HR is one of the most important yet complicated departments in any organization.

Depending on the size of the business, HR sometimes has to manage an incredibly large amount of responsibility.

If that’s the case for your company, you might benefit from some expert help from a third party. That’s what we’re here for today, to look at how outsourcing HR functions can help you and your company.

So, let’s get into this!

What exactly is HR outsourcing?

Well, let’s quickly break down the term “HR outsourcing.” Human Resources (HR) is just one department in the organization. HR can deal with a lot of things, depending on the structure of the company, but typical HR responsibilities are:

• Recruiting candidates
• Processing payroll
• Updating work policies
• Designing and analyzing job roles
• Creating performance appraisals

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So as you can tell, that’s a whole lot for one department to handle, and the HR’s role is critical to the company’s success.

Outsourcing is when a company uses a third party to help the organization create its products or services. Basically, a company outsources another company to fulfill its tasks. Many companies try (and sometimes fail) to perform every task “in-house,” themselves when it is clear that the company would benefit from some outsourced help.

So, put together, HR outsourcing is when a company decides to use a third-party company to handle some or all of its HR tasks. Instead of doing the overwhelming list of HR functions, companies can benefit from bringing in help from experts in the field.

Outsourcing HR can help you manage your time more effectively and focus on other business operations. When every department is running smoothly, you can focus on things like developing company culture and using team-building to strengthen workplace bonds.

So of all HR’s functions, which ones are best for outsourcing?

Which specific HR functions are good for outsourcing?

An HR department’s functions and processes differ from company to company, but here are the “hard HR processes” that could be outsourced to reduce operational costs and improve your business.

Payroll

One of the most important processes HR performs is organizing the pay of company employees. As workforces globalize, payroll systems are becoming increasingly complex and time-consuming. Your HR might already be well-practiced with the company’s trusty payroll system, but outsourcing this function often reduces overall operational costs. 

A small startup might only have a team of 10 employees, so one person could probably take full responsibility for arranging staff payroll. However, if the business is expanding and utilizing remote and globalized workers, you can see how things get tricky.

If it’s suited to your company, outsourcing payroll to a third party can offer you a lot of benefits. Manual payroll can take up a lot of time, and a third party might help with:

• Tax accuracy
• Meeting legal payment regulations
• Secure and store sensitive data

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Outsourcing the HR’s payroll responsibility could benefit your company if you’re suited to it. Look into this one if you’re expanding or if your current payroll officers have other big responsibilities.

Team retreat organizing

If your organization prioritizes company culture and recognizes the teambuilding potential of company retreats, then this is a great HR function to outsource. You might have already considered organizing your own retreat, or want selective HR outsourcing for help with event planning.

Maybe you want to take your employees somewhere special for a few days, filled with team-building activities. Whether you’re an SME or a mega-giant corporation, a well-organized team retreat can be complex and hard to organize. That’s where we enter the stage.

Here at Surf Office, organizing work retreats is our bread-and-butter. A twice-annual retreat for your teams provides an unforgettable and productive environment that helps stress melt away like a cube of sugar in a swimming pool.

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Here’s what we offer:

• Stress-free transfers? We got you! ✅
• Quality-assured accommodations? Check! ✅
• Engaging team-building activities? Our speciality ✅
• Restaurant reservations? That's on us! ✅
• Expert retreat planning assistance? Of course, we have this covered! ✅
• Onsite support, tailored to your needs? Absolutely ✅

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Not only this but we also have access to 160+ locations around Europe, APAC, the US, Latin America, and now Africa, meaning the sky is your limit when it comes to choosing the right location for you and your team.

We pride ourselves on delivering work retreats for companies who want to give something special to their teams. Take the sting out of the planning, and use us. Spaces are very limited, so get in touch now!

Recruitment and onboarding

The hiring process for many companies is long and complicated. When you outsource your recruitment, you might benefit from a few different types of third-party recruiters, including:

• Headhunters: These outsourced workers recruit for specialized positions. They often work on commission, and they’re great because they usually have lots of connections in the industry
  
• General recruiting: If you’re not hiring for a specialized role, a general recruiting firm can handle all of the hiring needs. Just like headhunters, your company pays the recruiters, not the candidates.
  
