Why Outsource HR Services?

Posted on March 1, 2015

Outsourcing HR services can help your company shift the focus onto your core competencies, avoid mundane administrative work and can even help you compete with your larger counterparts.

Many small to mid-size businesses find that outsourcing HR (Human Resources) functions is the best approach to take. Outsourcing human resource services is not only a great way to save on time, it is also cost-effective and takes the burden off from the manager or owner. Does your company too want to save on time and money? Have you always wanted to understand more about HR outsourcing before venturing into it? If yes, then read on to find out more about outsourcing HR services.

What is HR outsourcing?

Outsourcing HR services refers to partnering with an external service provider to manage certain tasks like recruitment, payroll, job postings or employee policies. In India, you will find service providers that exclusively deal with HR functions. Such service providers have several clients (large and small) and are proficient at handling any aspect of personnel related services. An important thing to remember is that the company you partner with will not be formally affiliated with your company in any way, apart from what in specified in the outsourcing agreement.

Why do companies outsource HR?

As per a 2009 survey conducted by The Chartered Institute of Personnel and Development, businesses primarily outsource HR functions to tap into the skills and know-how of a third party, to get better quality and to minimize costs. The most commonly outsourced HR functions are payroll, legal services and retirement planning. The survey also revealed that most business owners do not want to be bothered with handling human resources and opt instead to focus on core business functions like the company’s operations, objectives, mission and financial well-being.

The benefits of outsourcing HR

The Small Business Association (SMA) recently estimated that it costs around $1,469.00 per year per resource when a company handles human resources in-house. This is difficult for small businesses, as they have to invest more on HR, instead of marketing or product development. Outsourcing HR services on the other hand can help your company to shift the focus onto your core competencies, avoid mundane administrative work and can even help you compete with your larger counterparts. Outsourcing HR is not only great for your business, it can also be great for your employees. With the various benefit plans offered by a HR service provider, you can give your resources a wide choice of healthcare plans, aid them in saving for retirement and even offer them with stock options.

The drawbacks of outsourcing HR

Outsourcing HR too comes with its own set of drawbacks. The most common drawback is the feeling that you company is not in control of personnel matters and that the service provider has more power over the benefits offered to your resources. However, you must keep in mind that the third-party vendor works for you. If you are not receiving the services that you require or if your employees are not satisfied with their benefit options, you can always look for another service provider.

Read more about outsourcing HR services to India.

Would you outsource HR services? If not, why? Let us know by leaving a comment in the box below. We, at Flatworld Solutions love to hear from you!

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