When you talk to businesses about HR outsourcing, there is one thing that 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 for sure − outsourcing the HR function can be a good strategic decision. Those who deem outsourcing a threat are referring to 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.
- 1 HR outsourcing definition
- 2 What is outsourcing in HR?
- 3 The benefits of HR outsourcing
- 4 Functions reinforced by HR outsourcing
- 5 Take the leap – it’s time to outsource your HR activities
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 the 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?
It should be understood that HR outsourcing is a reasonably new behavior; however, for the last decade this organizational strategy has been significantly amplified. It is best to opt for a resource-based approach when it comes to outsourcing HR, but also adding in institutional theory when making outsourcing verdicts.
The benefits of HR outsourcing
When you ask why HR outsourcing is a good route to follow, simply look at the benefits or advantages of outsourcing HR. In practical terms, HR outsourcing permits empowerment of the HR department. The HR staff can refocus their attention 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 their business expenses by at least 20 percent when their HR is outsourced − all of 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 utilise the advantage of economies of scale, thus be able to service more clients simultaneously. A business 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 normally not part of the employees’ daily tasks have been managed by them. 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 stronger company culture – one that is set on the well-being of happier staff members. The results can include a 13 percent boost in productivity.
Reorganise 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 business, nevertheless must be conducted to adhere to regulations and laws, for instance, certain HR functions. Such functions can then be outsourced, so that core tasks may be taken care of 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 support to update the company’s employee handbook; to offer their knowledge to reduce risks; or to avoid expensive compliance mistakes. Moreover, the virtual assistant can help to ensure that the company is compliant with the regulations and laws.
When the payroll processing is outsourced, the internal systems of the business 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 – larger, 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 company or a 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 admin tasks weighed down by regulations and county laws. Time freed can be more productively spent on important 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.