• Staffing companies: A staffing company not only finds people to work for you, but they then hire and pay them as well. That means the new hires work for the staffing company, not you, and big companies like Google use this model.

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One example might be if you’re a new startup, and you need to hire your first of everything. You need someone for sales, accounting, IT, operations, and so on. In that case, it might be better to outsource the recruitment process to a professional recruiter.

If your company is going through an intense hiring phase and you’re recruiting in large numbers, it might also be a good idea. Say, for instance, you’re launching a new product and you need 1,000 new salespeople across the whole country, your in-house HR recruitment might not be able to handle the size. Consider outsourcing recruitment wisely!

Performance management

Nobody knows your staff better than you do when it comes to their work performance. However, in today’s business world, managers don’t always have the time or resources for annual reviews, salary negotiations, and other performance-related matters. Performance management and recognizing hard work from your staff shouldn’t be overlooked.

Outsourcing the performance management function can bring benefits to many companies. PwC reports that effective performance management outsourcing can reduce turnover by 50% You might benefit from “selective outsourcing” too, where you just choose one or two aspects of an HR function to outsource, like HR annual reviews.

Outsourcing performance management can help managers perform critical tasks. For small and medium enterprises (SMEs), you might be less likely to benefit. This is because performance management functions don’t take as long for smaller teams. If you’re in a large corporation, however, it might be best to consider third-party help to maximize your time.

Outsource performance management if you need to make sure all your employees are meeting their goals so that you can meet yours. Make the most of this outsourcing to keep everyone performing at their highest level.

Employee benefits

Employee benefits are an important part of the company, and HR usually design and carry it out. Benefits are any additional perks outside of the employee’s regular salary or wages. Benefits and perks are important motivational factors to keep staff engaged. In fact, 75% of employees reported they’re more likely to stay with their employer because of their benefits program.

Typical benefits that a company offers its staff include:

• Healthcare
• Retirement
• Pensions
• Childcare
• Work-travel opportunities

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If your staff are hired and promised benefits, you have to stick to them. However, as they work there for longer and gain experience, they might see other companies offering greater benefits, so it’s important to keep yours attractive and up-to-date. Consider the value of outsourcing this important HR function.

Compliance and legal

“Compliance and legal” is a term in HR that makes sure the company understands and adheres to laws, regulations, and industry standards. Think of it like a football team that has to stick to the laws of the league they’re in (like with Financial Fair Play). This function can be quite complicated, and so outsourcing it might benefit a company, especially if they don’t have the in-house resources to deal with it.

Some of the key benefits that outsourcing compliance and legal brings to the company are:

• Regulation compliance: Labor laws that match with the local, state, and federal labor laws are met. There are also wage and hour laws, medical leave, and anti-discrimination laws your company needs to follow.
  
• Employee relations: If ever there’s conflict or dispute in the workplace, legal compliance is extremely important. Outsource specialists help with this.
  
• Legal documentation: Managing contracts in a big business isn’t easy. Contracts need to be followed to the letter, and as a company expands it can become hard to keep up.

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Overall, outsourcing compliance and legal functions of HR might bring benefits to your company to make sure you’re covered in case anything risky happens. You should consider it if you need support adhering to a lot of laws and regulations. Better safe than sorry!

Health and safety

Similarly to compliance and legal, the health and safety function of HR is critical to making sure the company runs smoothly and safely. The HR department usually makes sure all staff carry out their work in a safe way while at the office. This function can include safety policies, conducting training and managing work health programs, so it might help you to outsource health and safety to a third party.

Some of the key parts of HR’s health and safety functions that could benefit from outsourcing include:

• Safety programs: Outsourced specialists in health and safety help design and carry out work safety programs and manuals that keep staff safe while working.
  
• Training and education: You might need physical training and educational sessions at work for things like hazard recognition, emergency response, and personal protective equipment (PPE).
  
