The Main Benefits Of Outsourcing Human Resource Functions

by Admin on April 12, 2013


The Human Resource department is essential in virtually every organization.

This department resides over and is responsible for a broad range of functions including overseeing the payroll of employees, employee health administration and benefits, and tax filing. In addition to this the Human Resource department maintains files and records, deals with legal compliance, and oversees development and training…to name a few.

Some large organizations have the capability to handle all their HR functions in-house. However, for many more organizations – particularly small businesses – the broad nature of human resource functions is too complex and comprehensive to maintain in this way. Such companies will find outsourcing HR functions to be beneficial therefore, and we look at why:

1. Reducing costs

The most obvious benefit of outsourcing Human Resource functions is saving the organization money through cutting costs. Setting up an in-house HR department involves plenty of back-office expenses, which do not generate any new revenue. This means the company essentially spends money that they may never recover. In addition, a fully functioning HR department needs highly trained staff and extra office space, all of which can cost huge sums of money. It makes economic sense therefore, to outsource human resource functions rather than to move into a new and larger office building to make space for a brand new HR department.

2. Minimizing risk

HR outsourcing firms help organizations to minimize risk. Labor laws and employment regulations change constantly, and it can be tough for employers to keep up with them. These employers may actually find themselves left behind when it comes to laws that affect the workplace and so outsourcing firms can ensure that they have highly trained professionals whose sole work is to keep up with such laws and keep the clients’ companies away from danger.

These firms help businesses to comply with all these laws and avoid expensive lawsuits that employees might bring against them too. In addition to this, they also audit and maintain company practices and policies to help protect the company’s best interests.

3. Employee development

When an organization outsources its Human Resource functions, it is able to manage employee development and performance more effectively as a result. The outsourcing firm is able to put into action performance management plans to make certain workers comply with the company’s practices and policies to meet business goals successfully.

These firms are also able to conduct an honest evaluation of employees from time to time and report their findings to company management. This not only reduces the workload for managers but also gives them an honest vantage point to enable them to take appropriate action from.

4. Efficiency

Critical to any business organization is maintaining a productive and efficient workplace. Once you outsource HR functions, you form a greater efficiency within the human resource systems. Outsourcing firms utilize highly advanced human resource technology to help organizations streamline vital HR functions like payroll, compliance management and benefit administration.

When you outsource HR functions, managers are able to spend less time on paperwork and more time focusing their skills on making the workplace more efficient – surely what any business owner wants and needs to thrive.

About the Author

Lucy is working with a number of small businesses at the moment and she’s currently learning to outsource her own work and look at the financials – Ceridian have some great resources online if you’d like to learn more.

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