To answer the question “Why should companies outsource their HR function?”, you need look no further than the reasons you outsource other specialized tasks. The exceptional HR professional must possess deep understanding of countless processes and regulations, many of which have steep consequences if performed poorly.
HR professionals have to master several detailed areas of knowledge and expertise.
Think of it this way. Suppose you are an online retailer. Maybe you employ someone to look after your website and other IT infrastructure. But if you want to create a shopping app for customers, you’re likelier to outsource that work than to ask your internal staff to learn how. After all, it involves highly specialized skills, and the stakes are relatively high.
The same can be said of HR processes, even if you employ a full-time HR representative. Here are seven top reasons to outsource HR.
1. You’ll Save Money
Outsourcing HR allows companies to trim costs while still focusing on their core business and customer-facing responsibilities. You can anticipate savings of approximately 20 to 30 percent compared to keeping all of your human resources functions in-house, and the right provider offers the peace of mind of knowing your HR functions are being handled by a seasoned expert.
2. You Can Mitigate Legal Risks
Many people don’t realize how exacting the rules and legal precedents for HR can be. By outsourcing HR, you can put your trust in people who focus on HR, know when rules and regulations change, and know how to ensure that your company minimizes exposure to legal risks associated with employment law and HR practices.
3. You Can Offer Services You Couldn’t Otherwise
When you outsource some or all of your HR functions, many times you make it possible to offer services and perks that you couldn’t offer as a singular small business. HR specialty firms may have access to economies of scale since they work with multiple clients, and this can open up access to perks you can offer so you can hire more competitively and retain your top talent.
4. Your Team Can Focus on Core Business Processes
With critical HR needs taken care of, you and your team can focus on what you do best.
If you run a medical practice, you want to focus on providing medical services. If you operate an automotive technology business, you want your people focusing on fixing and maintaining vehicles. Outsourcing HR allows you to spend more of your time and effort making sure your business does what it does best, with confidence that HR practices are handled correctly.
5. You’ll Have Better Access to Technology
Access to technology and the latest in best practices is a huge reason to outsource HR. HR specialists know where the technology is going, know what the best practices are for every HR function, and stay apprised of any changes in laws or regulations that affect them. By outsourcing HR, you can take advantage of these benefits too.
6. Your Regulation Compliance Can Improve
All companies have to comply with certain laws and regulations, and businesses in specific industries, like finance or medicine, have to comply with many of them. Failing to comply can have serious and expensive repercussions. Outsourcing to a firm that specializes in HR offers you peace of mind that your company will be in compliance with all applicable HR regulations at all times.
7. Your Employees Will Be Happier
When your employees have access to excellent fringe benefits, know that your company cares enough to make sure that HR problems don’t carry over into other aspects of the business, and can participate in professional training, they’ll be happier and more likely to stay with you. When your management team has a business partner to help build your culture, your company will thrive.
Maybe you have a highly-qualified HR professional on staff and wonder, “Why should companies outsource some of their HR function?” If your company undergoes any sort of measurable growth, you’ll soon find out why. HR is exacting, specialized, and extensive, and even companies with their own HR professionals often find that outsourcing some HR functions makes sense. You may need an extra pair of hands to help with recruitment during a period of growth. You may want an outside perspective when conducting an employee investigation. Or you may want to bring in someone from outside of the company to provide coaching to key leaders. The combination of saving money, having access to the latest benefits and technologies, and gaining the peace of mind of knowing that all HR functions are carried out with meticulous compliance is unbeatable in today’s ultra-competitive business world.