What Does Outsourced Human Resources Involve?

Outsourced human resources

As more and more companies look for ways to save money and operate more efficiently, outsourcing human resources is becoming more popular. However, many companies would like more details about what is entailed with outsourcing these vital functions before making a decision.

Outsourced human resources can mean many different things, depending upon the services you want for your company. This article identifies the different options available to companies and key considerations involved in outsourcing.

What is human resources outsourcing (HRO)?

Human resources outsourcing (HRO) involves bringing in an independent third-party company that provides HR services such as payroll, creation of policies and procedures, administration of benefits, and other HR functions. You can often get as much assistance as you want, ranging from full-service human resources to limited functions focused on specific areas you have identified needing assistance.

When deciding whether to outsource human resources services, it’s a good idea to know what tasks are commonly offered by human resourcing companies. The most common HR functions to be outsourced include:

  • Payroll administration & taxes: Payroll outsourcing will cover all payroll processing tasks, including setting up payroll for new employees, managing payroll deductions, ensuring payroll taxes are compliant, dealing with compensation changes, and addressing issues with payroll. Your outsourced company will process payments on your pay schedule and ensure you meet all filing deadlines. Some HR companies may also track absences and paid time off for employees.
  • Employee training & development: Outsourced training may include anything from writing policies and procedures to ensuring industry-specific compliance. HR services may also develop employee development programs and coach employees related to their job performance.
  • Performance management: HR companies may be hired to handle all aspects of performance management, from identifying how to measure performance and ways to optimize it to conducting workplace investigations and disciplinary actions.
  • Recruiting, hiring, and onboarding: Outsourced HR companies can handle all aspects of recruiting, hiring, and onboarding. They can conduct the interviews and take over all initial paperwork to prepare employees to be productive in their jobs.
  • Healthcare benefits administration: Companies can access comprehensive and cost-effective benefits packages through outsourced firms. In many instances, this can result in better benefits packages than an employer would be able to offer otherwise. Additionally, outsourced firms can manage the annual enrollment process, including answering employee questions and determining eligibility.
  • Compliance & workplace safety: Compliance is a huge issue for many companies. Since compliance requires specialized knowledge and can be highly dependent on the industry, this aspect of HR is commonly outsourced to those with expertise in compliance matters.
  • Data-driven decision-making: The pace of change in the modern economy is incredibly rapid. To stay ahead of the pack, companies must make sound business decisions every step of the way. Outsourced HR professionals often have expertise in collecting data related to HR, such as applicant tracking and employee retention. Through this data, they can help you make better business decisions. And many of the right business decisions – no matter how small they may seem – can add up to long-term cost savings, which gives your business a better chance of success. In today’s hypercompetitive market, this edge can be key to staying ahead of your business competitors.

In reality, outsourcing your HR functions can be as limited or broad as you want. You can contract with a firm for a very narrow scope of services all the way to full-service HR. And there are many business benefits to outsourcing HR services, such as:

  • A streamlined hiring process
  • Better compliance leading to less risk for your business
  • Cost savings related to greater efficiency and lower administration costs
  • Better HR services and benefits for your employees
  • Reduced turnover and greater job satisfaction
  • Better employee experiences when addressing HR issues
  • An enhanced performance management system

While these benefits may be achieved by any company that is outsourcing its HR functions, some companies may be in a great position to consider outsourcing. Outsourcing HR is especially beneficial for companies that:

  • Spend an excessive amount of time handling HR problems
  • Do not feel that current HR policies and procedures are sufficient
  • Are looking to cut expenses
  • Do not have clearly defined HR roles
  • Are looking to optimize business processes

As you can see, there are many benefits to outsourcing some or all of your HR services. And with most HR companies offering a full range of services, you can often find one that will provide exactly what you want within your budget. To learn more about outsourcing human resources, contact CA HR Services today.

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