HR Outsourcing Services – Doing Smart Business

August 26, 2016

HR Outsourcing Services – Doing Smart Business

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HR is one of the most pivotal parts of your SME (Small and Medium-Sized Enterprises) while your company is emerging. But is it a good practice for the company to get involved in HR management, payroll of the customers, looking after the benefits and compensation of the board members and the workers in the due process of the course?

Well, the answer to that question is a simple ‘NO’. An evolved SME cannot invest its valuable time and efforts in non-remunerative activities or in processes that hinder the advancement of the company, and that is the major reason why most companies delegate their HR responsibilities to a third party that is equipped with the required  knowledge and technology.

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Need For Outsourcing:

People are often dubious about outsourcing HR management because of lack of knowledge about the right time to outsource.  The following points will help appease that uncertainty and provide some insights into the right time to  outsource HR management:

  1. Strength of your SME

The most important aspect when you plan to outsource your HR is after analyzing the strength of your company. A strength of less than 50 recruits can be handled by your team without interference from a third party. The Guardian carried out a survey that found out that companies with less than 50 members had their finance director look into the responsibilities of the HR division since they have commendable knowledge pertaining to that field.

  1. Service Demands

There is a need to prioritize your demands about which aspect of your company needs to be handled by the HR Company. Usually most SME’s target the complete division of HR and need the services to fulfill the legal contracts and policies. Employee related issues are another growing concern of most SME’s. Also make certain that the HR company you delegate the job to ensures that you get newsletters so that you are updated and ahead of the curve. Redundant processes, discrimination issues, and ill-treatment are other concerns that an HR company can help you with.

  1. Cost

The cost of hiring these services will determine which HR company you employ. The costs vary from consultant to consultant, but other than that there are different facilities for which a consultant can bill you. Let’s take a look:

  • Consultants are roped in for a specific project
  • Day to day calculated activities
  • Projects that are termed as an “emergency” for which you may be billed at an hourly rate.
  1. Nature of Provider

Choosing the right provider for your needs will determine the costs involved as well as the personal relationship between the provider and the SME . If the SME needs a face for their HR department that oversees all the processes of the company, then they will have to choose a permanent outsourcing company that looks after all the processes, and that will be just a phone call away. The alternative is to hire a company that does part time consultancy, but the downside is that they may not be as personalized as the former.

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Business News Daily has come up with a list of advantages that revolve around hiring a PEO:

  1. Lesser Administrative Work

Choosing a PEO to handle the payrolls, legal issues as well as other administrative work will reduce the workload of the SME. This gives the SME more time to take care of other important things that will improve their business. This is one of the major reasons why the SME’s are comfortable in delegating work to HR consultants.

  1. Benefits for the Employees

The ulterior reason for allowing a PEO to take control of the administrative prospects of the SME is to provide better benefits to the employees in terms of health benefits, retirement benefits, as well as generous compensation. These are the thoughts of Sarah Grimstead, the regional sales manager for Insperity, which is a PEO provider.

  1. Cost Saving

The companies that tie up with PEO’s:

  • Have lesser insurance costs
  • Get massive worker’s compensation discounts
  • Lesser SUI which is state unemployment insurance

But to stay ahead of this, the SME needs to take into consideration the service fee the PEO is charging as well, and the added benefit costs saving. If the former is more than the latter then the SME is in a loss and vis- a-vis.

  1. Legal Issues

SME’s have various problems while updating their lawyers and managers with the changing legal issues. PEO’s are constantly evolving and adapt to the various changes in law as well. The PEO will help their clients by getting their employee handbooks made as well as make them understand the ACA (Affordable Care Act).

  1. Fresh Talent

While maintaining their existing employees in the companies, these PEO’s also work at bringing in better employees into the company. Better compensations, higher rewards, and health facilities is what the PEO’s promise to attract better employees.

  1. Legal Issues

There are certain issues that can disrupt the working of a company, for instance if an employee files a case. The PEO’s will help the company defend itself against such claims, for cases like discrimination or termination of contract on a wrong basis.

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How to Choose A PEO:

  1. Reputation

The first thing to check off on your list is the reputation of your company. These PEO’s are certified by Employer Service Assurance Corporation (ESAC), which is mandatory to check. When the SME is closing such a big deal, they need to ensure that proper research is done on these PEO’s , such looking at the vendor’s status, their reputation as well as the number of referrals from other customers. The financial background of these PEO’s should be strong which ensures that they do not declare bankruptcy in the near future.

  1. Services Offered

If you are looking for specific services, you need to choose a PEO that is specialized in certain processes. There are various services which you can choose in particular or else choose the complete package which will include:

  • Payroll
  • Administration
  • Worker’s Compensation and the benefits they provide
  • Recruitment of new staff


  1. Technologically Aspect

Does the PEO have a technological side that can be incorporated into the platform of the company? If these solutions are plausible, and the transition is easy, then the company can choose the PEO for its needs. You also need to be sure that the PEO’s technology is safe for use and can be trusted.

  1. Authority

What say does the company have in the daily proceedings? The company may have to set jurisdiction and scrutinize the contracts they are signing with the PEO.

  1. Cost

This is an important factor which will determine the viability of the process. Choose a billing rate that will not hamper the revenue structure of your company. A flat billing rate per month, billing for each employee separately, etc are some of the options.


These are a list of some of the advantages listed by Professional Employer. You can learn more about PEO’s from



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