Six compelling reasons why you should outsource your HR functions
The Society for Human Resources Management in the USA (SHRM) conducted a survey of hundreds of companies about their outsourcing habits. Here are the six compelling reasons companies outsource:
- 26% of companies outsource to save money – this isn’t terribly surprising – what company doesn’t want to pinch pennies where they can?
- 23% of companies outsource to focus on strategy. Spreading yourself too thin with administrative tasks doesn’t leave a lot of time for planning, so this makes sense.
- 22% of companies outsource to improve compliance. It is increasingly challenging to stay in compliance and increasingly risky to not meet requirements so outsourcing this risk is beyond smart.
- 18% of companies outsource to improve accuracy. If you’ve got too much on your plate (and who doesn’t?) accuracy may fall by the wayside, so this also makes sense.
- 18% of companies outsource due to a lack of experience in-house. Knowing your weaknesses is as important as knowing your strengths, so handing off a task you know you can’t handle properly to someone with expertise is a great business decision.
- 18% of companies outsource to take advantage of technological advances. With big data worth tapping into, but costly technology needed to really delve into strategic analytics, outsourcing can offer solutions without a significant investment.
These are the reasons why companies are choosing to outsource, but SHRM followed up with another question: what HR functions are companies most often choosing to outsource? Of those who outsource, here’s a quick rundown of the 10 tasks most commonly outsourced:
- 84% outsource 401(k) administration
- 84% outsource employee assistance/counseling
- 74% outsource retirement planning
- 73% outsource pension administration
- 72% outsource temporary staffing
- 8% outsource background checks
- 57% outsource training/management development programs
- 54% outsource executive development/coaching
- 53% outsource employee benefit administration
- 49% outsource payroll
Human resources outsourcing is an excellent way for smaller companies to transform and get the expertise they need without hiring additional employees at high salaries. It also enables them to focus on current staff and such critical issues as engagement and retention.
For larger companies, compliance can be a huge risk as can legal liability, so outsourcing grants extra layers of protection. From reducing operating expenses, controlling legal risks, streamlining HR functions to focusing on the core business, outsourcing HR functions works for organizations of all shapes and sizes to help them save time and money.