and everything in between.

The benefits that most companies can expect when they outsource human resource activities include:

  1. Saving money with lower administration costs. Companies tend to save approximately 20% on average compared to keeping human resource functions in-house with human resources outsourcing. And these savings often allows companies to lower prices and enhance their customer service offerings. Alternatively, companies may redirect some of these savings to growing the business. And business owners have the peace of mind of knowing that they can partner with an experienced HR professional who can handle all HR functions competently.
  2. More services with lower limitations. Human resources outsourcing makes it possible to broaden the array of services and benefits offered – something that may be impossible for most small businesses. This happens because HR companies experience economies of scale, allowing them to offer these services to multiple clients at a lower cost. This benefit can allow the company to expand its service offerings without paying more. 
  3. Better HR experience for employees. Outsourcing HR functions can also result in happier employees due to competitive benefit offerings. HR professionals can often guide your business through different strategies that cut costs or enhance benefits packages – or both. They know all of the options available and can advise you on the best moves that will help your staff. And offering better benefits is one of the best ways to attract and retain talent, which is becoming increasingly difficult in a hyper-competitive labor market where multiple employers often compete for qualified candidates. 
  4. Manage risk better. The number of risks facing most companies today is great, making risk mitigation essential. After all, nobody wants to end up in the middle of litigation. And much of the risk companies face stems from HR-related issues, such as employment and labor laws. Unfortunately, it isn’t easy to manage risk in these areas since changes to laws are common, and remaining up-to-date on current regulations can be incredibly challenging. Human resources outsourcing ensures that you work with dedicated professionals who stay abreast of all legislative and regulatory changes. They have a duty to stay on top of the laws and then help your business navigate what it means for the company. This duty often means they can help you review and update any company policies and procedures that may need amending. And when you can rely on outsourced professionals to fulfill this role, it can lift a huge burden from you.
  5. Streamlining your vital HR functions. Human resources outsourcing can also help you streamline your HR functions. These professionals work in HR every day, which means they often know the most efficient way to effectively complete a task, such as payroll administration or compliance management. And your company may benefit from this efficiency. For example, your business may save time that employees and managers generally use to complete paperwork or follow up on HR issues. When you outsource, the provider can deal with these tasks, freeing up time for your team to be more productive and effective.
  6. Better performance management. Another benefit of human resources outsourcing is better employee performance management. HR specialists with outsourced providers generally know the best ways to measure performance. They can identify the best key performance indicators or other metrics and then identify the best tools to measure or gauge performance. This task ensures that you use the best available data to manage employee performance. Additionally, outsourced professionals can often develop performance management plans that ensure employees act per the company’s policies and procedures and are committed to helping your company meet its business objective.

It’s a competitive market right now, and many companies are operating with razor-thin profit margins. Any actions that can cut costs should be considered, but with human resources outsourcing, businesses have the opportunity to cut costs without negatively impacting performance (and, in many cases, improving it). To learn more about human resources outsourcing, contact CA HR Services today.

CA HR Services specializes in working with small and medium-sized companies to help develop legal, efficient, and appropriate H.R. processes and procedures that meet state and federal labor law requirements.