Deciding to outsource any business function to a third-party is often a difficult process for businesses. Even if they believe outsourcing will almost surely result in cost savings, business owners and executives are often hesitant to make what they see as a dramatic change to how their company operates.
The truth is there is no one-size-fits-all solution or easy answer when it comes to deciding whether to outsource a business function or keep it “in-house.” Here are four questions to ask yourself when considering outsourcing HR, or any business function:
Is there a real, tangible benefit to performing this function in-house? If your core product or service offering doesn’t involve HR, why spend large amounts of time or money managing it? Having a robust in-house HR department is unlikely to help you sell more of your product or garner a bigger market share. What will help you increase sales and market presence is shedding the administrative liabilities and tasks associated with human resources management and refocusing those resources on revenue-generating activities.
Could an outside vendor manage this function more effectively or efficiently than your internal staff? Almost 75% of an in-house HR professional’s time is spent on transactional tasks like payroll processing and benefits enrollment. HR outsourcing providers have the tools and proven processes in place to streamline human resources and free up your (most-likely) overworked HR manager to design and implement more strategic HR initiatives.
Are your employees struggling to keep pace with all of the current and expected demands of this function? In addition to cost savings, one of the main reasons companies begin looking into HR outsourcing is that they want more from their human resources staff. With the ever-changing state and federal regulations being passed and the rising costs of health care coverage, companies are finding they don’t have the resources to keep up with the growing demands of their workforce. If your company is considering hiring additional staff or contracting out bits and pieces of HR to outside vendors, consider partnering with a professional employer organization. PEOs offer comprehensive HR and administrative services that touch every aspect of HR including payroll, regulatory compliance, employee benefits administration and risk management.
Is your organization expending valuable resources on HR that could be better spent elsewhere? The amount of money organizations spend on HR rose by over 30 percent between 2008 and 2012, with organizations reporting spending $1,923 per person on HR in 2012. In contrast, the average cost for a professional employer organization (PEO) providing comprehensive HR and administrative services typically ranges between 3 to 8 percent of a company’s total payroll.
If you were able to answer “yes” to any of the questions above, it may be time to give HR outsourcing a try.
G&A Partners, a leading national PEO and HR outsourcing provider, has been helping entrepreneurs grow their businesses, take better care of their employees and enjoy a higher quality of life for more than 20 years. G&A alleviates the burden of tedious, employment-related tasks by delivering proven human resources processes and technology, allowing business owners and executives to focus their time, talent and energy on their company’s core products and services.