Should My Hr Department Have Outsourced Help?

Top 13 reasons companies turn to external hr experts

In a survey conducted by the Society for Human Resource Management, they identified the top 13 reasons that companies were outsourcing some or all of their HR department.

1. 56% – To save money & reduce operating costs.
   Outsourced professionals typically give you the expertise of a team of individuals for a fraction of the cost.
2. 55% – To control legal risk & improve compliance.
   Outsourced professionals typically invest more time/dollars into staying on top of the ever-changing laws and regulations that businesses must follow.
3. 47% – To gain access to vendor talent & expertise.
   The outsourced team will come with a variety of expertise in various industries and situations as well as vendor relationships they’ve cultivated.  In-house talent doesn’t usually have access to these same resources.
4. 45% – To streamline HR functions.
   Because they have experience with many companies, outsourced professionals will typically excel at streamline your HR processes.  They can work with your in-house talent to identify bottlenecks and help develop methods for correcting them.
5. 44% – To offer services the organization could not otherwise provide.
   Because you gain access to a team of individuals for a fraction of the cost, you get a wider array of experience and services that you normally would not have access too in a budget-friendly way.
6. 42% – To allow the company to focus on it’s core business.
   This is especially important in smaller companies where the owners and managers need to focus on the core business without the added stress of trying to learn how to handle all the paperwork and regulations that come with employees.  Not being up-to-speed on the latest laws can be costly for a business – and when you don’t have time to learn them, you can get in trouble before you know it.
7. 41% – To reduce the number of HR staff and related staff expenses.
   By outsourcing some of your HR functions, you don’t need as many in-house staff members.  This reduces your expenses as well since outsourced talent will also provide their own equipment and training.
8. 36% – To provide consistent/improved service delivery.
   Many companies will over-burden their in-house team without realizing they are doing it.  This can lead to delays in devliery times and quality.
9. 33% – To allow HR staff to focus more on strategy.
   Once you’ve removed some of the burden from your team, they can focus on making improvements while the outsourced team takes care of the more tedious and time-consuming tasks.
10. 27% – To make up for the lack of in-house talent/expertise.
    Oftentimes, you’ll find that your in-house team isn’t fully qualified in all of the various areas of HR that you need them to fill.  This is typically just due to the complexity of HR requirements.  It’s almost impossible for one or two people to hold the experience necessary.  You can solve for these gaps easily by supplementing with outsourced talent.
11. 23% – To gain access to vendor technology.
    Outsourced HR companies will typically build relationships with third-party vendors as well.  By utilizing those vendor connections, you gain access to additional technology as well as a team of people that can help you implement it.
12. 18% – To avoid the cost of major investments in technology.
    HR professionals often need access to certain technology and other tools to do their job.
13. 13% – To make up for a reduction in HR staff.
    If you’ve recently reduced your HR staff, you can utilize outsourced talent to fill in the gaps.

The TOP 10 Functions Typically Outsourced

In the same survey conducted by SHRM, they also identified the top functions outsourced by companies.

1. Background & Criminal Background Checks – 49% completely outsourced, 24% partially outsourced
2. Employee assistance / counseling – 47% completely outsourced, 19% partially outsourced
3. Flexible spending account administration – 43% completely outsourced, 24% partially outsourced
4. COBRA administration – 38% completely outsourced, 17% partially outsourced
5. Health care benefits administration – 24% completely outsourced, 36% partially outsourced
6. Temporary staffing – 21% completely outsourced, 33% partially outsourced
7. Pension benefits administration – 19% completely outsourced, 36% partially outsourced
8. Retirement benefits administration – 17% completely outsourced, 30% partially outsourced
9. Employee relocation – 13% completely outsourced, 16% partially outsourced
10. Payroll administration – 13% completely outsourced, 35% partially outsourced