HR outsourcing is when a business contracts a third party to handle and manage HR responsibilities on their behalf. People typically assume that your business needs to be large to outsource HR, but this is not true. Many small businesses outsource their HR needs to free up time and save money.
It seems counterintuitive to outsource HR when so many businesses have had their own internal HR department for years. As time progressed, it was realized that outsourcing HR brings many benefits and can help your business regardless of the industry you are in. With an ever-increasing remote workforce and drive for efficiency, more and more businesses are starting to outsource some or all of the HR operations to professional employment organizations (PEO). Efficiency does not mean degradation in quality; in fact, it is quite the opposite.
Outsourcing HR does not have to be hard. NetPEO makes setup easy and can outsource all of your HR needs. We can take care of everything, so you don’t have to worry. Do not let the mundane work of HR bog down your business. NetPEO has years of experience. We will not let you down. Call us at (678) 841-7195 to get started.
Benefits of Outsourcing HR
When outsourced, all of your HR needs get handled. Depending on your unique situation, outsourcing can be a great way to unload some of the stress that HR work can bring to your company. The question is, how good is the quality of work when outsourced? Will everything be done quickly and correctly? To understand this better, consider the pros and cons of outsourcing.
Outsourced HR Pros
Here is a list of all the good things outsourcing HR can bring to your business.
- Cost efficiency. According to the Bureau of Labor Statistics (BLS), an HR manager’s median salary in 2019 was $116,720 a year, or roughly $56.11 per hour. Hiring an entire HR department can cost you lots of money each year in benefits and salary. Outsourcing HR can help save you money by preventing the need to hire additional employees or starting up an internal HR division from scratch.
- Legal compliance. All businesses need to work according to laws and regulations at the federal, state, and local levels. It does not matter whether these laws are disobeyed unintentionally or not. Your business can be punished through fines and penalties. When you outsource your HR, all work done gets checked to ensure that all laws are followed, so these problems do not occur.
- Accurate payroll and tax reporting. You should always strive to be as precise as possible when it comes to taxes and payroll. This job can be tedious as many things can go wrong. The IRS audits many businesses each year. Having errors and easily missed miscalculations on your payroll or employee taxes can spell unnecessary stress. These issues can also result in penalties for non-compliance and other fees that may occur. Outsourced HR keeps accurate payroll records and reports taxes correctly, so things run smoothly.
Downsides to Outsourcing HR
When you outsource HR, the biggest con is the trustworthiness of the company you are contracting. Dishonest outsourcing companies can lie, cheat, and not give you your money’s worth. Dishonesty is something easily countered by thorough vetting and research. Choose PEOs and outsourcing companies that have a record of honesty and customer service. It is best to shop around and see which outsourcing provider is best for you. Transparency and ethics are essential qualities; be sure to look for them.
Some business owners are not comfortable with a third party having access to sensitive information or being a part of their business. The perceived lack of privacy is an understandable concern to have. Risks of an information leak get increased when outside entities can gain access to sensitive data. Outsourcing HR is meant to be flexible. To combat any perceived loss of control, you can decide what level of service you need and how much privacy you wish to retain. Outsourcing is meant to work with you on your terms to help your business. Most reputable PEOs and outsourcing companies have security countermeasures and other ways of maintaining privacy for your business.
Another con to outsourcing HR is the potential impacts on company culture and morale. When HR is not internal, it can lead to a disconnect amongst your employees. Remember, when you outsource HR, you are not outsourcing internal issues present in the business. Conflict resolution, emotional needs, and culture all need to be fostered internally. Relying on outsourced HR to do these things for you will only negatively affect your business.
Outsource Your HR to Save Time and Money
When you choose to outsource, you can stop wasting time on HR duties and focus on other essential aspects of your business. HR is important, but to dedicate all your time and resources to one segment of your business neglects the rest. You can save time, money, and improve your efficiency with outsourced HR services.
NetPEO has decades of experience and a 95% client retention rate. We care deeply about your satisfaction and are here to help save your business money and help it grow. Our company offers many different services for all businesses. We can adapt to any business, and our flexible options make us the best choice for all of your needs. Give us a call at (678) 841-7195 and talk to a representative to get a free quote.