article icon

What are the Advantages and Disadvantages of HR Outsourcing? Weigh the Pros and Cons for Your Business.

Outsourcing human resources is a popular strategy for businesses seeking to streamline operations, reduce costs, and access specialized expertise. And turning over some or most of your HR responsibilities to an external provider can help you improve overall efficiencies so you can get time back to concentrate on your primary operations.

However — like any business solution — outsourcing human resources has advantages and disadvantages (and even some misconceptions). It’s essential to understand the big picture of HR outsourcing and to research different providers, so you can choose a partner, along with the services and solutions that best address your company's needs.

In this article, we'll explore some key benefits and potential drawbacks of HR outsourcing to help you determine the best path to take for your business.

Woman wearing glasses sits in front of an indoor plant in a contemplative pose with a laptop in front of her.

What are the top 6 advantages of HR outsourcing?

To succeed in today's competitive business landscape, streamlining operations and maximizing resources is crucial. And for small to mid-sized business owners – juggling a long list of HR tasks every day (and night) can take precious time away from revenue-generating initiatives.

That’s why more and more companies are turning to HR outsourcing. The option delivers a variety of benefits, but six of the top advantages of HR outsourcing include:

1. Managing Your HR Costs

Outsourcing helps you reduce and better manage HR costs over time, providing predictable expenses, easier budgeting, and scalable services. Instead of hiring multiple HR professionals, you can partner with an HR outsourcing company and gain access to a wide range of services and solutions along with a team of specialized HR experts.

2. HR Expertise for the Unexpected

Compared to a single in-house HR manager, whose expertise and time may be limited, an HR outsourcing provider – like a professional employer organization (PEO) – employs a team of experts with comprehensive and deep HR knowledge. From payroll and employee benefits expertise to safety and compliance support, their specialists can guide you through new or complex challenges, including (but not limited to) business continuity planning, succession planning, and preparing for natural disasters or crisis events.

3. Plug-and-play HR for Growing Companies

Are you expanding to another region or hiring remote employees? A national HR outsourcing provider has the resources and knowledge to ensure compliance with local regulations, including payroll taxes, mandated breaks, and much more. This expertise allows you to streamline your expansion or recruitment efforts in new markets, so you can ensure a smooth transition and hit the ground running.

4. Continuous Updates on Labor Trends (Without All the Labor)

An HR outsourcing provider, like a PEO, continually researches the latest employee benefits trends to provide their clients with competitive options. This allows you to offer your employees top quality, affordable employee benefits packages without the hassle of doing the research yourself – helping you attract (and keep) top talent in a competitive labor market.

5. Tailored Flexibility

If you’re satisfied with your current workers' compensation or benefits broker, an HR outsourcing provider such as G&A Partners can integrate their solutions with your existing services. This allows you to benefit from our best-in-class client service and HR support without disrupting what’s already working for you.

6. Shared Liability and Interest in Your Success

Some HR outsourcing providers, like a PEO partner, share employment-related liability with your business, making them invested in your success. Their experts help you reduce risk and help ensure your business is compliant by advising on complex issues, such as whether to terminate an employee who is on FMLA, payroll and related taxes, and more.

To learn more about the advantages of HR outsourcing and how it can help your business grow, contact G&A Partners.

What are the perceived disadvantages of HR outsourcing?

If you're unsure about outsourcing HR and concerned about any potential downsides, you're not alone. However, what many perceive as disadvantages of HR outsourcing are often just misconceptions, including:

1. Loss of control

With HR outsourcing, you give up some operational responsibilities, but ultimately, you retain complete control over decisions involving your company and employees. You can follow recommendations from the outsourced HR provider or make decisions based on their guidance. It’s your call.

2. Cost

While there are costs associated with HR outsourcing, you control spending and can choose the services that fit your needs and budget. Plus, through HR outsourcing, you gain access to specialized expertise, technology, and resources without taking on the cost burden of additional internal hires.

3. Communication challenges

Communication challenges with HR outsourcing, such as distance, company culture differences, and confidentiality issues, can create concern. However, companies like G&A can bridge the communication gap with advanced technology, experienced HR professionals, and a proven client-centric approach.

4. Data security

Data and security are crucial for your HR department's success (and your business). That’s why HR outsourcing experts rigorously comply with data protection laws, implement encryption measures, and develop comprehensive company policies to safeguard against cybersecurity risks and protect employee privacy.

5. Turnover

Your people are your most important asset. Contrary to popular belief, outsourcing HR can reduce turnover by providing access to top-tier benefits plans, simplified payroll and benefits administration, robust recruitment programs, and other talent retention services.

As with any partnership, it’s important to properly vet and research different HR providers to identify the partner that works best for your business.

Why G&A?

At G&A Partners, we deliver world-class HR solutions that help build thriving businesses. To learn more about how G&A can support you, your business, and your employees, schedule a consultation.