Everything You Need to Know About HR Outsourcing

What is HR Outsourcing?

HR outsourcing is a business arrangement between a company and a third-party human resources provider that oversees human resources tasks on behalf of that company.



However, outsourcing services doesn’t mean a reduction in quality. In fact, HR outsourcing specialists may provide superior services to what a company could provide by hiring HR staff internally. 

There aren’t strict limitations on what human resource services you’re allowed to outsource. HR outsourcing can either replace existing services entirely or augment an existing HR team to plug gaps in their workload.

Who is HR Outsourcing For?

HR professionals recommend companies with as few as 15 employees invest in human resource services, and that businesses begin looking into HR options well before reaching this critical milestone.

While often the first consideration, hiring full-time HR professionals in-house can be expensive, especially in countries like the United States with high minimum wages, increasing living costs, complicated tax systems, and prohibitive regulations. Some estimates place the savings potential of outsourcing HR as high as 35% and increased growth rates near 10%.

Because of its low-cost, high-return potential, HR outsourcing is an excellent option for:

Organizations:

• Small or medium-sized businesses
• Businesses with limited resources
• Small HR departments

Situations:

• Difficulty keeping up with HR responsibilities
• HR tasks performed by non-HR personnel
• Legal trouble
• Low morale

The flexibility of outsourcing HR services makes it especially appealing for growing companies and companies with a remote workforce, as an outsourced HR workforce is naturally situated to operate from a distance and adjust along with you.

What Tasks Will an Outsourced HR Manager Perform?

One of the best aspects of outsourcing HR is picking which responsibilities to offload and which to keep in-house, if any. 

Some of the most common tasks performed by outsourced HR managers ad hoc are:

Personnel:

• Maintaining personnel records
• Learning and development
• Managing employee relations
• Creating company guidelines

Administrative:

• Benefits administration
• Legal compliance
• Payroll services
• Termination

Workforce Management:

• Recruitment
• Onboarding and training
• Background checks
• Drug testing

By trusting an HR outsourcing company with these responsibilities, you’ll have more time and energy to focus on your core business with the peace of mind that professionals are handling your fundamental operations. 

Read More: Should I Outsource Payroll? Yes—and Here’s Why.

How Can Outsourcing HR Benefit Your Business?

Outsourcing HR responsibilities to a professional HR organization is an excellent method of boosting company efficiency and performance.

For the right business, employing an outsourced HR department can provide a wide range of benefits:

Cut Costs

Why pay for additional full-time employees when an outsourced HR team can perform all the same tasks for a fraction of the cost? After outsourcing HR tasks, you’ll cut unnecessary salaries, benefits packages, and payroll taxes out of your budget, freeing up resources for profit-generating endeavors.

Recruit Better Talent

Your company is only as strong as your employees. Yet sifting through applications to find the right talent can be as time-consuming as it is challenging. Outsourced HR professionals put in the hard work to find that needle in the haystack while you maintain the best team possible and avoid the costs of hiring the wrong person—now up to 30% of a bad hire’s expected first-year earnings.

Reduce Turnover

You probably want to keep that excellent new hire at the company after spending so much energy onboarding them, right? An outsourced HR team that excels at people management and administration will create an environment top talent wants to work in. Avoid late payroll, poor communication, and inadequate conflict resolution processes before your disgruntled coworkers become former coworkers.

Deploy Technology

HR outsourcing may also provide employers with advanced technology solutions that are often collectively out of reach for small employers. These services can include:



• Timesheet and payroll services
• Performance management
• Mobile apps
• Candidate referral systems
• Applicant tracking
• Talent management

Boost Engagement and Productivity

Only 30% of the American workforce is genuinely engaged in their work. Improve your HR offerings with an outsourced HR department that offers career development and incentive structures, deploys the latest tools and technology, and creates an enjoyable work environment to motivate your employees. Thanks to positive, creative atmospheres that reduce stress and encourage collaboration, happier employees are more productive.

Read More: 30 Employee Perk Ideas to Attract and Retain Employees

Provide Competitive Benefits

Sometimes HR outsourcing can unlock new opportunities, such as improved benefit offerings. Your HR services partner may secure better benefits packages through their extensive network than you could afford on your own, making your company more attractive to prospective workers.

In addition to health and dental insurance coverage, benefits can include:



• Volunteer hours
• Maternity leave
• Life and pet insurance
• Tuition reimbursement
• Retirement plan

Mitigate Risk and Enhance Safety

Rules and regulations concerning the workplace are constantly changing, making compliance difficult even under ideal circumstances. When consequences for minor lapses in compliance are severe, third-party experts who make the intricacies of legal compliance their full-time job offer peace of mind to weary businesses in litigious industries.

Evaluate Performance

Sometimes, the best way to make decisions about the future is to evaluate past performance. However, finding the time and resources to conduct performance reviews might go beyond your HR team’s capacity or budget. HR outsourcing helps by delivering critical performance reviews so that you can develop superior insights into your business and discover areas for expansion or reduction.

Trust Nexus HR With Your HR Outsourcing

Nexus HR is the premier HR outsourcing company for your human resources needs, including payroll, recruitment, and administration. Increase efficiency, boost productivity, and save money with the world-class, remote HR team you deserve. With Nexus HR, you can’t go wrong—our affordable solutions offer the highest quality services at the best prices.