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Should you outsource your HR functions? There are plenty of reasons why your staffing agency should consider outsourcing HR. They include benefits from cost savings to increased efficiency in your workplace. But there are some drawbacks, too. Here are the pros and cons of outsourcing HR functions to ensure your agency makes the most informed decision.

What to Consider When Outsourcing Your HR

Pro: Access to Technology

Outsourcing human resources can give companies greater access to HR technology, enabling them to leverage advanced tools and systems that may otherwise be costly or resource-intensive to implement in-house. Partnering with an HR outsourcing provider means organizations can tap into their expertise and infrastructure, gaining access to cutting-edge HR technologies and software solutions. These technologies can include robust applicant tracking systems, integrated payroll and benefits platforms, performance management tools, and data analytics dashboards. Outsourcing HR allows companies to benefit from economies of scale, as service providers often have access to industry-leading HR technologies and regularly update their systems to stay at the forefront of technological advancements.

Con: Possible Loss of Control

Outsourcing human resources can sometimes create a perception that a company has given up control over its HR functions, which some stakeholders can view negatively. When HR responsibilities are outsourced, there is a shift in the direct management and oversight of HR processes, leading to concerns about losing control over critical functions such as hiring, employee relations, and policy implementation. This perception may arise from the fear of potential misalignment between the outsourced provider’s actions and the company’s strategic goals or culture. The communication and coordination challenges in an outsourcing arrangement can contribute to the perception of reduced control. It is essential for companies to effectively manage these concerns by maintaining open lines of communication with the outsourced provider, clearly defining expectations and performance metrics, and ensuring ongoing collaboration to maintain a sense of control and alignment with the organization’s objectives.

Pro: Comprehensive Benefits

Outsourcing human resources can give companies better access to more comprehensive employer benefits for their workforce. HR outsourcing providers often have relationships with insurance carriers, benefits administrators, and retirement plan providers. These partnerships allow them to offer various benefits options and negotiate competitive rates for their client companies. By leveraging these relationships, outsourced HR providers can provide access to a broader selection of employee benefits, including health insurance plans, retirement savings programs, wellness initiatives, and other perks. This expanded pool of benefits options enables companies to offer their employees more comprehensive and attractive packages, enhancing employee satisfaction and retention. Outsourced HR providers can help navigate the complex landscape of benefits administration, ensuring compliance with legal requirements and simplifying the enrollment and management processes.

Con: The Cost

The cost of outsourcing human resources can be prohibitively expensive for some companies. While outsourcing HR can provide numerous benefits, such as expertise and access to advanced technology, associated costs are involved. Outsourcing providers typically charge fees based on the scope of services offered, such as payroll administration, benefits management, or employee training. These fees can vary depending on the company’s size, the complexity of HR functions, and the level of customization required. For smaller companies or those with limited budgets, these costs may pose a financial burden that outweighs the potential benefits. Additional expenses may be related to transitioning to an outsourced HR model, such as contract negotiations, data migration, and training employees on new systems. It’s crucial for companies to carefully evaluate their financial capabilities and consider the long-term ROI before committing to HR outsourcing, ensuring that the cost aligns with their budget and strategic goals.

Pro: Access to HR Experts

The cost of outsourcing human resources provides companies with valuable access to HR experts who specialize in employment and compliance matters. Outsourcing HR functions often involves partnering with providers with a dedicated team of professionals well-versed in employment laws, regulations, and compliance requirements. These HR experts stay updated on the ever-changing legal landscape and ensure that companies adhere to local, state, and federal employment regulations. By outsourcing HR, companies gain access to this specialized knowledge and expertise without investing in extensive training or hiring full-time HR professionals. This access to HR experts helps mitigate non-compliance risk, minimizes potential legal issues, and ensures that HR practices align with industry standards.

Thinking of Outsourcing Your HR Functions?

Anserteam Workforce Solutions represents North America’s very best staffing agencies aligned together to deliver world-class workforce management solutions. We offer end-to-end talent services that can be customized for any size business, utilizing our Managed Services Provider (MSP) model and Vendor Management Solutions (VMS) technology. Is your organization seeking a WBENC-certified diversity partner to provide measurable results and substantial cost savings?  Contact us today.