Human relations is an essential component and driver of a successful business. HR departments are typically tasked with all aspects of employee management, right from recruitment, screening, hiring, paying, handling employee complaints, and much more. While having in-house HR teams for your business is beneficial, outsourcing these tasks makes sense in some situations.
While outsourcing is among the many trends in HR management, is it really worthwhile? This article weighs in on the benefits and drawbacks of HR outsourcing.
Photo by Scott Graham on Unsplash
What are the Benefits of Outsourcing HR Tasks?
Outsourcing HR functions to experienced organizations come with several benefits. They include:
1. Cost-saving
The cost of maintaining an HR department can quickly add up, especially if you have many employees since HR personnel can’t handle several functions. For instance, you can’t force one employee to handle all your employees’ recruitment, payroll, and compliance tasks. You will need a team with varying expertise to ensure that all HR functions are handled.
Hiring a large team means that you should pay their salaries, benefits, workers’ compensation and create a large workspace to accommodate them. For a team that doesn’t generate business income, maintaining such a team is expensive. This makes human resources outsourcing a better, cost-saving option.
2. Risk Management
Outsourcing your HR tasks also reduces business risks. HR laws and regulations keep changing, making it difficult for businesses to keep tabs. However, HR firms have professionals who regularly update themselves with the latest regulations in this field. Simply put, outsourcing grants you access to an experienced pool of talent with great expertise in HR tasks.
3. Increases Efficiency
Most businesses outsource their HR functions to increase efficiency in their HR departments. Outsourcing streamlines various HR activities, such as payroll, employee administration, and payroll.
4. Flexibility
Flexibility is another reason why employers are hiring remote HR teams. This usually occurs during peak seasons. For instance, if your business faces an information influx unexpectedly, you can outsource to remote HR teams, enabling your business to keep running normally.
What HR Roles Can Be Outsourced?
Obviously, you cannot outsource all of your HR functions. You should maintain a slim in-house team and outsource time-consuming tasks. Below are HR functions that should be outsourced.
- Employee relations – The HR department should ensure that your business complies with all labor laws. They should also address arising employee concerns and handle workplace issues, such as discrimination.
- Payroll services – Payroll services involve ensuring that employees are paid their wages properly according to the hours worked, tax deductions, and more. Removing these tasks from your plate will allow you to focus on other pressing tasks.
- Employee screening and background checks – Apart from recruitment, HR should conduct background checks on potential candidates. They also screen them to ensure that they are a perfect fit for positions they applied. These tasks are time-consuming, and remote teams work better.
- Temporary staffing – Depending on the nature of your business, you might need to recruit and onboard new staff for short periods; working with remote HR teams may prove valuable.
Note that these aren’t the only tasks that can be outsourced. ind out other outsourced HR services that can benefit your business.
Are there Drawbacks of HR Outsourcing?
Like outsourcing other business tasks, HR outsourcing has the following risks;
- Quality issues – Unfortunately, you can’t assume that all HR firms provide assured quality services. Besides, these firms aren’t driven by similar standards and missions as your company. Some vendors focus on making profits and not providing quality services.
- Hidden costs – Cost saving is probably why most people outsource. However, you should be wary of some hidden costs of outsourcing. Fortunately, you can avoid this by having a detailed contract of services the company should provide.
- Security threat – Your business risks breaching confidentiality if the outsourced company gets access to your employees’ medical records and other personal details. Regardless of the nature of outsourced tasks, always ensure that your service provider has solid data safety and protection measures.
Is Outsourcing Worth It?
While outsourcing your HR functions comes with many benefits, it also presents several challenges, especially if not done right or outsourced to good service providers. You can avoid these potential problems by using a contract that highlights service agreements, timeframes, penalties, and exit strategies.
Outsourcing can only be worth it if done by the books. Being a new trend, businesses can work with remote teams to stay ahead of the competition. It relieves your employees and managers from various repetitive tasks and frees them to focus on business growth.
Great information in your article. This is where outside to a PEO for your HR can make a bigger impact. If you offer benefits the cost savings in a PEO using their master benefit pool can completely save you the cost of the HR department the PEO brings to support your business. This is even further helped with the more ancillary benefits your company offers as a good PEO can help a small business look like a fortune 500 company of employee offerings. Picking the right PEO to match your needs (strategic, tactical or reactionary) is where deciding on the right fit can make our break this experience and results for your business.