How to Outsource Your Human Resources and Why It's a Good Idea

Editor’s note: QuartSoft has been a web / mobile design and development outsourcing partner for years for startups and established businesses from all over the world and especially from the USA. We have even opened an office in the United States to work with those companies who prefer outsourcing their web and mobile development projects within America. The article below gives a few ideas on why outsourcing can be beneficial for businesses.

Forget about the many naysayers saying that outsourcing is bad for the American economy (which, for some industries, it is). The bottom line is this -- in order for your business to grow, you need a company out there somewhere to handle your everyday business in terms of payroll, benefits and even vacation time. Where it turns out to be a damper on the economy, though, is when you outsource outside the country. Keep it within the states, and you’re streamlining your business and benefitting the country.

But Why Does It Help Businesses?

I’ll update you on the happenings here, for starters. Naysayers do have a right to the opinion that outsourcing has been a sour endeavor. As it stands, many early external HR companies went under somehow, but only most recently have we seen a tremendous upsurge in business with an estimated $165BB annually, which is nearly 85% of all firms currently outsourcing their HR needs.

outsourcing human resources, why it is beneficial

That’s pretty impressive.

Moreover, this trend seems to be hitting the small business sector in a big way, with contracted companies called private employer organizations (PEOs) setting up the legal compliance and services covering everything from benefits to payroll. The bonus of these gargantuan PEOs is that they’re able to provide dozens of plans for clients at competitive rates, allowing small businesses the ability to effectively outsource while seeking to expand.

We Get the PEO Format: But You Mentioned “Legal Compliance”?

It’s not just a money issue for companies these days, too. Going after an actual PEO can save you the headaches of applying outsourcing to other ‘smaller companies’ without the benefit of getting your legal compliance down correctly. In other words, risk mitigation is a big deal. You might have your HR set up with a company, but you’re still dragging hard by constantly figuring out if you’re applying the state and federal regulations, with respect to your HR, correctly.

Such legal compliance issues include:

  • Vacation Time

  • Workers Compensation

  • Insurance

Knowing what you can and can’t do is now a non-issue. You can let a PEO handle it for you.

Not All PEO-represented Companies Operate Externally, Though

That’s a good thing. Part of what’s given outsourcing such a bad name is that very word: “outsourcing.” It’s not in your company anymore. It’s almost like you’re ‘giving up’ on the responsibility.

Not all outsourcing, though, these days actually happen outside the business. You can often contract external HR firms to operate within your own building, and sometimes you can even “reconfigure” some of your employees to be paid by the HR firm directly. It becomes more of a merging partnership than just a passing of the HR torch. In that way, somehow, businesses end up seeming to work more together and not at the same time with mutual benefits. There’s more collaboration and cooperation involved.

What About the Cost?

To sum up, though, as any business lawyer will analyze, cost isn’t everything. You’re looking at the value. HR outsourcing firms didn’t survive way back when not simply because of the outlandish costs, but because of the lackluster value they provided.

You want a company that can handle it all. You want options. You want flexibility. Make no mistake, though, that for that kind of service, you’ll pay a pretty penny. When you look at the value behind all the services -- everything from encompassing your telecommunications, to payroll, to vacation time, to benefits, plus an ability to restructure your entire workforce to operate within those seamless services -- you’ve got more than your dollar can actually provide.

Think of it this way: the cost might be hefty -- the benefit, and the resulting revenue, will bring in the ROI. We can guarantee it.

Research PEOs and see what they can do for you and your small business. That’s the sign of the times, really -- companies are, to a certain extent, merging together. That doesn’t necessarily have to be a “bad thing.” In fact, it might be the best thing that can happen to your corporation.

Matt Faustman is the CEO at UpCounsel. You can follow his business insights on Twitter at @upcounsel.

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