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HR outsourcing is a valuable tool for every business - big or small. Outsourcing some or all of your HR duties to an outside provider will allow your employees to focus more at the core of your business’s development, save money in the long run, and help you to avoid error.
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HR Outsourcing


Most small business owners and professionals don't want to be weighed down with large amount of administrative work and human resource functions that are required of every running business; instead, they want to be focused on innovating to fuel their company’s success.

Outsourcing HR business functions has begun to increase in popularity as a way of cutting back on administrative responsibility while still running a business. Hiring an outside company can actually be cost-effective and help your small business minimize the possibility of error in calculating payroll and other administrative duties. This guide will provide you with more information about outsourcing HR functions and finding the right provider for your company.

Not ready to outsource your human resources? Purchase HR software from one of our vendors to streamline the process.

Benefits of HR Outsourcing

Even though outsourcing your HR department does in fact take away a certain amount of control from the business owner, the benefits of outsourcing your HR are extensive. Some of these benefits include:

  • Access to outside expertise, and improved service quality. Hired businesses can provide employees that are specifically trained for HR tasks, whereas as an average small business owner might not have proper training. This will likely improve customer and employee support and help to reduce the possibility for error.
  • Lowered overall expenses and ability to adjust to your budget. The cost of keeping up-to-date with regulations and technological advances, as well as the potential cost of error and overhead is usually more than the cost of outsourcing HR functions.
  • Most companies offer a variety of different services with customizable options to fit into your budget, depending on the size of your company.
  • Reduce administrative distractions that might be taking away from the development of the core of your business, and allow existing staff to focus their energy on innovation.
  • Most payroll providers can provide your employees online access to view their benefits, log their own hours, and conduct basic payroll transactions.

HR Outsourcing Option: PEOs

PEOs provide integrated, cost-effective, and innovative approach to the management and administration of the human resources functions. PEOs operate by practicing “co-employment;” this means they are contractually assuming employer rights and responsibilities for all employees hired through them.

In this way, the outside PEO is the face of employee management for your business. PEOs can offer most businesses comprehensive HR coverage including everything from recruiting, payroll and employee benefits to risk management and safety training.

Finding the Right HR Service Provider

When looking to outsource your HR functions, you should be sure you can establish a constructive relationship with the company that you choose. Regardless of the company you hire, you will likely need to keep your lines of communication as open as possible, and know that they have your business’s best interests at heart.

  • Conduct a background check. Check partner references and make sure that they have worked with businesses in your industry successfully before.
  • Make sure they can provide the latest services in terms of online access and payment tracking. You will likely stay with your HR service provider so a long period of time, so be sure they won’t be holding you back in the future.
  • Check out the Society for Human Resource Management for more information on the subject. A lot of their information is free, but some pages may require a membership subscription.

HR outsourcing is steadily becoming the expected way to do business, seeing as the industry has grown close to 70% over the past 6 years. More small business owners are turning to outsourcing to manage their HR functions because it can actually be cost-effective in the long run by eliminating error and helping you focus on doing what you do best: business.

If you're interested in HR outsourcing, be sure to consider payroll services, as well.

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