The HR department plays a critical role in an organisation’s success. It is responsible for employee management, including recruitment, onboarding, training, and employee benefits management.
However, many organisations do not have sufficient resources to set up an efficient in-house team or manage day-to-day HR functions in response to growing business demands and priorities. Business owners and executives like you are outsourcing their HR functions to adapt to growing trends, streamline operations, and enhance the employee experience.
According to a 2023 Clutch survey, 24% of small businesses and startups currently outsource their HR functions for different reasons. But what do outsourced HR functions entail, and how can they help you grow your business?
What Is Outsourced HR?
Outsourced HR, or HR outsourcing, refers to the process of partnering with a third-party company to fulfil HR tasks on your behalf, i.e., delegating some or all of your HR functions to a third party—usually an HR outsourcing service provider.
In recent times, outsourcing HR functions has proved a wise investment, freeing up time for in-house HR teams to focus on more strategic HR priorities, including succession planning and boosting work culture initiatives.
You can outsource HR functions through three channels:
1. Professional Employer Organisation (PEO)
A PEO provides comprehensive HR outsourcing services to small and medium-sized businesses by entering into a co-employment relationship with them. In this relationship, the PEO takes on the role of employer of record for specific employment-related functions.
The PEO handles several HR tasks, including payroll management, benefit administration, HR compliance and risk management. As a client, you retain control over operations while the PEO takes care of HR-related functions and assumes certain liabilities.
2. Administrative Services Organisation (ASO)
Unlike a PEO, an ASO does not enter into a co-employment relationship with you, although it similarly provides outsourced HR services. As such, you remain the employer of record and maintain all employer-related liabilities, while the ASO assists with tasks like payroll, benefits administration, risk management, and HR compliance.
3. Business Process Outsourcing (BPO)
While PEOs and ASOs primarily focus on HR functions, Business Process Outsourcing encompasses outsourcing a wider range of your business processes to an external service provider. These business processes cut across various departments, including finance, customer service, accounting, data entry, IT support, supply chain management, etc.
Although HR outsourcing is a better fit for enterprises and larger-sized businesses, PEOs can be cost-effective for small and medium-sized companies. Examples of commonly outsourced HR functions include:
- Recruitment: This includes many aspects of the hiring process, such as background checks and verification, benefits management, and employee onboarding.
- Payroll processes and management
- Employee management: This includes employee performance management relating to organisational goals, etc.
7 Ways Outsourcing HR Functions Can Help Grow Your Business
Outsourcing HR functions ensures several benefits for organisations, ultimately guaranteeing business growth and profitability. According to Jack Welch, CEO of General Electric, outsourcing HR functions increases efficiency because in-house administrative headaches become someone else’s front-office priority.
Let’s explore seven (7) ways specific HR outsourcing functions can help your business grow.
1. Recruitment and Talent Acquisition
Outsourcing your recruitment needs to expert service providers can significantly enhance your top-tier talent pool. By partnering with Workforce Group, you can leverage our extensive networks, advanced sourcing techniques, and market insights, which enable us to identify and engage top-tier candidates efficiently.
By accessing our wider talent pool, you can secure the skills and expertise necessary to drive innovation, expand into new markets, and stay ahead of competitors.
2. Training and Development
Partnering with a leading HR outsourcing provider like Workforce Group for your training and development programmes empowers employees with the knowledge, skills, and capabilities needed to excel in their roles.
Our customised training initiatives enhance individual performance and contribute to a continuous learning and development culture within the organisation. Well-trained employees are more engaged, productive, and agile, enabling your business to innovate, adapt to changing market demands, and confidently seize growth opportunities.
3. Payroll Processing and Benefits Administration
Payroll and benefits are the two most significant expenses every business incurs. This is why one of our popular outsourcing services is payroll outsourcing. This helps you streamline administrative tasks, reduce errors significantly, and ensure compliance with tax regulations and labour laws.
Workforce Group also guarantees accuracy, efficiency, and transparency in your compensation processes. In addition, robust benefits packages can help you attract and retain top-tier talent, foster employee loyalty, and contribute positively to your employer brand, ultimately driving employee satisfaction, productivity, and business growth.
4. Compliance Management
Outsourcing your compliance management functions to reputable professionals can mitigate legal risks, ensure adherence to regulatory requirements, and protect your reputation. Our extensive experience ensures we keep up to date with evolving laws and regulations, conduct thorough audits, and implement effective risk mitigation strategies.
We partner with you to proactively manage compliance to avoid costly penalties, lawsuits, and reputational damage, safeguarding your operations and enabling sustained growth and expansion.
5. Employee Relations and Conflict Resolution
Workforce Group helps promote and maintain a collaborative and productive work environment by handling employee relations and conflict resolution processes. Our in-house experts are trained to address interpersonal conflicts, grievances, and disputes impartially and effectively.
By resolving conflicts promptly and constructively, your business can minimise disruptions and foster a culture of collaboration and mutual respect. A positive work environment enhances employee engagement, retention, and performance, driving business growth and success.
6. Strategic HR Consulting
Reputable HR outsourcing providers can provide valuable insights, guidance, and direction to business leaders across various industries and sectors. They work with you to analyse your organisational objectives, assess workforce capabilities, and develop customised HR strategies aligned with your business goals.
Whether it’s workforce planning, succession planning, or organisational restructuring, strategic HR consultants like Workforce Group offer actionable recommendations that optimise your talent management practices and drive sustainable growth. By leveraging our expertise, you can make informed decisions, mitigate risks, and capitalise on emerging opportunities in today’s competitive landscape.
7. Technology Integration and HR Systems Management
Success in today’s business landscape is highly dependent on an efficient technology integration system and on high-quality talent. Outsourcing your technology integration and HR systems management to specialised providers can optimise HR processes, enhance data accuracy, and improve decision-making capabilities.
Workforce Group offers expertise in implementing and managing HRIS (Human Resource Information Systems), ATS (Applicant Tracking Systems), and other technology solutions tailored to your organisation’s needs. By leveraging our advanced technology platforms, you can automate routine tasks, streamline workflow processes, and gain valuable insights into workforce analytics.
Enhanced data visibility and analytics empower businesses to make data-driven HR decisions, optimise resource allocation, and drive continuous improvement across their organisation, ultimately driving business growth and innovation.
Conclusion
Maintaining an effective HR department may become a challenge as your organisation evolves. As such, outsourcing HR functions can be a strategic imperative to grow and thrive in today’s competitive landscape.
By partnering with leading HR outsourcing providers like Workforce Group, you gain access to specialised expertise, optimise operational efficiency, streamline your processes, enhance compliance and risk management, and foster a positive employee experience—all of which help you unlock significant value and are critical drivers of business growth and success in today’s competitive landscape.
To learn more about how outsourced HR functions can grow your business, contact one of our expert consultants or simply email hello@workforcegroup.com.
