Why should a small business outsource HR? Because it will infinitely simplify your life?

August 10, 2015

Why should a small business outsource HR? Because it will infinitely simplify your life?

Contrary to popular belief, the skill set required for strategy implementation in Human resources management (HR) is more complex than anywhere else in the organization. Outsourced HR consultancy services then becomes a very viable alternative.

Traditionally, HR is a critical function and most companies have handled it in- house, and in fact in small business the owner doubles up as the head of HR. However, all that is changing very rapidly as the role of HR moves beyond the limited tasks of helping employees with questions or concerns about benefits, hiring, training, complaints, colleagues, etc.

Today an estimated 50 percent of large companies outsource at least a part of their HR needs; this number is of course much lower for small business but adoption is growing rapidly.

Satisfaction with Outsourcing Human Resource Consultants


So should you bring on board an outsourced HR company?

Today forget developing engaging initiatives with your employees, mundane day-to-day tasks of administration and compliance issues will eat up all of your time. This one itself is a great reason to consider outsourcing human resources.

So probably yes, however like everything else in business esp. people management, a one size fits all doesn’t work. The key is to develop a strategy and solution that works for you and your organization. If you are wondering why other companies are outsourcing human resources, read on!

Some quick advantages of outsourcing HR:

  • Reduce direct HR related staff expenses up to 41%.
  • Improve legal compliance up to 55%.
  • Access to HR expertise increases up to 47%.
  • Ability to focus on core business increases up to 42%.
  • Reduce the cost of maintaining non revenue-generating back-office expenses up to 23%.
  • Cost reduced upto 56% on expense reports
  • Time needed for payroll processing can be reduced due to Outsourcing Human Resources
  • Reduces work load of managers by reducing administrative work.
  • Reduce almost all the paper work associated with HR tasks.

Services typically provided by an outsourced HR company include

  • Recruitment & Hiring
  • Induction
  • Training and Development
  • Performance Management
  • Policy Manual which broadly covers employment, induction, absentism, attendance, salary administration, employee expenses and reimbursement procedures.
  • Employee Engagement
  • Work place culture
  • HR Training
  • Timekeeping Solutions

Cost for Outsourcing HR services?

  • Though costs would vary with different HR requirements and the services you opt for, as a small business having about 25-30 employees the costs could be in the region of 20,000-25,000 per month
  • Of course each HR outsourcing company will have different packages and offerings; we have included a few prominent ones at the end of this newsletter

Watch out for…when choosing an Outsourced HR services agency?

  • Make sure to choose a outsource HR service provider who invests time in understanding you and your organization.
  • Make sure the consultancy is trust worthy to keep employee details confidential.
  • Loss of face to face interactions is the biggest disadvantage of outsourcing as the employees want a familiar face when they have HR issues; but we feel the advantages far outweigh this disadvantage
  • Of course some consultants may not always take care of your employees as passionately as you would, so it’s important to ensure the agency understands your organizational culture… or maybe if the mundane is taken care of by an outsource HR agency, you can implement the employee engagement initiatives you may have always dreamt off.


August 10, 2015

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