Advantages Of Outsourcing: When and What to Outsource?

Aug. 20, 2009 - PRLog -- Human resources outsourcing is not a "one size fits all" proposition. What is right for one company may not be right for another. The most significant and important factor that determines which processes a company should consider outsourcing is size. A very small company can benefit just as much as a very large one in terms of outsourcing - as long as it knows which strategy to employ. Below, we take a look at how a company's size determines which kinds of human resources functions it should outsource and why. In the end, a much clearer picture will develop concerning the benefits of outsourcing for companies of all size and scope.

HR Outsourcing And The Small Business

Getting a new company off the ground is a tremendously challenging endeavor, even under the best possible circumstances. The costs of running the administrative side of a start-up can be prohibitive, which is why it makes sense to outsource absolutely everything you can. Enlisting the assistance of a PEO (Professional Employer Organization) or an ASO (Administrative Services Organization) to help you manage the nitty gritty details of running a business frees you up to focus on making your company profitable and successful - and to develop a sound business strategy.

What does outsourcing "everything" typically involve when it comes to a small business with less than 50 employees? Generally, it means outsourcing all human resources related functions including payroll services, benefits administration, compliance and everything else that would fall into the lap of a human resource department. Especially in its infancy, a business needs to dot all its i's, cross all its t's and generally ensure that it is following the proper procedure. Paying an outside organization to handle all of these concerns is far more economical than bringing someone on board full time, and allows you to focus mostly on revenue generation.

HR Outsourcing And The Midsized Business

Midsized companies - those with anywhere from 50 to 300 employees - have much different needs and concerns than much smaller or much larger enterprises, especially when it comes to HR outsourcing. With the complexity of HR increasing every day, compliance becomes a bigger and bigger issue as a company begins to grow. Nothing is more likely to stall an organization's progress than noncompliance issues. The benefits of outsourcing for a midsized business are glaring and exceptional in this regard.

Most midsized companies are best advised to consider benefits administration outsourcing, as well as outsourcing their payroll services and HR technology. New and ever-evolving government laws - including FMLA (the Family Medical Leave Act), FLSA (Fair Labor Standards Act) - can seriously trip up an inexperienced or overworked HR department that is being stretched too thin. HR outsourcing simply makes sense for a midsized business; optimally, one should keep what it already has and move towards outsourcing as it grows larger. This way, it can keep up with emerging trends, remain profitable and competitive, and keep their eye on the horizon of progress.

HR Outsourcing And The Large Mid-Market Business

Large mid-market companies with 300 to 1,000 employees hardly outgrow the need to outsource their HR functions. Instead, they just require the services of an HRO for different reasons. Large companies typically have an HR infrastructure firmly in place; usually, it includes an HR Leader and a small staff for assistance. Having these personnel on staff is important for a company of this size, as employees can turn to it for their various needs and concerns. However, remaining competitive, compliant and profitable continues to be the focus of companies of this size, and they can benefit enormously from using payroll services and using benefits administration outsourcing - among other things.

For the most part, a large mid-market company with 300 to 1,000 employees will seek to maximize the efficiency of its existing human resources department. Outsourcing is an excellent way for them to do this, in effect turning a staff of a handful of people into one backed up by the support of a professional HRO. Risk management is much more streamlined under these circumstances, making the complexities of running a large business more manageable. In many ways, large mid-market companies utilize the best of both worlds: they keep a trained, professional staff at the ready and on the premises, yet take full advantage of everything that HR outsourcing has to offer.

HR Outsourcing: Enhancing Growth And Profitability For Companies Of All Size

As outlined above, human resources outsourcing has unique benefits for companies of many different sizes. Norman LeClair - CEO of Corban OneSource (http://www.corbanone.com), an HRO for mid market companies - notes, "We have clients ranging in size from 70 to 1,200 employees; what they all have in common is a custom solution incorporating best practices that helps them scale up or down with minimal business disruption. We make their back office our front office so they can focus on what their great at."

There's no doubt about it: from start ups to large, firmly established organizations, companies of all shapes and size can enjoy the benefits of outsourcing. From payroll outsourcing to benefits administration outsourcing - and beyond - companies must consider HR outsourcing if they wish to remain truly viable and competitive in today's complex business world.

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Senior HR Consultants Inc. is a group of HR Professionals that average more than 25 years of experience per Consultant. Our primary goal is to help mid-sized companies look at ways their HR Department can help thier company become more profitable.