According to recent data from Deloitte, 57% of organizations are currently outsourcing all or part of their human resources function. From day-to-day administrative support to strategy development, outside experts can perform many different functions and bring numerous benefits to your HR team.
Before you reach outside your organization for help, however, it’s important to understand how outsourcing might benefit your company and department and whether it’s the right move for you. Here’s what to consider as you decide on an HR outsourcing strategy.
The Nuts and Bolts of HR Outsourcing
On a fundamental level, HR outsourcing is about inviting an outside expert to perform services for your organization. In some cases, you may have a specific set of tasks you need to offload, such as:
- Payroll
- Benefits administration
- Employee training
- Recruiting and hiring
- Regulatory compliance
In other cases, you may need an outside professional to offer strategic advice on how to improve efficiency, craft clear policies and procedures, or increase employee engagement. When considering your approach to HR outsourcing, it’s important to be clear about what you need and how the service will help you achieve your goals.
Advantages and Drawbacks of Outsourcing Your HR Function
The most significant benefit of HR outsourcing is that it can save your team a great deal of time.
Recent surveys show that processing payroll and reaching out to candidates are some of the most time-consuming tasks small business owners engage in each week. Imagine what you could accomplish if you could offload those tasks to someone else and use that time for more strategic activities.
Additionally, outsourcing can help your organization reduce its overhead. Hiring employees can get expensive, and outsourcing allows you to take advantage of having a team of people working on HR tasks without the need to bring on more staff. In turn, this can allow you to scale the HR function cost-effectively as your business grows.
Still, HR outsourcing isn’t without its challenges. Because any outside team or organization will have access to your employees’ sensitive data, you’ll need to ensure that their cybersecurity practices are up to par with regulatory requirements.
You’ll also need to maintain open communication with your employees. Your HR team must clearly understand how their roles may be impacted by outsourcing. By the same token, it’s crucial to develop a plan to continue building relationships with employees throughout the organization so they can be confident that they have your support.
Choosing the Right Outsourcing Option
HR outsourcing comes in many different forms. Consider the following common outsourcing options and how to know which may be right for your organization.
Administrative Services Organization (ASO)
An ASO focuses on only one thing: administrative HR services. You can hire this type of company for specific projects (such as an employee engagement survey or developing an onboarding program) or use them regularly to offload administrative tasks like payroll and benefits.
These organizations are an excellent choice for small and medium-sized businesses that need to offload a few responsibilities to save time or money.
Professional Employer Organization (PEO)
PEOs take things a step further by taking on the responsibility of becoming an employer of record for your employees. This means they can pay employees and administer benefits under their own tax ID number.
Because they take on greater liability, these services can be more expensive.
Human Capital Management (HCM)
HCM comes in the form of software that allows your team to automate the processes that tend to take most of your time, including time and attendance, payroll and tax processing, recruitment, employee records, and compliance.
This option lets you keep your HR function in-house while benefiting from the efficiency of a customized technology solution. The Human Capital Management partner tends to offer the greatest value, bringing a combination of high-touch services without taking away your company’s HR autonomy.
Take Your HR Function to the Next Level With the Right Outsourcing Solution
The decision to outsource HR tasks can be complex and is one you should consider carefully. Make sure to weigh your options against critical considerations like your budget, necessary level of assistance, and future HR goals.
When you’re ready to move forward, AssetHR is here to help. Our HCM platform offers cutting-edge automated technology coupled with the advantages of our world-class legal and HR expertise, ensuring that you get a customized solution that aligns with your needs.
Contact us today to discover how we can reduce your administrative burden as you strive to take your organization to the next level.