HR outsourcing operations remain a pressing topic within the financial circle in Nigeria, with senior executives across the banking, financial services and insurance industries seeking long-term and cost-cutting solutions to the numerous operational challenges besetting the sector.
While the industry is one of the mainstays of the Nigerian economy, driving investment, providing credit and fostering financial inclusion, increasing regulatory demands, the pressure to innovate while reducing operational costs and a competitive talent landscape are some challenges that impact its growth.
Although the decision to outsource some or all HR operations for financial service companies might be far from straightforward and require the buy-in of all stakeholders, it has become non-negotiable for streamlining operations and maintaining focus on core business goals to drive organisation growth.
In this article, we outline seven (7) compelling reasons why financial services companies in Nigeria should consider outsourcing their HR functions.
7 Reasons to Outsource HR for Financial Services Companies
Outsourcing HR operations can be a great choice for financial services firms. This is especially true for small to mid-sized companies with small staff strength that warrants hiring a dedicated financial services HR person.
As such, your financial service company can gain significantly from outsourcing its HR needs to reputable HR outsourcing companies like Workforce Group. Doing so effectively guarantees you the support you need and peace of mind.
1. Improved Focus on Core Business Operations
With economic demands at an all-time high, financial services companies need to focus on activities that drive revenue, including expanding market share, product innovation, and improving customer experience. Although HR management is essential, it can distract from these core business priorities.
Why Outsourcing Helps:
Outsourcing your HR functions allows you to delegate tasks like payroll processing and management, recruitment, and employee benefits administration to HR outsourcing service providers.
This frees up leadership teams and internal resources to focus on strategic goals such as digital banking transformation, portfolio growth, and customer satisfaction.
For instance, a bank aiming to develop mobile financial solutions can benefit from outsourcing HR, enabling it to channel its efforts toward technological innovation rather than administrative tasks.
2. Cost Efficiency and Improved Financial Performance
Modern-day realities for organisations in Nigeria are such that managing an in-house HR department can be expensive, especially for small to medium-sized financial institutions.
Costs associated with hiring HR staff, investing in technology, and staying updated on compliance requirements add up quickly.
Why Outsourcing Helps:
Workforce Group offers cost-effective solutions by leveraging economies of scale. As a financial service company, you only pay for the services you need, converting fixed costs into variable expenses.
For example, a microfinance bank can outsource payroll processing and employee benefits management at a fraction of the cost of maintaining an in-house team.
Outsourcing also minimises costs associated with errors, penalties, and inefficiencies, ensuring that your financial service firm operates smoothly and profitably.
3. Fsi
The FSI operates under strict regulatory frameworks in Nigeria, including compliance with the Central Bank of Nigeria (CBN) guidelines, tax regulations, and labour laws.
Navigating these requirements effectively demands expertise that many in-house HR teams may lack.
Why Outsourcing Helps:
Reputable HR outsourcing providers specialise in compliance, talent acquisition, and employee relations. At Workforce Group, we stay updated on the latest regulations and best practices, ensuring financial institutions avoid costly mistakes.
We partnered with a leading commercial bank, ensuring compliance with Nigeria’s Pension Reform Act and accurate management of employee tax deductions, reducing the risk of non-compliance penalties.
4. Enhanced Talent Acquisition and Retention
Attracting and retaining top talent remains a concerning factor for the financial services industry in Nigeria, as demand for skilled professionals often exceeds supply. In addition, the increasing trend toward digital banking has heightened the need for tech-savvy professionals.
Why Outsourcing Helps:
HR outsourcing service companies have access to vast talent networks and advanced recruitment tools, ensuring they can quickly identify and attract top-tier candidates.
At Workforce Group, we also offer employee engagement and retention solutions, such as performance management systems and training programmes.
For example, a client in the financial technology (fintech) sector trusted us to recruit highly skilled software developers with expertise in blockchain or cybersecurity – skills essential for driving digital transformation.
5. Improved Compliance and Risk Management
Non-compliance with labour laws, tax requirements and regulations, and industry standards can lead to reputational damage and hefty fines.
In Nigeria, where regulatory requirements frequently evolve, staying compliant is a significant challenge for financial services companies.
Why Outsourcing Helps:
As Nigeria’s top HR outsourcing partner, we specialise in compliance and staying updated with changes in Nigerian labour laws, tax codes, and financial regulations.
We ensure employment contracts, payroll processes, and employee benefits align with legal requirements.
By outsourcing, your financial service firm can reduce penalty risk due to late tax remittances or non-compliance with the CBN’s employee guidelines, maintaining its reputation and operational efficiency.
6. Access to Advanced HR Technology
Managing HR functions effectively, such as payroll automation, employee performance tracking, and data analytics, requires sophisticated tools.
However, investing in such technology can be costly and less of a priority than other more essential business functions, especially for smaller financial institutions.
Why Outsourcing Helps:
HR outsourcing providers invest in advanced tools and systems, offering financial services companies access to these technologies without the associated capital expenditure. These tools enhance efficiency, accuracy, and decision-making.
At Workforce Group, we leverage cloud-based HR management systems that enable real-time access to employee data, simplifying tasks such as attendance tracking and performance reviews.
8. Flexibility and Scalability
The financial services industry in Nigeria often experiences fluctuations due to market demands, economic shifts, and regulatory changes.
As experienced during the pandemic year, companies may need to scale their workforce quickly to adapt to these changes.
Why Outsourcing Helps:
At Workforce Group, we offer flexible solutions tailored to a specific company’s evolving needs. Whether it’s ramping up recruitment during a merger or scaling down operations during an economic downturn, partnering with us ensures your HR services align with business demands.
For example, during a bank acquisition, the acquiring company can outsource onboarding and integration processes, ensuring a smooth transition for new employees while focusing on core business activities.
Conclusion
Human Resource functions are critical for the smooth running of financial services companies – and the industry at large. As such, it is important to ensure proper handling of these functions.
As the banking and financial services industry evolves, embracing HR outsourcing can be the key to staying competitive in a dynamic market.
Whether you’re a commercial bank aiming to expand your reach or a fintech company developing innovative solutions, partnering with Workforce Group makes getting the flexibility and support needed to achieve success easier.
Ready to handle your HR functions more effectively? Get in touch with our expert consultants to learn more about our customised HR outsourcing solutions for FSIs and how we can help your organisation.
