How Outsourced Human Resources Can Streamline Your Business Operations

No business is complete without a human resources department. HR departments, after all, keep your company up and running smoothly. They handle a myriad of tasks, including sourcing talent, addressing workplace (or employee) issues, and complying with labor laws. Interestingly, outsourced human resources are now a standard practice among businesses.

Human resources outsourcing (HRO) takes off the burden of administrative tasks from in-house staff. With the high cost of labor, HR outsourcing is a viable alternative that offers an all-in-one package of high-quality services, innovation, specialized expertise, efficiency, and cost savings. 

Whether your HR team is short-staffed or overwhelmed with low-value administrative tasks, HR outsourcing provides the streamlined support your business needs. Here, you’ll learn how outsourced human resources can streamline businesses. 

As a bonus, we included an FAQ about human resources outsourcing services. But before we jump into all that, let’s first recall what human resources outsourcing is.

What Is Outsourced Human Resources?

Human resources outsourcing is a strategy in which you let an HR outsourcing provider handle your company’s HR functions. Examples of outsourced HR services include:

• Background checking
• Benefits administration
• Employee training and development
• HR compliance
• HR data analysis
• HR management
• Payroll processing
• Recruitment
• Sourcing
• Talent acquisition

Most companies choose to work with an HR outsourcing company from a developing country to access cost-effective HR professionals and bolster operational efficiency. 

5 Ways How HR Outsourcing Can Streamline Your Business

Like any outsourcing service, outsourced human resources can be the best investment you can make for your business. Outsourcing HR functions can streamline your day-to-day operations while also innovating your HR systems and increasing your cost savings. 

Below, let’s dive deeper into how this strategy can benefit your business:

1. Provides Your Business With Top HR Expertise

While people typically enjoy working in HR, we can’t deny the challenges they face — and the statistics reflect these well. According to Sage, cited by PeopleSpheres, 95% of the surveyed HR leaders reported that their workload caused them to feel stressed out and overwhelmed at their jobs. 

Let’s also not forget the role of labor shortage. The US Bureau of Labor Statistics found there are 7.4 million job openings. With positions left unfulfilled and the increase in workload, short-staffed HR departments will struggle to keep up with tasks — further exacerbating stress and burnout. 

This is where outsourcing HR services comes in. When you partner with any of the top HR outsourcing companies, you gain access to highly qualified talent acquisition specialists, payroll specialists, benefits administrators, and other HR professionals who can ease the burden off your internal HR team and meet your HR needs. With more people on deck, your in-house team can focus on strategic HR tasks without getting burned out.

2. Helps In Scaling Your Headcount

Scaling a business is a goal for many business owners. However, scalability efforts are often hindered not just by burnout, turnover, or inadequate manpower, but also by evolving regulations and business environments. If scalability is on your radar, outsourcing HR services is the most optimal solution. 

Outsourced human resources promises cost-effectiveness, allowing you to grow your team as needed. Influx of workload lately? You can scale without increasing expenses and compromising the quality of work. Outsourcing HR also promises faster time-to-hire, allowing you to onboard new hires in 30 days (or less), unlike the 44-day average. 

Apart from having access to a database of talent, the best BPO companies also leverage AI-powered recruitment solutions for faster resume screening and streamlined candidate matching. All these help the service provider source candidates much faster. This way, you can work with the right people and improve your HR department’s operational efficiency right off the bat.

3. Reduces Your Hiring Expenses

The right employees are worth the investment. But here’s the truth: Labor is expensive. Hiring costs in the US amount to a staggering $4,683 USD per hire. While companies can choose to offer higher compensation to attract high-caliber HR professionals, budget constraints are becoming a challenge, according to most HR leaders (90%). 

Insufficient budgets can make your HR professionals more prone to stress and burnout, or even limit your HR department’s ability to accomplish high-value HR tasks. This is because you can’t hire specialized HR expertise, ramp up headcount, or invest in new technologies to divide the workload and streamline processes.

With outsourced HR resources, you can work with HR staff from a developing country at a fraction of the cost of a local HR employee. To give you an idea, an HR generalist from the Philippines earns $5,182.52 USD a year, whereas a US HR generalist takes home $62,360 USD each year.  Because of the stark differences in salaries, it just makes sense to hire a Filipino HR generalist (or any HR professional at that). 

This means you can onboard two or more offshore Filipino professionals to support your internal HR department without overspending and deteriorating productivity levels. Plus, rather than increasing your spending on overhead and training, you can invest that money in growing your business. This way, you’ll get more value and ROI from outsourcing human resources.

4. Increases Access to Technology

Technology and humans are a powerful tandem. After all, technology is only as good as the individual using it. As human resources evolve, investing in technology is a must. According to Fuel 50’s “Skills Tech Survey,” increasing the company budget on HR technologies has been done by 55% of the surveyed organizations.

This is good news as technology is seen as an investment rather than an expense. Unfortunately, for smaller companies with limited budgets, a technology-powered HR department may look like a far-off dream. Thankfully, outsourced human resources brings innovation to your company at a cost-effective price point. 

