3 Reasons Why Outsourcing HR is Now the Preferred Solution

One of the leading business magazine recently stated that approximately 85 percent of all companies outsource at least a few HR functions. Keep reading to learn the motivation behind this growing trend and how it will benefit your organization.

Affordable Advantages

The leading reason behind the switch from in-house HR managers to outsourced HR professionals is cost savings. Outsourcing HR functions provides businesses with benefits that they normally couldn’t afford or access. The more clients an HR service firm has, the more negotiating power they may have to take on profit-driven health insurance and employee benefit organizations. As a result, the business will be able to lower their health care plan costs and offer workers many benefits that were previously unaffordable. This makes the company more competitive when recruiting and retaining talent in aggressive job markets.

Lower Legal Liability

Compliance is an ongoing challenge for many HR departments that must deal with complex labor, safety, discrimination and employment regulations. Increasingly strict regulatory environments make it quite difficult for HR professionals in small businesses to remain perfectly compliant with changing OSHA, worker’s compensation and Affordable Care Act rules. HR service firms often accept some or all of the legal liability for maintaining compliance. HR professionals in small companies often wear many hats and cannot keep up with the demanding complexities of hiring, payroll and administration compliance issues. Small business owners can selectively choose which functions to outsource and which functions to keep in-house.

New HR Industry Standards

Business practices and perceptions are evolving with changing market, industry and government trends. Companies can choose which functions to outsource and the level of their integrated involvement with the HR services firm. For example, the most popular solutions is the Professional Employer Organization (PEO) model because the client retains operational control and access to various HR and insurance products. This includes labor recruiting, payroll processing, labor training and safety programs. An HR partnership provides customized services and documentation with access to a team of experts. Human Resources Outsourcing (HRO) is a comprehensive program that comes with an on-site or assigned HR professional.

Keep in mind that once companies have over 50 employees, they may start thinking about insourcing certain HR functions and permanently outsourcing other HR functions like payroll and recruiting.