HR departments of almost every organisation
are largely responsible for a variety of functions. They need to oversee
employee payroll and tax filing along with other functions such as employee
benefit and health administration. HR also manages legal compliance and oversee
training and development of new recruits as well as existing employees. Thus
various functions of the HR department become too complicated to maintain
in-house. Companies who outsource their HR and payroll functions have gained several
advantages that eventually support the company’s bottom line.
And yet payroll and HR are two aspects of a
company that often don’t get the attention that they deserve. The average small
business owner will spend between seven and 25 percent of their working hours
handling employee paperwork. While outsourcing may seem challenging, it can
certainly free up time of employees and engage them elsewhere.
Benefits of outsourcing HR and
Hiring new employees only for managing HR or
payroll can be a costly affair. Apart from their salary, companies also have to
pay various other costs such as health care. Taking on a full-time employee to
handle HR and payroll may not always be the best financially safe option. There
are also other expenses that come with hiring new staff such as placing job
advertisements or conducting interviews and buying office equipment if needed.
Outsourcing isn’t cheap (not in a negative
way) but many companies have experienced a significant reduction in costs by
outsourcing HR and payroll services.
Maintaining an efficient and productive workplace is what every company strives
for. By outsourcing there can be a significant increase in efficiency within HR
department. Outsourcing providers leverage advanced technology to streamline
important HR functions, such as payroll, benefit administration and compliance
management. It also ensures staff spends less time doing manual paperwork and
dedicate more time to improve the efficiency and effectiveness of the
Companies who perform these activities
in-house know how much time it can take them. There are numerous tasks like
calculating payroll taxes, filing forms and trying to keep up with all tax
compliances, which take a large part of the day with these activities.
Outsourcing helps to free up this time and
allows employees to concentrate on more important aspects of the company. While
payroll and HR may not appear to be important, actually processing all the
paperwork can lead to a decrease in productivity. Due to the cutthroat
competition these days, companies should ideally focus on growing their
businesses by analyzing trends, reducing costs, as well as improving margins.
Outsourcing also helps companies manage employee performance and development.
They implement performance management plans that help employees understand and
comply with company policies and procedures. These steps can eventually lead to
them successfully meeting their business goals. Outsourcing experts regularly monitor employee
performance and report all their findings to the management. That is one less worry
for the managers.
HR departments also have the responsibility of
taking steps to reduce turnover. This is because higher turnover can reduce
productivity to a great extent which leads to major losses for the company.
Instead of forcing this responsibility on the HR department, companies can
leverage the expertise and experience of their service providers to manage such
To summarize, while it may appear that the
company is losing control over some of its functions, it is definitely not the
case. By outsourcing HR and payroll functions,
companies can focus on achieving their goals and growing at a much quicker