HR outsourcing is continuing to expand at a rapid rate.
In fact, according to a recent poll, 78% of respondents feel favourable about outsourcing relationships with other businesses, whilst the UK Chartered Institue of Personnel and Development (CIPD) found that 39% of small and medium sized businesses choose to outsource some of their HR functions.
It’s no wonder, then, that by 2026 the HR outsourcing market is expected to grow by $10.9 billion. But how does HR outsourcing work, and what are the benefits of HR outsourcing services? We’re glad you asked…
What is HR outsourcing?
As you are probably already aware, HR outsourcing refers to hiring external firms to perform HR-related tasks for your company.
The specific processes involved in any HR outsourcing arrangement will of course vary from company to company, depending on the size of the business and its needs. Generally speaking, though, HR outsourcing includes tasks such as recruiting, payroll, compliance, benefits administration, and more.
Basically, any organisation, whether large or small, needs access to HR expertise to ensure that its people are protected and engaged - and HR outsourcing allows you to do just that, either by working as an extension of your existing HR department when needed, or acting as your sole HR department.
6 benefits of outsourcing HR for your business
1. Save time
Firstly, one of the biggest and most important benefits of HR outsourcing services is the amount of time it saves your organisation.
With HR outsourcing, you can delegate lengthy HR processes such as the hiring and recruitment, employment law, complex tax systems, and other key HR functions to an experienced and knowledgeable third-party provider, freeing up a great deal of your time to focus on other business-critical issues.
Not only does this free time enable you build strong relationships with your employees as your business continues to grow, but if you are expanding globally, it also allows you to concentrate on ensuring your expansion is a success rather than being entrenched in the HR challenges that come with business growth.
2. Save money
Another big benefit of outsourcing HR is the cost savings. The cost of HR functions can grow hugely, especially as your business continues to expand internationally. As your business grows, you will need a team of HR professionals to carry out all the necessary HR functions for the smooth running of your organisation, which ultimately results in higher costs.
Although outsourcing a service might seem an unnecessary expense, the truth is that by outsourcing your HR, you are saving money in the long run.
Firstly, you could save on the salary, training and development, and insurance expenses that come with an in-house team. But additionally, you can also save on recruitment and hiring, payroll, and compliance costs by outsourcing these significant functions too. In fact, studies have shown that companies tend to save over 20% of regular expenses compared to the cost of keeping all HR functions in house.
3. Minimise and manage risk
One more area where outsourcing HR can benefit your business is by helping you to mitigate risk. Employment and labour laws are constantly changing - and keeping up to date with laws and regulations can not only significantly impact the workplace but is also necessary if your business is going to minimise risk and remain compliant.
When you outsource your HR, you will have access to professionals who have a deep understanding of laws and regulations and can help to ensure you comply with them. Plus, they will also help you to maintain and audit company policies to ensure you always stay one step ahead.
4. Scale up or down as needed
Another benefit of outsourcing HR is flexibility. When you choose to outsource your HR, you can scale up and down as and when you need, which is key to business growth and scalability.
Whether you need ad-hoc project support, are seeking help with strategy, or want to outsource your entire HR function, you can pick and choose the level of support you need, ensuring it is tailor made for your business whilst also enabling you to keep your budgets down.
5. Help with international expansion
If your business is undergoing a period of growth and expanding internationally, you must align your existing HR principles and policy with local employment laws and country specific requirements. This is an incredibly daunting task, and your current HR team may not have the necessary experience and experience.
Employment law varies from country to country, and for every country you operate in, your HR team needs to be completely up to speed with that country’s legislation. Of course, some countries, such as those in the European Union, will operate within a similar framework - however, each location will have their own HR nuances, from data privacy regulations to tax legislations.
If your expansion is going to be successful, ensuring global HR compliance is absolutely essential, which is why handing these complexities over to an expert is one of the most important benefits of outsourcing your HR.
6. Attract and retain the best talent
Finally, outsourcing your HR can also enable you to gain access to the very best talent from around the world - and ensure you keep them, too.
Accessing, attracting, and retaining talent is paramount to business success - and by outsourcing your HR, you can ensure that you have access to a team of experts who have their finger on the pulse and know everything there is to know about the latest market trends, benefits schemes and more, simplifying the recruitment and onboarding process and ensuring you attract - and retain - the best talent out there.
For example, by improving and tweaking your employee benefits programmes depending on country location, you can make sure that your employees are satisfied, wherever they are. But that’s not all. Outsourcing your HR also ensures that all your employees’ needs are taken care of swiftly, which ultimately means your employees will be happier and more productive.
What’s more, by assisting with your international expansion, HR outsourcing services can widen the talent pool available to your organisation and gives you the tools you need to connect with the very best candidates across the globe. As they say, the world is your oyster!
Want to find out more about HR outsourcing?
Ultimately, whatever the size and scope of your business, if your organisation is going to succeed, you need an expert HR function - and that’s where we come in.
At Activpayroll, our global HR expertise enables us to deliver efficiency and compliance, so you can continue to grow your business and maximize your international operations whilst being completely sure that your HR function is being taken care off.
If you’d like to find out more about how we can help, contact us today to learn more about our global HR services.