4 Myths About Outsourcing Human Resources

As businesses look for innovative ways to remain competitive, outsourcing human resources is becoming more common. It is often cited as a way to meet your business’s human resources needs cost-effectively.

However, companies may hear some myths or misconceptions about outsourcing human resources as they decide the best solution for their future. This article seeks to clarify some of these myths and misconceptions, such as:

1. HR Outsourcing Will Result in a Loss of Control of Your Business. There can be no denying that HR functions are essential to the operations of any business. However, working with a third party to control these operations will not undermine the leaders’ and any department’s authority and control. Leaders retain control of employees’ growth and performance and the development of policies and procedures. This assumption often comes from a belief that outsourced staff members are not obligated to follow the rules and regulations of the client’s company. In reality, the outsourcing company will retain all responsibilities as the head of the company or department. Outsourcing HR functions simply reduces the work involved with redundant tasks, such as payroll, or those requiring specialized knowledge, such as compliance monitoring. But at the end of the day, you and your leadership team are still responsible for making all major decisions and setting the course for your company’s growth. You do not lose any control with an outsourced HR team. In contrast, you still have the same amount of control; you just work with different team members for HR needs.
2. Outsourcing is Cost-Prohibitive. When business owners read about the benefits of outsourcing HR, the first thought is usually that it would be great to have all of the benefits, but it will likely cost way too much. Fortunately, the alternative is usually true, and outsourcing human resources can be a tremendous cost savings opportunity for most companies. Companies providing outsourced human resources activities often have the benefit of economies of scale, which means that they can offer multiple clients services at a much more competitive rate than it would cost to hire your own staff. And they can do so while providing better support. Many small and medium-sized companies have only one HR generalist to cover all tasks when they handle HR internally. When you outsource, you can get the benefits of multiple experts, who can often accomplish tasks faster and better, and in many cases, at less of a financial cost.
3. Outsourcing may have a negative impact on my team or lead to smaller staff. Many business owners exploring outsourcing HR as an option fear that it could lead to a negative employee experience or require them to shrink the company’s existing workforce. Working with outsourced human resources can often work in your favor and provide additional benefits, such as tailored health insurance and voluntary benefits. And when you outsource HR, employees have peace of mind that you comply with all employment taxes, and payroll will be on-time and accurate. Generally speaking, many existing employees may be excited about outsourcing HR since it can mean more features, more choices, and better technology for them. In some instances, outsourcing may lead you to hire fewer individuals, but most companies that outsource human resources do it to supplement their existing staff. They may also outsource to reduce the burden of repetitive tasks and ensure that their existing staff maximizes their time and skillset. In either instance, it generally doesn’t mean there is a negative impact on staff in terms of size or experience. In most instances, outsourcing has a positive impact on staff.
4. Outsourcing is only for larger companies. It can be tempting to think that outsourcing HR functions are only something large or enterprise-sized companies can benefit from. But the reality is that it can often benefit companies of all sizes, even the smallest. Firms that provide HR services are often well-versed in meeting the needs of companies of all sizes. And they often provide service packages that allow you to select a level of support that is right for your budget. This flexibility can even help companies that can’t afford to hire a full-time HR person to provide their staff with HR support. The right provider can give you great service, regardless of your company size. They should be able to meet your capacity and workload needs in a way that optimizes your operations.

To learn more about the benefits of outsourcing human resources, contact CA HR services today!

CA HR Services specializes in working with small and medium-sized companies to help develop legal, efficient, and appropriate H.R. processes and procedures that meet state and federal labor law requirements.