Last Updated on September 13, 2023
When you talk to businesses about HR outsourcing, one thing is clear – the debate is polarized. For some, HR outsourcing is viewed as an opportunity, whereas others see it as a threat. Yet one thing is certain − outsourcing the HR function can be an excellent strategic decision. Those who deem outsourcing a threat are referring to the reduction of HR employees.
This article discusses the use of outsourcing as a strategy whereby businesses can cut costs while taking advantage of the other benefits of HR outsourcing.
HR outsourcing definition
What is HR outsourcing? HR outsourcing can be defined as a contractual agreement between a third party operating externally and the business or business owner or the employer of the third-party provider.
In outsourcing the services from a third party, the employer or business transfers the responsibility for and the management of certain HR functions to the third-party provider.
What is outsourcing in HR?
HR outsourcing is a reasonably new behavior; however, this organizational strategy has been significantly amplified over the last decade.
It is best to opt for a resource-based approach when outsourcing HR and add institutional theory when making outsourcing verdicts.
The benefits of HR outsourcing
When you ask why HR outsourcing is an excellent route to follow, simply look at the benefits or advantages of outsourcing HR. In practical terms, HR outsourcing permits the empowerment of the HR department.
The HR staff can focus on strategic HR management rather than conducting low-level HR tasks. However, to understand the benefits better, one should also investigate outsourcing HR functions and how these can be advantageous to a business.
Cost-saving with reduced admin costs
HR functions that are outsourced imply reduced costs. This is because the business team can focus on their core work. Such core work can be either core business or customer-serving tasks.
On average, a business can cut its expenses by at least 20 percent when its HR is outsourced − all this while a professional HR agent manages the company’s HR-related tasks.
Access to great talent
Businesses can gain access to skilled workers and, in some cases, access to expertise that they might not otherwise have sourced for their team. Consultants, or virtual assistants, are onboarded, offering their skills to a business.
A business can also utilize the advantage of economies of scale, thus being able to service more clients simultaneously. A company can therefore scale up much more rapidly.
Looking at the wellness of employees
You might not consider that outsourcing would benefit employees. However, it certainly can. Repetitive and time-consuming work typically is not part of the employees’ daily tasks that they have managed.
Once these time-consuming tasks are outsourced to a third party, the core and onsite teams can more effectively focus on their work. The company can then also build up a more robust company culture – one that is set on the well-being of happier staff members. The results can include a 13 percent boost in productivity.
Reorganize the key functions.
A core benefit of outsourcing is that a business can run more efficiently and more so that work can be simplified. Some work is not a core function of the company, nevertheless must be conducted to adhere to regulations and laws, for instance, certain HR functions.
Such functions can then be outsourced to handle core tasks without burdening the onsite team. This can prevent the business from facing lawsuits. Risks are thus managed simply through streamlining key functions within the business.
Functions reinforced by HR outsourcing
A virtual HR assistant supplies highly skilled knowledge to a business, offering support during the course of the service life cycle. The virtual assistant can assist with the following HR functions:
A virtual assistant skilled in human resources management can offer expert guidance and support to the company. The remote assistant will provide recommendations and help update the company’s employee handbook, offering their knowledge to reduce risks or avoid costly compliance mistakes.
Moreover, the virtual assistant can help ensure the company complies with the regulations and laws.
When the payroll processing is outsourced, the business’s internal systems are not only streamlined − the virtual assistant is in charge of adhering to total compliance.
The business owner will also have more free time as they need not spend any energy on this time-consuming task.
Another HR function is managing the staff benefits. These benefits can include health insurance, retirement plans, and vacation days. Such benefits help to attract great talent to a business.
It can be especially difficult for start-ups who want to attract top talent – more significantly, more established businesses can offer better salaries and benefits. However, offering the most you can increases your chance of attracting great talent.
Other HR functions
Other functions that can be managed by a virtual assistant through outsourcing are hiring and recruiting, HR compliance, and staff performance management while concomitantly building a strong company culture.
Take the leap – it’s time to outsource your HR activities
Whether you are a more established or small business, outsourcing your HR can help you gain business traction on different levels. Outsourcing takes off your shoulders the part of your business, not your main focus.
This can mean regulations and county laws weigh down admin tasks. The time freed can be more productively spent on meaningful work. Hiring a virtual HR assistant means onboarding not only great people but exceptional HR knowledge banks that can guide, advise, take action, and arrange matters.