According to research firm Technavio, HR outsourcing will grow at a rate of nearly 9% over the next four years. As a leader or HR professional within an organization, this may seem surprising. HR is a critical enterprise to the organization, shouldn’t that mean it needs to stay in-house? The answer, as many businesses are now finding, is not necessarily.
There are many reasons why you might consider outsourcing your HR functions, or some portion of them, to a trusted partner. Read on to see our top six.
1. Gain access to a full team of professionals
The number one spot is a clear frontrunner: assuming you select an experienced trusted partner, you’ll be gaining access to a full team of professionals with wide-ranging expertise in human resources functions. Depending on the size of your organization, you may be operating with an HR team of one – or worse, an “operations” expert who is tackling the jack-of-all-trades functions including HR alongside accounting, budgeting, legal guidance, and anything else viewed as an administrative burden. When outsourcing your HR functions, you’ll tap into a wealth of knowledge that you previously lacked, and new experiences to draw from.
Within your organization, you may only need to hire once every few months; you may rarely need to navigate more complex functions like leaves of absence paperwork, international payroll, or legal concerns. What that means, put simply, is that even if your top performer is handling these functions, they do not have expertise in them. It is likely that unusual hiring scenarios or employee concerns may be unprecedented more often than not. When outsourcing, you’ll be working with HR professionals who have seen it all – because all they do is process critical HR transactions, they have seen every unique example of each one, and will be well-equipped to step in when it occurs at your organization.
2. Gain confidence in your compliance with legal and federal guidelines
Again, your organization’s well-meaning catch-all administrative expert may do the best they can, but they likely won’t be as well-tuned to the industry as a team of HR experts. When outsourcing, you can stop trying to keep up with email subscriptions and newsletters to tell you about pending regulation changes – your external HR partner will not only be accountable to keep you informed and compliant, but will likely be aware of any changes as soon as they occur.
3. Gain access to top-of-the-line HR technology
Staying informed on ERP technology trends is a lofty goal; implementing them in your organization is a much greater challenge. While negotiating your outsourcing agreement, you may consider seeking information on the new partner’s technology stack and how it compares to yours. If you find theirs to be more advanced, it may be worthwhile to see if there are licensing opportunities to allow your employees access to self-service functions and other HR needs within their tool of choice, improving the employee experience.
4. Gain access to a new trusted business partner
As you are hopefully already aware, an HR expert is more than just an I-9 and payroll form processor. Just as is true for your internal HR expert, an outsourced HR team has the potential to become a trusted business partner, providing you wide-ranging feedback and shaping your business processes across the organization. Depending on the structure of your outsourcing agreement, your HR partner can be truly embedded in your business, and will serve as a new advisor and a fresh perspective as you make critical decisions moving forward.
5. Gain a new strategy to reduce risk
While this ties into several of the benefits already mentioned, it is worth discussing as its own separate benefit because it is top of mind for so many leaders. As you can imagine, many of these benefits will reduce your overall risk. Gaining the expertise of a team of experts, relying on their understanding of legal regulations, adding a fresh perspective to your business, and even gaining new technology can all reduce your risk. However, even more directly, depending on the structure of your agreement, your new partner may now shoulder some of the risk by performing some of your HR functions, especially if you indicate specific metrics in SLAs that the partner agrees to meet. These stringent standards will ensure your HR processes continue to be performed with consistency and quality as your team expects.
6. Gain the time you need to prioritize your business
At the end of the day, outsourcing your HR function allows you to focus on your core competency: driving your actual business product forward and leading your team. Relieving your team members of the time spent on day-to-day HR processes will allow them time to be repurposed to other business-critical needs.
While the prospect of outsourcing a critical function such as human resources may seem unorthodox, there are advantages worth considering for any organization. Take the time to consider the state of your human resources team and function today. How strong is it? What other critical functions are they also performing for your organization? How much expertise do they have in unique HR use cases? Depending on your answers, you may find that a high amount of value in exploring an HR outsourcing arrangement.
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