HR outsourcing has become a popular option among smaller businesses, and HR outsourcing statistics suggest that almost 24% of small organizations have begun to outsource HR services.
Not only does HR outsourcing help save money, but it can also greatly reduce HR administrative burdens. According to HR outsourcing statistics, approximately 45% of businesses spend an entire day or more every week dealing with HR-related administrative tasks.
Outsourcing gives businesses access to HR experts that can both help streamline these processes and provide insight on essential HR issues like compliance and employee development. Clearly, HR outsourcing is an excellent way for organizations of any size to manage HR tasks efficiently.
HR Outsourcing Statistics
- It is estimated that nearly 24% of small businesses outsource HR services.
- 45% of businesses spend nearly a day a week on administrative HR issues.
- Outsourcing HR could cut employment costs by 70%.
- 44% of businesses say their biggest challenge working with outsourced HR is that vendors take a reactive versus proactive approach to issues.
- HR outsourcing costs $583 per month per employee.
- 78% of HRO providers met or exceeded cost goals.
- Employee Training (58%) and recruitment (38%) are the most outsourced HR functions.
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How many companies outsource their HR?
Nearly 24% of small businesses are known to outsource HR services, according to Riley Panko, Marketing Communications Manager at Clutch.
This is a growing trend among businesses, as more and more companies look to find external help from experts who can provide comprehensive knowledge on human resources related issues.
People are increasingly searching for qualified professionals who have the necessary training and experience that can guide them through important decisions like payroll outsourcing or benefit packages.
Although it seems like a daunting task, outsourcing HR could be an ideal solution for businesses to streamline their operations and enhance the employee experience.
Which industry outsources the most?
According to a 2021 report from Deloitte, the most commonly outsourced services are in the IT, finance and payroll fields.
More than half of all services outsourced involve IT-related tasks such as providing software support and maintaining networks. Finance takes up 44%, with firms often outsourcing their accounts payable or collection processes. Payroll duties cover 32% of outsourcing, with some companies hiring third parties to manage employee salaries and benefits.
Finally, 22% of service outsourcing is related to customer service or contact center operations for responding to customer inquiries. It’s clear that organizations depend on external vendors for various activities beyond just IT support.
Challenges of Outsourcing HR
As companies increasingly look to manage their personnel costs, outsourcing Human Resources (HR) has become an attractive option.
According to Execustaff HR, one of the biggest challenges associated with this is retention issues. When you rely on an external partner for your HR needs, it can lead to misalignment with your company culture, which generally results in a higher turnover rate and decreased productivity.
To minimize the risk of facing such issues, Execustaff HR encourages businesses to closely evaluate any potential outsourced partner before signing a contract — ensuring that they are compatible with your organization’s values and culture.
Is HR outsourcing a Good Idea?
Outsourcing HR services can be a great way to streamline operations and free up resources for other areas of the business. According to Patty Hilger of genesis hr solutions, there are distinct cost savings associated with outsourcing that can benefit businesses of all sizes, especially in tight labor markets when it’s hard to find and attract quality employees.
Outsourcing HR eliminates recruitment costs. It also tends to lessen employment tax liabilities, reduce compliance risks and improve employee engagement.
Certainly, this is an idea that is worth considering if you’re looking for ways to make your organization more agile and efficient.
Is it cheaper to outsource HR?
According to Asuresoftware, outsourcing HR functions can save businesses more than 50% of the cost of hiring a full-time in-house staff.
Instead of paying for salaries, health benefits and office space for an entire team, businesses can now easily hire third party vendors who specialize in providing reliable HR services.
This helps them cut costs while still having access to high quality human resources services. By outsourcing their HR needs, companies can rest assured that they are getting the best service at an affordable price point.
What do HR outsourcing companies do?
ADP says HR outsourcing firms offer many services. They can help with everything from recruiting and strategic hiring, to onboarding and open enrollment processing, invoice reconciliation and reporting, employee training and development, and COBRA administration.
In short, they can assist businesses in finding the right talent and equipping them with the skills necessary for success.
With HROs freeing up your time to focus on core goals, you can rest easy knowing that important elements of your company’s people strategy are all in capable hands.