Updated March 7, 2022
Businesses, large and small, have turned to outsourcing to get ahead. Here are a few reasons why.What is Outsourcing?
Generally, a company partners with a professional or business to perform specific activities that may be traditionally performed in-house. Companies can outsource an entire division, such as customer service, or a specific function, such as payroll. Some of the most common services outsourced include customer service, human resources, payroll, risk management, and IT support services.
How does outsourcing work? The first step is to identify the processes and areas of your business where you need the most support. Then, select the outsourcing partners that align with your business goals and your budget. Finally, weigh the short- and long-term benefits and costs of outsourcing versus hiring staff.
According to the Small Business Administration, more than one-third of small businesses currently outsource at least some part of their services and business processes and more employers plan to explore this option in the future. For businesses, large and small, some of the most common benefits include:
Saves Time. Employers find that one of the most important benefits of outsourcing is the time gained to focus on their business. According to a recent Deloitte survey, 57% of businesses use outsourcing for this reason. Outsourcing services, such as payroll and HR for example, significantly reduces a business’s administrative workload.
Access to More Expertise. Outsourcing is much like developing a strategic partnership with a team of industry experts. For example, if you need to enhance your customer service game, then you may consider outsourcing that function to a company specializing in customer service. Or if you need to expand your HR capabilities but not quite ready to invest in adding more staff, outsourcing can help you gain access to more skills , knowledge, and resources that you may not be able to afford on your own. Even if you have an in-house HR manager, it often makes smart business sense to outsource to a team of HR experts as trusted advisors to supplement your staff.
Saves Money. According to a same survey, 59% of businesses use outsourcing as a strategy to reduce expenses. Outsourcing shifts fixed labor costs to variable costs and provides the employer the flexibility of paying for only the services needed. This frees up more that can be used to invest in other parts of your business.
Reduces Exposure to Risks. Even with a dedicated HR professional on staff, it can be a challenge to stay on top of new state and federal laws and ever-changing reporting requirements and deadlines. Outsourcing an area, such as HR, can help reduce risks and prevent costly compliance violations. This includes complying with labor laws and regulations governed by the state where all your employees are working, not just where your business is based. Outsourcing can also provide expert guidance for handling employee complaints, disciplinary actions, workplace investigations, crisis intervention, and terminations.
Get Back to Your Business
It’s easy to see how outsourcing certain functions can take your business to another level. By aligning the outsourced service with your company goals, employers can access new tools, implement more innovative strategies, and gain valuable industry expertise to positively impact company performance.
Need Help? Propel HR offers a number of services that can be outsourced as a standalone service or as part of our IRS-certified PEO arrangement. To find out more, contact one of our Propel Pros at 1-800-446-6567.
Propel HR President Lee Yarborough was recently elected Chair of the National Association of Professional Employer Organizations (NAPEO) Board of Directors. She spoke with PEO Insider magazine to share where she thinks the industry is headed and how NAPEO can continue to grow. Download a pdf version of the full interview: A Passion To Serve
Propel HR is an IRS-certified PEO that has been a leading provider of human resources and payroll solutions for 25 years. Propel partners with small to midsized businesses to manage payroll, employee benefits, compliance and risks, and other HR functions in a way that maximizes efficiency and reduces costs. Visit our new website at www.propelhr.com.