The ease of outsourcing human resource functions is as attractive to small companies with just a handful of employees as it is to large organizations that employ thousands. Outsourcing human resources functions is a business decision that can impact your organization’s overall profitability, employer liability, and HR functionality. IF you are not HR compliant, it could not only cost you good employees but could result in millions of dollars in fines.
Proficiency: New businesses or companies with a relatively small work force may prefer to outsource one HR function or several HR functions for the sake of proficiency. Companies that don’t have a dedicated human resources department may discover that outsourcing is a better use of time and money. They would not use time and money recruiting, selecting and training human resources specialists to handle all the necessary HR functions. While hiring a consultant you save money on benefits, training, vacation/sick time, workers comp and employee taxes.
Cost Effectiveness: Large organizations that engage human resources outsource providers argue that the cost of employing specialists in HR disciplines such as compensation and benefits, training, employee relations and risk management is higher than outsourcing all or some of its transactional processes. Hewitt Associates, a premier outsourcing and consulting firm, surveyed company decision-makers about the reasons why their companies outsourced HR functions. Hewitt’s survey results in “HR Outsourcing Trends and Insights 2009” revealed: “58 percent said the top pressure facing HR is the need to reduce operating costs.” Transferring systems and processes to an outsource provider eliminates the complexities of human resources department staffing and the costs associated with a fully staffed human resources department.