Why You Should Outsource HR Functions

HR plays an essential role in developing and driving a business’s most valuable asset: its people. Research shows that HR strategies aligned with achieving business goals have led to better performance, demonstrating how a good HR department is a competitive advantage. Unfortunately, many businesses are still struggling in today’s climate, with small business owners often forced to take on these roles themselves at the expense of other aspects of their business.

A solution to this problem would be to outsource HR functions rather than hiring staff directly. Studies have shown that outsourcing HR functions saved companies 24-32% of the cost of hiring in-house HR staff. While this proposition may mean navigating uncharted territory for many entrepreneurs, it can ultimately benefit organizations by allowing qualified service providers to take on other tasks. This opens up the opportunity to focus on growing one’s business.

Here are ways that you can use outsourcing as a viable solution to address your business’s HR needs.

The Benefits of Outsourcing HR

HR is fundamental for any business that wants to grow. The field itself and the demand for skilled HR professionals is rapidly growing as new businesses that need HR departments continue to emerge. This is why human resource managers have become so important in terms of the current careers in business administration. There are 136,100 HR managers in the US alone, and the role is expected to grow 9% through 2026. HR is required across all industries, and as long as there are staff members; HR managers and their teams will always be needed to oversee things. HR professionals act as the essential connection between the highest levels of a company and the employees putting in the day-to-day work. Fortunately, these professionals can join businesses as in-house employees or through outsourcing.

One of the biggest advantages of outsourcing HR is to reduce operational costs. HR performs numerous functions and responsibilities, and the more employees you hire in a growing business, the more HR professionals you will need. Some larger organizations even require multiple teams to handle all of these functions, which can lead to unsustainably high employee costs.

HR also comes with plenty of administrative responsibilities and paperwork, which are quite time-consuming. Outsourcing these functions can free up valuable time that your HR team can dedicate to more important matters.

HR Functions to Outsource

Depending on your business priorities, certain HR functions may be better kept in-house while others can be outsourced. Here are the functions that are best left to expert service providers:


Payroll is a time-intensive and error-prone process that is subject to multiple regulations which are constantly changing. Aside from payroll administration and direct deposits, payroll officers also handle documentation and reporting requirements for taxes, such as W-2 preparation. They also work with benefits specialists to track employee leaves and timekeeping. Outsourcing this function will ensure accuracy, timely payments, compliance, and even reduce fraud.


Letting a qualified service provider handle your hiring needs can lead to a better selection of candidates for your business, as well as significantly lowering costs on recruitment software and processes. Recruitment specialists from outsourcing companies stay abreast with hiring trends across industries, and they will have a full set of services for business owners to choose from; including application and interview processes, background screening, and onboarding.


Fully understanding every aspect of compensation and benefits and then implementing them is a demanding task. By outsourcing the design and implementation of benefits programs to specialists, your employees’ concerns about health coverage, Insurance, and other benefits can be addressed at an expert level. Some providers can now develop high-quality benefits programs for small businesses that once only enterprise-level companies could afford.

Deciding whether you should outsource and which functions to keep can be a difficult process. Business leaders can start by clarifying their business priorities and understanding what successful outsourcing entails during the pandemic. Whether it’s Payroll, Recruitment, or any other HR function, leaving it to the experts can be the best way for small businesses to grow and succeed.

Specially written for premierbpo.com by Jana Noels

Author Bio

Jana Noels is a freelance writer with a passion for employee wellness. When she isn’t working, she likes to try out new recipes with her two children or train their dog, Hunter.

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