7 reasons to outsource HR

7 reasons to outsource HR

As your company grows, compliance and benefits administration will take up increasingly more time. You would have to delegate these and other HR related responsibilities to firms who specialize in the field so that you can spend time growing your business instead. This in itself is a good reason to outsource HR. But if you are still not convinced, here are the top reasons identified by the Society for Human Resources Management to outsource HR:

1. 26% outsource to save money: With increased volatility in the markets, cost reduction has become one of the prime focus areas for most companies. HR costs include advertising on job boards, background screening, applicant tracking systems and recruiting technology. All these can be bundled into a single cost when HR is outsourced. The cost-per-hire for a dedicated HR company is much lower as they have dedicated resources and the risk is shared. This also eliminates any duplication of HR related tasks across departments within the company and streamlines the overall process.

2. 23% outsource to focus on strategy: As a company, you want to dedicate all your resources to the core business and develop it further. By outsourcing HR functions, you free up time for yourself and your employees to focus on what they do best. Don’t spread yourself thin by taking up enabling functions.

3. 22% outsource to improve compliance: The compliance requirements have grown in complexity over the years. On top of that, the risk associated with non-compliance has become formidable. It is smart to outsource this risk and let specialists deal with it.

4. 18% outsource to improve accuracy: The cost of bad hires is very high for small and medium businesses. The chances of a bad hire go up as your responsibilities increase. Outsourcing HR reduces the cost of bad hire – as typically the agency will absorb this cost for the first few months of a new hire.

5. 18% outsource due to a lack of experience in-house: It is difficult to keep the most talented HR executives engaged when the core business of the company is something else. Being aware of this weakness, a lot of successful companies prefer to outsource the HR functions.

6. 18% outsource to take advantage of technological advances: HR technology is fast evolving. AI & machine learning are playing an increasingly important role in this field. It is impossible for most companies to invest in the cutting edge technology for what is typically seen as a cost center. In such a scenario, the best way to take advantage of these advances is to outsource to established domain experts.

7. 16% outsource to coordinate recruiting and on-boarding: The process of recruitment does not just end with signing a letter of appointment. It continues with candidate on-boarding and training. Outsourcing HR functions ensure that sourcing, recruiting, hiring and onboarding processes are streamlined and feed into each other seamlessly. This not only improves the candidate experience but also increase the overall efficiency of the HR processes. The continuity of experience builds candidates’ confidence in the company and he is more likely to stay with the hiring company.