Businesses can often turn to other companies for help if they are desperate to save costs and increase profits. One such way businesses do this is by using Human Resources (HR) outsourcing services, which refers to the practice of sub-contracting personnel functions to external suppliers. Companies that provide these types of services also positively contribute to businesses’ revenues and thus the U.S. economy. According to a recent report from the personal finance website The Balance, American HR outsourcing companies generate between $136 billion and $156 billion in revenue.
Examples of HR Outsourcing Services
HR outsourcing gives companies the opportunity to pay for HR management services when they most urgently need them. This option is great for business owners because it means they do not have to hire a full-time HR manager or group and can thus cut costs and precious time for companies, all while relying on a group of experts to help them achieve their goals.
Examples of HR outsourcing services include the administration of payroll, training, recruiting, workers’ compensation insurance, benefits and retirement plans, and legal expertise and compliance. Other HR-specific projects outsourcing firms can assist businesses with include employer branding, performance review strategy, auditing, policies and procedures documentation (employee handbooks and policy manuals), and talent acquisition and management. HR outsourcing firms can also help write and update affirmative action plans and provide training related to sexual harassment and other forms of employee misconduct.
Outsourcing human resources can also be done via shared service HR outsourcing. This process simply means that the administrative or transactional aspects of HR activities are delegated to an outside company. The activities included here may be personal interactions with employees, for example.
Meanwhile, application and facilities service HR outsourcing refers to external companies overseeing the physical and technological infrastructure of a business to bolster HR activities.
The Benefits of HR Outsourcing Services
There are many advantages to businesses sub-contracting HR activities to external companies. Here are some of the major benefits of these services:
This is perhaps the most impressive advantage of HR outsourcing services, as this option allows businesses to save money on fixed costs like salaries and insurance. At the same time, businesses can also enjoy reduced costs for benefits, hiring, training, and more.
Not having employee permanent HR professionals:
Businesses can hire HR managers or other similar personnel on a per-project basis or interim basis. There is tremendous flexibility. Hiring on an interim basis is particularly useful if a company’s current HR manager is on leave, if there is a vacancy in this position, or if a large project demands additional support.
More options for benefits:
HR outsourcing services also help business owners and managers offer their employees a wider range of employment benefits, like health, dental, and vision insurance, 401k/retirement plans, and voluntary benefits like travel, cancer coverage, and long-term disability plans. Plus, outsourcing companies are more likely to have more advanced, organized, and efficient tools for benefits enrollment, such as an online portal instead of traditional paperwork.
More time spent on high-ROI efforts:
Businesses are always looking to maximize their return on investment, and HR outsourcing allows them to do this by cutting costs (including overhead) and hiring HR managers on an interim basis. Business owners and managers can thus focus more on sales and marketing strategies, setting goals and key performance indicators, and deciding what resources to invest in. All this can, in turn, lead to higher productivity among business owners and employees.
Hiring More Talented Employees:
An outside perspective can also often help businesses make better hiring decisions and streamline the recruitment and hiring processes to ensure that only the top candidates are selected for interviews and other steps in the employment process.
Outsourcing HR services help ensure that employee management practices are in compliance with local, state, and federal laws. An external company can often assist a business in handling harassment claims, termination disputes, and other similar issues.
Seeking More Information About HR Outsourcing Services
Contact the Alexandria, Virginia-based Smart HR to learn more about HR outsourcing and consulting solutions. Smart HR provides HR outsourcing services to organizations with 10 to 150 employees. Their extensive experience usually costs roughly 50% less than hiring an internal HR manager or team, and they offer both onsite and remote support.
Smart HR’s services include both HR Projects, which allow businesses to hire Smart HR on a per-project basis and avoid paying for non-essential HR management tasks, and Interim HR support, which offers businesses the option of delegating a regular HR manager’s full-time workload to Smart HR on a temporary basis.
Among the HR-related assignments Smart HR handles for businesses are benefits administration, recruiting, training, hiring and performance review strategy. They also assist with vision and values research, employer branding, auditing, and legal compliance.