Find out why outsourcing human resources can be a cost-effective way for your business to improve efficiency and save time and money.
Here's what you need to know:
- Outsourcing allows you to develop and streamline HR processes so you can save time and money
- Reputable HR outsourcing companies like Zenefits can provide a full range of services, including recruiting, onboarding, payroll, benefits, and staying compliant with employment laws
- However, there are also reasons some companies may choose to keep HR in-house
- Ultimately, the decision comes down to 2 factors: how much money you're willing to spend on HR and how vital HR is to your business
When it comes to managing a workforce, many businesses outsource some or all of their human resources functions. Outsourcing HR can be a cost-effective way to improve efficiency and reduce the time and resources needed to maintain a full on-site HR department.
However, before you outsource your HR team, make sure that you assess your needs and decide if an outsourced HR solution is right for your business.
There are pros and cons so today we will introduce reasons to consider outsourcing your HR team — saving time and money being the most influential. However, we will also share some insights as to why you may not want to outsource HR — the top reasons being control and privacy.
What does outsourcing human resources entail?
A common misconception is that outsourcing equals offshoring. This is not true. Offshoring means replacing or removing internal staff with remote workers from overseas.
With outsourcing, you are putting the HR responsibilities into the hands of non-employees so your employees don’t have to shoulder HR tasks on top of their defined duties.
Why your business should outsource your HR team
As your business grows, so will your need for an effective HR team. Outsourcing allows you to develop and streamline HR processes so you can take care of your employees. You can reduce costs, increase efficiency, and attract top-tier talent with an outsourced team.
It also frees up time for you to focus on your business. A study by the Hackett Group revealed that companies outsourcing HR spend 26% fewer resources and have 32% less staff.
Counterintuitive as it may seem, even SMBs benefit from HR outsourcing. The smaller your business the better it is to outsource HR. Recent research shows that companies using HR outsourcing can grow 7-9% faster than those that don’t.
When you outsource your HR, you no longer have to pay for the salaries of HR employees or the costs associated with running an HR department. Additionally, you don’t have to worry about hiring and training HR staff or about keeping up with changing laws and regulations.
Outsourcing your HR can also help you better manage your employee benefits and retirement plans. Working with an experienced HR outsourcing company gives you the expert advice and guidance you need to make the best decisions for your business.
One of the most important parts of a successful business is operating efficiently. You want to get the most out of your team while minimizing waste. Outsourcing HR can help a company to be more organized.
By having someone else handle all of the paperwork and administrative tasks associated with HR, your HR team can focus on its core functions. So why not increase efficiency and productivity?
Businesses will outsource their HR functions to save on a full-time employee’s cost and gain access to specialized expertise. Some reputable HR outsourcing companies like Zenefits can provide a full range of services, including recruiting, onboarding, payroll, benefits, and staying compliant with employment laws.
Greater focus on core business activities
It’s essential to focus on your core business activities in an ever-evolving business world. This means outsourcing HR. Although HR is a critical function, it can also be time-consuming and expensive to manage in-house. So instead, focus on what you do best and leave the rest to the experts.
Ease of scalability
Outsourcing can be a great way to manage your company’s growth. You can quickly scale your business operations while keeping costs low.
When choosing an HR outsourcing company, consider the HR firm’s experience and expertise in areas most relevant to your business.
Additionally, by working with an experienced HR outsourcing partner, you can focus on growing your business while the partner manages all of your HR needs.
When choosing an HR outsourcing company, consider the HR firm’s experience and expertise in areas most relevant to your business. If outsourcing is right for your business, you can get the expertise needed to run your business and remain compliant. However, outsourcing may not be the choice for every business.
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When should your company keep human resources in-house?
Outsourcing HR can be a big mistake. Many companies decide to outsource their HR functions in an attempt to save money, but this can be a costly decision.
When companies outsource their HR, they risk losing control over their hiring process, employee benefits, and training and development programs. This can lead to lower employee morale and reduced productivity.
In addition, outsourcing HR can lead to compliance issues if the company’s outsourced provider is not current on all the latest regulations. Here are some other considerations for outsourcing your HR team.
Greater control over processes and procedures
By keeping HR in-house, you can ensure that your business uses the most up-to-date and effective systems, and customize those systems to fit your specific needs.
Additionally, having HR on-site allows for more direct communication between managers and employees. With HR on-site, you can provide better employee satisfaction and productivity.
Ability to quickly address employee issues
Every organization would benefit from having an HR department that quickly addresses employee issues. When employees feel like their concerns are being heard and dealt with promptly, they are more likely to be productive and feel optimistic about their work environment.
Last but not least, keeping HR in-house can save your business money from outside fees.
More personal connection with employees
As companies grow, it becomes more challenging to keep HR in-house. Maintaining personal connections is important for creating a positive work environment.
Employees who feel connected are more likely to be honest with HR. Without such a connection, your team may be less likely to report issues until they become too big to ignore.
Ease of training and developing HR staff
Since hiring an HR professional can be costly and time-consuming, you might consider training and developing HR staff internally.
It is expensive to recruit, interview, and train new HR professionals. If your internal HR staff is already familiar with your company’s culture and values, they can build a pool of qualified candidates for future roles.
Familiarity with company culture and history
If your HR is in-house, they better understand the fundamental values that drive your company’s culture. This understanding can also help HR make better decisions about where to place employees within the company structure to capitalize on their strengths.
Additionally, by being aware of a company’s history, your HR team can avoid making decisions that could negatively impact employee morale.
More affordable than outsourcing
In some cases, the cost of outsourcing can be greater than the cost of having an internal HR department. Some factors to consider are your company’s needs, budget, size, the complexity of HR tasks, and the level of expertise needed to perform those tasks.
Some businesses outsource HR because they don’t have the resources or expertise to handle specific tasks themselves. Others outsource to save money. However, outsourcing can be expensive, and sometimes, it can be more affordable to keep HR in-house.
To outsource or not to outsource, that is the question
The decision to outsource your human resources team is a tough one. On one hand, outsourcing can save you money. But, on the other hand, it can reduce the level of HR expertise in your organization and potentially leave you vulnerable to HR mistakes.
Ultimately, the decision comes down to 2 factors: how much money you’re willing to spend on HR and how vital HR is to your business. If either of those factors is low, outsourcing may be a good option.