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Why Outsourcing HR Is A Business Decision For Growth

By January 4, 2013 February 19th, 2015 No Comments

young business woman walking on a tightropeOutsourcing hr is a decision that many businesses make when they realize the cost of not having an outsourced human resources group. Considering the opportunity costs, it makes absolute sense. Payroll and human resource management, benefit, and compensation, and other non-revenue generating activities can be time consuming for most small businesses. Estimate are that up to 40 percent of a business day may be engaged in tasks that are necessary for the business, but eat up time that could be devoted to activities that produce revenues.

For 2013 a trend for many small companies is to outsource human resources in order to improve profitability and devote more time to the actual core buesinss needs of the company.

An oursourced human resource company may be a business process outsourcers (BPO), professional employer organization (PEO), an adminstrative services organization (ASO) or one of several other designations that work with companies to manage staff and handle payroll, benefits and HR functions.

When businesses outsource non-core activities they can be more efficient in their core activities, resulting in greater pofitability and growth. Often, the outsourced human resource group can provide better benefit programs and reduce the cost to provide them versus the company itself acting independently. This is partially due to economies of scale, the power of negotiating for larger numbers of users, or the ability to have multiple providers to select from.

If your company has experienced the managerial and administrative tasks taking up too much time and slowing down the ability of the company to grow, it’s time to consider outsourcing hr. This can be different for each company and in the past, many companies have balked at the idea of hiring a PEO to then hire the associates as employees of the PEO. There are other ways to outsource human resources that do not entail losing the ability to direct hire, and which may be less expensive alternatives to PEO scenarios. Understanding BPO’s and ASO’s can help an employer make the right decision with regard to outsourced hr providers.

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