• Health programs and well-being initiatives: Using experts who specialize in workplace wellness can really boost your teams. These could include mental health workshops and fitness-for-duty.

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By outsourcing your health and safety functions to a third party, you might be improving the overall wellness of the workplace. That can be really important for letting staff know they’re in no danger while at work, and can also make sure you’re meeting health and safety laws. 

Technology 

In modern workplaces, HR departments use a lot of technology to help with their tasks. Good technology can help streamline things like payroll calculation and clock-in times for employees. With optimized technology, HR’s tasks are a lot more convenient. So could you benefit from outsourcing technology to optimize your HR department?

HR information systems (HRIS) for example can be outsourced to tech developers that really suit your company’s needs and budget. Experts in this field help design and manage software that keeps track of employee task performance. Employee self-service portals are great too, where employees directly access things like their work hours and personal information.

There’s also outsourcing for payroll processing software. Modern payroll systems can be extremely complex, so you could outsource this to specialists. 

For recruitment, applicant tracking systems (ATS) are a fantastic tool to streamline the hiring process, so a third party can develop and maintain this system to free up time for your current HR department and make life a lot easier.

Overall, there are a lot of benefits to outsourcing tech needs for your HR functions, so don’t overlook this one. 

Diversity, equity, and inclusion (DEI)

In the modern workplace, diversity, equity, and inclusion (DEI) is more important now than ever before. Businesses try to meet the requirements of DEI to improve their efficiency and make sure the company has a strong culture for everyone.

Outsourcing DEI to specialized experts can help bring in some effective strategies and help the company meet its DEI goals more easily. Here are some of the components that outsourcing DEI can offer:

• DEI workshops: Outsourcing DEI to third-party experts means they can bring in some fantastic educational workshops and seminars.
  
• Recruitment practices: Outsourcing DEI means you can get some expert input to make sure your hiring practices are inclusive and diverse. Good news!
  
• DEI metrics: A specialized DEI group can help analyze and inform you about your workplace metrics, which can be very valuable information.

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If your workplace wants to optimize its DEI, consider outsourcing this function to some experts. You can’t do everything yourself, so sometimes a little outside help can really benefit you. Give this one a try!

Exit management

Our final recommendation for an HR function that could be outsourced is exit management. This one’s a little more serious because it deals with what happens when employees leave the company. It’s the final stage in the employee life-cycle and outsourcing it can bring some benefits.

Exit management for HR helps to ensure that when a member of staff leaves, the process goes smoothly. It protects the company and provides some really good feedback when used properly. Some aspects of exit management that can be outsourced include:

• Processing resignation: Outsourcing for resignations helps to manage the procedure, as there might be retirement or pension plans that need to be carefully processed.
  
• Termination laws: This makes sure that all laws and procedures are followed when an employee unfortunately leaves. They sometimes need documents for the departure.
  
• Exit interviews: This can be one of the most beneficial aspects to get right. Exit interviews help the company learn why they left and how the company can improve moving forward.

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Exit management is an unfortunate but important function for an HR team, and it’s not always easy to manage. You should consider outsourcing this if you’d like expert input and execution of exit management from specialists.

Do all companies benefit from HR outsourcing?

The short answer is no, not all companies benefit from full HR outsourcing. By using the services of a third party, there is always an amount of risk and things that could go wrong.

Think for a moment of a small startup company. In the early stages of the company’s lifecycle, staff sometimes need to perform tasks outside of their traditional roles. Startups are made of small teams who sometimes need to “wear different hats,” for example the programmer might need to help someone with a small HR task he knows about.

That being said, larger companies are certainly enjoying the benefits of HR outsourcing. Executives of 120 companies in North America and Europe with annual revenues over US $1 billion were surveyed, and the results are clear. 80% of them said they’d use HR outsourcing again, instead of bringing the HR function back in-house.

Outsourcing HR can be expensive, but in the long run, it’s often worth it. Some HR outsourcing companies charge flat fees ranging from $1,100 to $10,000, depending on the size of the job. Consider all the pros and cons of outsourcing HR to make sure it works for your company.