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The 2016 Human Resources Outsourcing Forecast

Human resources outsourcing has continued to become more popular among small businesses throughout the U.S. Here's a look at trends and other factors that may affect HR outsourcing in 2016.

Small businesses are increasingly relying on HR outsourcing to save money, improve federal and state labor and employment compliance efforts, expand the range of HR expertise within their organizations, and to enjoy new benefits derived from advances in technology. Just as with large companies that routinely use HR outsourcing, small businesses have come to see these advantages as key to their continued growth in 2016 and beyond.

Several trends noted at the outset of 2015 will continue to make their influence felt in the coming New Year:

Data storage and security in the cloud

Many small businesses will continue to migrate key HR data from locally hosted servers into the cloud. Cloud-based HR outsourcing providers point to the cloud’s more efficient data security processes (as well as the peace of mind that comes with access to their business operations from multiple locations), along with more customized and advanced reporting and analytics. Using the cloud may also lead to improved integration of employee support and related HR functions.

Changing definitions of talent

The traditional definition of "talent" is steadily becoming broader. As the U.S. population grows more diverse, so will the talent pool. Employers will likely broaden their efforts to attract a more diverse range of job candidates (at least partly to reflect demographic changes in their customer base). Along with this trend is a greater focus on attracting job seekers based on their potential rather than their experience.

"Some people are not looking forward to being employed by a big employer, but they like to be involved in challenging, complex projects," notes Tom Haak at the HR Trend Institute. "Organizations that define talent too narrowly might miss opportunities to connect talent to their organization."

Big-data and HR analytics

The year 2015 saw a greater reliance on big-data analytics and related algorithms for insights into hiring and employee-management strategies. The same approach to analyzing sales data for new strategies may influence ongoing efforts to recruit and retain key employees.

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