With the importance of cutting costs clearer than ever, many businesses are seeing outsourcing as a viable and effective answer to saving money without losing efficiency. But even when outsourcing seems like a good option, knowing which aspects of a business to outsource can be challenging.
"As a rule of thumb, the best areas to look at for outsourcing are those that do not directly interface with your clients," says Sheila Dramis, chief executive officer of Lowden and Associates, a full service human resources outsourcing and consulting firm in Norcross. "For that reason, HR, IT and accounting are areas that businesses typically look to outsource portions or all of. In addition to cost savings through outsourcing, businesses are able to get a lot more talented, degreed, seasoned professionals than if they were to hire one person internally."
Having effective human resources is critical for any small business. In addition to the more common issues such as hiring, training and retaining a talented staff, HR professionals also handle benefits, payroll processing and compliance – areas where a small mistake can turn into huge fines or lawsuits for companies. By outsourcing human resources, the responsibility is then spread among a team of professionals with varying specialties and experiences, rather than all on a small internal team.
Depending on a company's needs, all human resource functions or just a portion, such as payroll, can be outsourced. According to Dramis, a Cornell University study on small businesses' HR management found that companies who had effective HR management practices experienced 22.1 percent higher revenue growth, 23.3 percent higher profit growth and 66.8 percent lower turnover.
Dramis has created a list of the top five reasons businesses should consider outsourcing their HR.
- Cost reduction – Hiring an in-house team involves many recurring expenses such as salary, taxes, benefits, training and workers' comp. When you outsource, you free yourself from all of these expenses. Also, outsourcing means that you get a team of professionals, often with Fortune 100 and 500 level expertise, for less than the cost of hiring one employee.
- Accomplishing strategic goals – Outsourcing can help ensure companies have a strategic plan, vision and goals for their human resources. Once outsourced professions have helped the company create this plan, they ensure the plan is implemented through effective job descriptions, clear performance expectations and staff reviews.
- The opportunity to focus on your core business – Outsourcing allows business owners to reduce their involvement with "people drama" to regain focus on core business objectives.
- Increased efficiency – Outsourcing aligns human resources, staff activities and the business' goals. With the right human resources firm, staff will have experienced a multitude of situations and will have the expert knowledge to navigate problems quickly and effectively.
- Improved compliance – Human resources outsourcing will manage a company's risk. By putting the proper policies and procedures in place, they can help avoid expensive lawsuits. Also, employee relations management can help mitigate workplace confrontation by redirecting issues before they explode.
