4 Reasons You Should Consider Outsourcing HR

Human resource management is an essential function for any business. They are the ones who find, train and support the team that keeps the business running. Yet it is a function that many businesses choose to outsource. They may outsource everything from recruitment of hard to find experts to everything in the HR department from hiring to payroll to regulatory compliance.

Outsourcing human resource management

Here are four reasons you should consider outsourcing HR.

It Reduces Costs

Outsourcing human resources can save your business quite a bit of money. It allows small businesses to utilize HR experts without having to pay their full salary since the HR firm or professional employer organization or PEO divides their time between several clients. The average savings range from 20 to 30 percent.

Joining with other businesses under the umbrella a PEO allows them to negotiate benefits on an equal playing field as large companies. Now you pay less for things like health insurance. This may allow you to offer services you otherwise couldn’t.

It Guarantees Compliance

While you may have a great payroll administrator or caring HR rep for handling basic questions, they may not have the expertise necessary to meet the incredible array of employment law and industry regulations you have to meet. When you outsource HR to an outside organization, they are able to bring in the experts as necessary to prove you meet various governmental standards. By relying on HR specialists, you’ll mitigate the legal risks associated with employment law and HR practices, too.

It Improves Hiring

Working with an HR staffing agency will allow you to improve the overall hiring of staff for your organization. Because the HR firm can provide a broader array of benefits, your business will be more attractive to potential employees. Rolling out additional benefits without additional cost can help you retain top talent, too. That’s costly in its own right since more than a fifth of small businesses say they lost staff because they couldn’t match someone else’s benefits and compensation package.

When you work with a PEO, they’ll also be able to offer training opportunities you may not otherwise be able to give employees. HR professionals will also be able to use far more channels to find qualified, competent staff no matter what role you’re trying to fill. A side benefit of outsourcing HR is that they’ll manage every stage of recruiting you’re willing to hand off to them. You could even save yourself time by only being called in to do the final interview of the most promising candidates. Then let the HR firm handle the on-boarding process.

It Frees You Up to Focus on Your Core Competencies

By outsourcing human resources to an expert third-party, your management will spend less time on HR and more time on strategic work that is their own specialty. The greatest benefits are seen by small business.

For example, small business owners generally spend only a third of their time on actual business functions. The rest of their time is consumed by administrative and other tasks that don’t contribute to revenue. Outsource even a fraction of that work and you’ll have more time to focus on what does build revenue. Or it may reduce your overall workload, preventing burnout and minimizing stress. After all, the typical business owner is spending fifty or more hours a week working on their business. Shift half or most of it to an HR outsourcing firm, and you’ll get more done in less time.

This is a significant improvement over small business owners doing it themselves. Eighty percent of small business owners try to handle HR on their own, though a third of them say they aren’t sure they’re doing it all correctly.


HR outsourcing saves money and frees up business leaders to focus on what matters most to them. Yet they get higher quality employees and a number of other benefits in the process.


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