Human resources outsourcing continues to flourish as a key element in an organization’s broader strategic approach to growth. A 2013 survey conducted by the Society for Human Resources Management pinpointed the six most common reasons why businesses increasingly rely on this resource:
- Save money
- Focus on strategy
- Improve compliance
- Improve accuracy
- Gain access to HRO expertise
- Take advantage of technology
Once considered only appropriate for large-scale operations, human resources outsourcing is increasingly seen as a critical option for small businesses as well. Benefits include:
- Greater productivity — Rather than handling routine administrative tasks, employees can focus on more strategic functions.
- Access to advanced technology — The use of state-of-the-art equipment without having to own it.
- Expert help with compliance information — Allowing a trusted provider to stay up to date on changing laws related to hiring, insurance claims management, and benefits regulations.
Human resources outsourcing can enable smaller companies to grow without making it necessary to hire additional personnel, and by assisting with compliance issues, can help minimize the threat of financial consequences due to a failure to comply with state and federal employment regulations.
Current and future trends
A quick scan of the "Human resources outsourcing horizon" points to these emerging and future trends:
Moving to the cloud. Transferring company HR data off of servers and into the cloud is becoming the standard approach across most industries. Human resources outsourcing providers point to the cloud's more efficient data security processes and its value in enabling businesses to maintain operational continuity. Cloud-based Human Resources Outsourcing aids in advanced reporting and analytics, as well as integrated employee support and related HR functions.
Process automation. Building on the use of cloud-based HR platforms, smart process automation can improve productivity, simplify employee benefits management, and can significantly reduce manual back-office functions.
Selective outsourcing. Another continuing trend is selective outsourcing, in which companies outsource specific employee administration functions requiring specialized knowledge while retaining other functions in-house. Selective outsourcing can be an effective approach for candidate recruitment, compliance with the Affordable Care Act and COBRA, the creation of an employee handbook, and non-harassment training.
Social media recruiting. Many HR outsourcing providers are expanding their social media recruitment and selection efforts, hoping to capitalize on the growth and diversity of business-focused platforms.
Expansion of professional employer organizations (PEOs). Outsourcing HR functions by developing a co-employer relationship with a PEO continues to gain in popularity. A PEO can be a highly cost-effective option for handling payroll, employee benefits and workers' compensation, allowing business owners to delegate administrative tasks while focusing on strategic issues involved in running their company. This co-employment model connects a company's workforce to a larger benefits and administrative employment group, with PEOs often positioned to negotiate better insurance rates and benefits for members.
As the needs of both businesses and employees evolve, human resources outsourcing is fast becoming the essential solution for companies seeking a trusted HR services provider so they can concentrate on strategies for growth. Is it time for your business to outsource?
Professional employer organization (PEO) services are sold and provided by Paychex Business Solutions, LLC (PBS) and its affiliates, which are registered and licensed to sell and provide PEO services, including in Florida. PBS FL license numbers are Paychex Business Solutions, LLC, GL7, PBS of Central Florida, LLC, GM14, PBS of America, LLC, GM46, Paychex PEO I, LLC, GM455, Paychex PEO II, LLC, GM456, Paychex PEO III, LLC, GL193, Paychex PEO IV, LLC, GM519 and Paychex PEO V, LLC, GM 522.