Outsourcing your human resource department can help you with efficiency, decrease your expenses, and even elevate your compliance standards. It provides you with an opportunity to concentrate on your core or main operations and outsource the work of an HR department to an experienced service.  

This will provide increased efficiency, scalability, flexibility and, in turn, better support for the general business activity and strategies. Before we move forward learn about  

The business world nowadays is rapidly expanding, and organisations are always on the lookout for methods and techniques which can increase their efficiency. Among the strategies that can be regarded as rather effective and gaining popularity gradually, there is one called HR outsourcing. If you want to know what is offshoring and outsourcing, read our detailed blog to understand the difference between the two.  

In this blog, we will cover how HR outsourcing fulfils various advantages that can help a business. Knowledge of these benefits will go a long way in assisting you make an enlightened decision on why to outsource HR services and how to organise this new branch of your business. We will also explain the difficulties you may achieve when outsourcing and the way to get away from these difficulties.

Function managed by HR outsourced

An outsourced HR can manage various functions, such as:

• Recruitment and onboarding

• HR Admin

• Payroll  

• Tax Administration

• Compliance and Legal

• Risk Management

• And many more.

Wish to know more about what HR outsourcing is, read our blog on “What is HR Outsourcing Services”  in detail.  

Benefits and how HR outsourcing helps businesses with their HR functions

When you outsource your HR department duties and tasks, you will have many advantages. Here are some of the benefits of outsourcing your HR department:

Cost benefits of outsourcing HR  

An advantage associated with outsourcing of the HR services is the aspect of cost reduction. Managing an internal HR team is not cheap since it entails payments for the employees, their allowances, the development and acquisition of necessary tools, and much more.  

This is a clear pointer that outsourcing some of these HR functions could lead to many overheads being cut out. When companies subcontract with a specialised HR service provider the costs which heretofore have been paid directly by the company become variable costs hence a better fit to organisational needs.  

This cost-benefit of outsourcing HR is especially beneficial for SMEs who, owing to the company’s size or stage of development, cannot yet or may not want to invest in a full-fledged HR department.

Use our employee calculator to analyse how much cost benefits you will have when you outsource your services to India. Check out our easy and transparent calculator.  

Operational benefits

The advantages of outsourcing the Human Resource Department are many and pertain mostly to the operational realm and productivity. Outsourcing means that organisations can no longer handle most of the HR activities on their own, instead, they must contract some personnel to offer the services.  

HR outsourcing enables the decentralisation of tedious tasks including paying employees, implementing and managing employees’ compensation structures, and ensuring companies adhere to legal standards.  

Delegation of tasks relieves internal resources; thus, it allows the employees to dedicate their efforts to relevant business operations and long-term plans. Furthermore, common functions administrated by outsourcing providers include sophisticated technologies as well as optimal methodologies causing organisational HR functions to operate optimally.

Scalability benefits

Outsourcing HR functions also have the added advantage of scalability. Attached to the growth and changes of your business, you will confront changes in the human resources demands. Outsourcing of HR functions therefore offers the necessary flexibility whenever it is necessary to adapt and alter the HR services that are rendered in each company.

External HR comprises one of the benefits of scale as they can extend or reining in their services in proportion to the needs of the business. This allows one to have enough support, but only at the requisite level without the need to hire extra people in-house or invest in expensive human resources equipment.

Global talent and recruitment

The availability of global talent for recruitment is one of the key factors why every company should outsource their requirements and build a remote team. HR outsourcing providers often have access to global talent, and this allows your business to recruit top talent from around the world.  

This new expansion of the talent pool is advantageous to companies looking for diversity and innovation in their team and projects. You can leverage the remote experts and hire specialised skills personnel at an affordable salary.  

Thinking about which country is most suitable for outsourcing? End your search with India. Read our detailed blog on why you should hire from India.  

Legal compliance

Sometimes it’s difficult to navigate complex labour laws and maintaining legal compliance can be challenging, especially for businesses operating in multiple jurisdictions. Outsourcing human resources can help you manage this problem as they provide expert guidance on complex legal compliances.

HR outsourcing not only guides you but also lets you be on top of your industry with the latest rules and government requirements. They are proactive and always helpful, this approach helps in reducing the risk of legal disputes and penalties.  

They safeguard your business from legal compliance issues. If you want to offshore but don’t know how, connect with Black Piano and we will help you.  

Employee benefits and services

Outsourcing HR services not only enhances business but also facilitates employee benefits and services. External HR providers offer access to better packages and improved support services for all your employees.

If you provide better employee services than your competitors then you will have higher retention rates, increased job satisfaction and a positive work environment. HR outsourcing provides specialised services such as employee assistance programmes, wellness initiatives and career development opportunities.  

Hiring an outsourcing company also motivates the employees to work better and keep engaged as they can see the efforts put in by their employer. Learn about different types of HR Outsourcing in our blog.

Challenges of HR outsourcing

While the benefits of HR outsourcing services are numerous, it is important to consider the potential challenges associated with it. One common challenge is ensuring effective communication between your business and the external HR provider. Clear and consistent communication is crucial for successful collaboration and to ensure that the outsourced HR functions align with your organisational goals.

Cultural differences and varying practices between your company and the HR service provider can also pose challenges. It’s important to select an HR outsourcing partner that understands your business culture and values and can integrate seamlessly with your team.

Additionally, businesses must carefully evaluate and select the right HR service provider to ensure they meet your specific needs. This involves assessing their expertise, reputation, and the range of services they offer. A thorough selection process helps mitigate risks and ensures that you partner with a provider that aligns with your organisational objectives.

Confused about whether to offshore or outsource? Click here to learn about the difference and choose accordingly.  

Case studies

Slack Technologies

Slack is a popular workplace messaging platform and has outsourced payroll processing and employee benefits administration. Due to this outsourcing, they can focus on critical and main operations and as a result, we can see their tremendous growth in the industry.

After outsourcing HR services Slack can maintain a strong organisational structure whilst offering competitive employee benefits and making sure that everything is well in compliance with labour laws across the different regions.  

This can be seen as a strategic move which has contributed to the rapid growth of Slack.  

According to a PwC survey, 39% of companies outsource HR so that they focus on their main business areas.  

I hope now you understand why you should Outsource your HR Services and How HR outsourcing helps businesses.  

The benefits of outsourcing HR functions are extensive and varied. From significant cost savings and operational efficiencies to enhanced legal compliance and access to global talent, outsourcing HR can provide valuable advantages for businesses of all sizes. By leveraging the expertise of an external HR service provider, companies can optimise their HR management and focus on their core business activities.

Understanding these benefits can help you make informed decisions about why outsource HR services and how to effectively integrate outsourcing into your business strategy. Despite potential challenges, the strategic advantages of HR outsourcing often outweigh the drawbacks, making it a viable option for many organisations.

If you want to discuss further or outsource your HR functions, connect with Black Piano today. Send us an email at hello@blackpiano.co.uk and we will get back to you as soon as possible or schedule a call with Jon.