What HR Services Can Be Outsourced?

The Milestone Team March 1, 2024
What HR services can be outsourced

It’s not easy being a full-time small business owner, where you juggle multiple hats and navigate the intricacies of managing your most precious asset: your people. Human resources is a multifaceted domain, crucial to ensuring that the people you hire align perfectly with your business’s ethos, contributing their best work, and becoming valuable assets to your organization.

In the dynamic and often complex world of small business, human resources play an essential role, far beyond the traditional realms of hiring, firing, and handling complaints. It encompasses many critical functions – each requiring specialized attention and expertise. Recognizing this, savvy small business owners understand their strengths and the strategic importance of bringing in outside expertise to optimize these functions. Outsourcing HR not only streamlines your business operations but also infuses your organization with a wealth of knowledge and specialized skills. These outsourced services can transform your business into a more efficient, compliant, and employee-centric workplace.

Outsourced HR for startups could be your secret weapon. Why? Because an HR outsourcing service can improve the output of your HR systems while reducing overhead costs. That means more time, energy, and money to invest in other critical areas of your business. In this blog, we cover the details of outsourced HR services and outsourcing HR pros and cons. Learn more about how much does it cost to outsource HR?

What Is Human Resources Outsourcing?

Outsourced human resource services provide startups and small businesses with access to HR experts without costly overhead commitments. When your business partners with an outsourced HR services provider, their team supplements yours. Whether you need a payroll specialist or an entire HR department, outsourcing your HR needs helps to ensure your business is foundationally sound and prepared to reach the next level.

What Is Human Resources Outsourcing?

HR Outsourcing Provider Examples

To get a better idea of the practical and transformative applications of these services, check out the following human resource outsourcing examples:

For more examples of outsourced HR services in action, explore our case studies and client testimonials.

List of Human Resource Functions that Can Be Outsourced

HR outsourcing has advantages and disadvantages, and those change depending on the business. But there’s a certain sigh of relief that comes with knowing your business is following employee protection laws to the letter, because you have experts at the helm. But more than just compliance, there are numerous other functions you can outsource. 

Legal HR Functions: Advising on employment law and ensuring compliance with regulations.

Employee Administration – Every employee you hire requires a certain amount of paperwork. From onboarding to employee data updates to running the occasional employee investigation, an outsourced HR company will cover the administrative tasks associated with your workforce. 

Compensation & Benefits – Paying your workers—and doing it fairly—is the first step in reducing turnover. An outsourced HR company can help you determine fair and competitive compensation, plus suggest comparable benefits to offer. 

Talent Acquisition –  Finding the right people for your open positions can be difficult. But outsourced HR companies are usually skilled at tracking down pools of talent, weeding through resumes, and finding the one that’s the best fit. 

Performance Management – It’s important to keep your employees meeting their goals, so that you can meet yours. When you’re running every other function of a small business, it’s difficult to oversee all of your employees and keep everyone on track. An outsourced HR company can provide training and performance reviews to keep everyone performing at a high level. 

Employee Engagement – A great workplace can keep employees happy and productive for a long time. But they need to feel like they’re an integral part of what makes the machine move forward. Outsourcing employee engagement gives you an unbiased vision into the parts of your culture that you do well, and the areas where you can improve. 

Payroll – There’s no surer way to lose a workforce than to not pay them on time and in full. And maintaining payroll can be tricky, with taxes, withholdings, and salaries versus hourly wages. This is yet another HR function that can be outsourced to experts who make sure your workforce is compensated, and use reliable, modern software to keep track of the numbers for accounting. 

Lifecycle Development – It’s rare for an employee to spend their entire career at one business, and as an owner it’s important to realize that. But while you have them, you can benefit from their skills, help them grow, and get greater benefits from your relationship with them. A strong employee lifecycle is mutually beneficial, and experts at an HR company can help you create a solid structure for yours. 

What HR Services Can Be Outsourced?

Most HR functions that can be outsourced should be outsourced to create a lean department and that ranges from payroll to managing employee satisfaction. However, there are a few disadvantages of outsourcing HR functions. The primary disadvantage is that for some HR functions, there still needs to be significant input from internal stakeholders. This is especially true for hiring for startups and firing decisions. So, while outsourced HR experts can help advise these decisions, it is ultimately up to your internal team members to make the final call.   

What HR Services Can Be Outsourced?

Why Do Organizations Outsource HRM Functions?

People start businesses because they have a passion or a great idea. They rarely do so because they’re so highly functional in all of the areas required to manage a business. Part of your growth as a small business owner is knowing when to pass off certain functions to outside partners. There may be pros and cons to outsourcing HRM functions, but here are three very clear advantages. 

Expertise – You get the best thinking from people who have dedicated their lives to knowing human resources. Not only that, with an outsourced HR company, you’re likely getting people who specialize in certain tasks too. So not only do you get an excellent recruiter to help with talent acquisition, but you also get a great manager who can help them set and achieve goals in their performance reviews—and so much more.  

Employee Happiness – A good working environment is built around a solid foundation in human resources. When your employees know they’re valued, and that you’re investing in them and their futures as much as you’re investing in your own, you end up with an engaged workforce that’s ready to put in work to advance the goals of the company. 

Compliance – You’re dealing with people. And with that, there are a lot of laws surrounding your workforce. It can feel overwhelming. With an outsourced HR company, you know that your team of experts is totally fluent in the most updated versions of all human resource codes and policies. From HR forms to handbooks and I9 compliance, they’ve got you covered. 

What Are the 6 Categories of HR?

No matter what stage of business your startup is in, you should be able to confidently manage these 6 categories of HR functions:

  • Compensation and Benefits: Job seekers and current employees deserve to be rewarded for their hard work. Your HR team can finely tune salary, benefits, and equity packages to stay competitive in a ruthless job market.
  • Recruitment and Staffing: You can’t disrupt industries without an all-star team. Your HR team is responsible for sourcing top talent and getting them up to speed quickly so your business doesn’t miss a beat.
  • Training and Development: Technology and business landscapes are constantly evolving. An effective HR team leads professional development initiatives that keep your employees up-to-date.
  • Employee Relations: It’s more expensive to hire new employees than it is to keep current ones. Through professional development, advancement tracks, and culture-building initiatives, your HR team can improve employee retention rates.
  • Employee Satisfaction: Satisfaction goes hand-in-hand with retention. Your HR team should keep a pulse on employee morale so you know what’s working and what needs improving to help your employees engage with their work and be successful.
  • Labor Laws and Legal Compliance: Laws and regulations can change frequently, and they’re rarely straightforward to understand. Your HR team should be able to navigate these changes to avoid fines and other penalties.

If any of these functions are underperforming at your business, might be time to outsource HR tasks to an HR outsourcing services provider. Contact us to learn more.

Which Is the Best HR Company for Outsourcing?

While there is no hard and fast answer to the best HR outsourcing services, the best human resources outsourcing companies can offer the following qualities:

  • A tailored approach to your business
  • Transparent pricing
  • No required long-term contracts

At Milestone, our HR outsourcing services check all of the boxes. If your business could benefit from an HR outsourcing company that offers flexibility, cost savings, and outstanding results, get in touch today.

Which Is the Best HR Company for Outsourcing?

Supercharge Your Back Office with Milestone HR Outsourcing Services!

Outsourcing HR services can save you time, money, and hassle. At Milestone, our HR experts have the experience to power your startup’s back office to the next level. Like a pit crew keeps race cars in shape for peak performance, your HR team fine-tunes internal processes to give your entire business a competitive edge.

Don’t wait to optimize your business. Contact us to learn how our team can help you outsource HR.

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