Top 10 Reasons Companies Outsource HR

by | Oct 20, 2015 | Employee Management, Our Blog | 0 comments

Human Resource functions have grown immensely more complex than they were even 30 years ago. Today, businesses find themselves faced with challenges including ever-evolving state and federal compliancy laws, 401(k) retirement plans, the Americans with Disabilities Act, the Family and Medical Leave Act, and now the Affordable Care Act. Many small to mid-sized businesses (even large companies) become overwhelmed by these challenges and the demands of a successful employee management program.

Human Resources OutsourcingBenefits administration and compliance issues alone can eat up all of your HR devoted time. Finding time to focus on one-on-one time with employees, developing employee engagement programs, etc., is often impossible. By outsourcing HR related functions, owners and management can focus on the success of their business.


Benefits of Outsourcing HR

According to The Society for Human Resource Management (SHRM) , an increasing number of small businesses are outsourcing their HR functions. According to an in-depth SHRM survey, these are the 10 leading reasons companies turn to HR consultants:

  1. Save money and reduce operating expenses;
  2. Control legal risk and improve compliance;
  3. Gain greater HR expertise;
  4. Streamline HR functions;
  5. Offer services the organization could not otherwise provide;
  6. Allow the company to focus on its core business;
  7. Reduce the number of HR staff and related expenses;
  8. Improve service delivery;
  9. Allow HR staff to put more emphasis on strategy; and
  10. Make up for the lack of in-house expertise.

SHRM also found that the top 10 HR functions turned over to an outsourced HR administrator, completely or in part, were:

  1. Background checks;
  2. Employee assistance and counseling services;
  3. Flexible spending account administration;
  4. Health care benefits administration;
  5. Risk management;
  6. Pension benefits administration;
  7. Retirement benefits administration;
  8. Employee relocation;
  9. Payroll administration;
  10. Training programs


Outsourcing the above human resource functions makes sense for many companies, allowing them to get customized expertise without having to hire an in-house HR professional at a high salary. Additionally, compliance is a huge risk as well as liability. By outsourcing, companies are granted an extra layer of protection.