Human resource outsourcing companies are equipped with cutting-edge, AI-powered HR software solutions. As an example, here’s how technology can supercharge outsourced HR functions:

• Payroll: Payroll technology automates the calculation and deposit of compensation, improves accuracy, anticipates costs, and enhances decision-making surrounding compensation and budget.

• Recruitment and Talent Acquisition: Technology helps provide objective insights, minimize hiring biases, and centralize and analyze candidate data.

• Benefits Administration: Implementing technology in benefits administration simplifies benefits enrollment, personalizes interactions through chatbots, and analyzes employees’ preferences on benefits.

• Employee Training and Development: Technology helps identify skill gaps, personalize training programs, analyze employees’ performance data, and anticipate learning needs.

What’s great about outsourced HR professionals is that they specialize in various HR software solutions and platforms, leading to reduced expenses on training employees on new technology. Thanks to AI, automation, and data analytics, HR processes will be more streamlined due to the reduction in manual tasks, thus enhancing employee experience.

5. Improves Compliance

Compliance is the foundation of trust and accountability. At first glance, it may mean ensuring that all employees follow workplace policies — but there is more to compliance than that. On a broader scale, HR compliance means that everything  — from the company’s workplace rules and regulations to employee treatment — is lawful. 

However, laws and regulations are evolving. For in-house HR professionals who are overwhelmed with work, keeping up with regulatory changes presents another challenge. Non-compliance can result in hefty fines, criminal charges, reputational loss, and business closure. Of course, no business owner would like to receive such penalties. 

Outsourced human resources can improve compliance. Many HR outsourcing professionals specialize in compliance. With their knowledge of local and international labor laws and compliance standards, they can ensure that your business’s workplace environment and employment practices remain compliant. 

Not only does HR outsourcing protect your company from lawsuits and penalties, but it also allows your internal HR staff to focus on strategic HR initiatives. 

FAQS On Outsourced Human Resources

1. Is Outsourced Human Resources the Same As Recruitment Process Outsourcing (RPO)?

HR outsourcing shouldbe interchanged with RPO. While human resources outsourcing includes recruitment, the services offered are broader. When you partner with an outsourced HR service provider, the company can provide support outside recruitment — including administrative support, compliance, payroll administration, and many more.

On the other hand, RPO centers on recruitment-related functions, such as employer branding, talent acquisition, and talent management. RPO companies offer consulting services, too. 

2. Does An HRO Provider Charge Hidden Fees?

Outsourced HR service providers don’t charge hidden fees. They offer transparent pricing models to help you manage costs. To avoid surprise charges and unnecessary expenses, request the vendor for a full breakdown of costs, so you know where your hard-earned money goes. 

However, there may be additional costs when partnering with an HR outsourcing service provider, including:

• Start-up/implementation fees
• Management fees
• Compliance fees
• Termination fees
• Training fees

3. Why Should I Create A Budget for Human Resource Outsourcing?

A budget is vital for effective financial planning. While outsourcing is cheaper, costs may add up if you’re unprepared. It’s also important to account for task complexity, average salaries, level of expertise, and software solution subscriptions when creating a budget.

4. How Do I Evaluate An HR Outsourcing Firm?

Evaluating a potential outsourcing partner is one of the most crucial decisions you’ll make when outsourcing HR. Remember, it’s not about which provider is the cheapest, but the one that suits your needs, aligns with your business goals, and shares similar values.

Here are factors to take note of when choosing an HRO provider:

• Portfolio and case studies
• Client reviews
• Data security practices and IT infrastructure
• Quality of facilities
• HR expertise
• Software expertise
• Industry knowledge and expertise
• Core values
• Employee retention

5. What Are the Red Flags In An HR Outsourcing Company?

Don’t be easily swayed by marketing claims. Here are the red flags to look for in an outsourced HR service provider:

• Negative reviews from clients or employees
• No/lack of case studies or portfolio
• Poor quality of work (despite multiple feedback)
• Retention issues
• Missed deadlines 
• Lackluster or outdated technology
• Unprofessional behavior
• Lack of industry knowledge and expertise

The earlier you spot these red flags, the easier it will be to cut your losses and find an HRO provider that surpasses your standards. 

6. Should I Request A Trial Project From A Human Resource Outsourcing Company?

Definitely! A trial project is one way to prove that the HR outsourcing firm can walk the talk. It’s also a great opportunity to assess your offshore HR team’s performance as well as their ability to meet deadlines and quality standards. By the end of the trial, you should already know whether you want to continue working with the vendor or not. 

Feedback can be provided — but if there is no sign of improvement — move on to another outsourcing provider. If your offshore team frequently misses deadlines or behaves unprofessionally, stop working with your team and end the trial. 

It’s better to start over than fully committing to an HR outsourcing service company that fails to live up to your standards and expectations. 

7. What Should I Look for In An Outsourced HR Professional?

It depends. Are you looking for a sourcing specialist? A payroll processor? An HR compliance officer? Hard skills differ per role, so it’s important to find out what those skills are before closing a deal with an outsourcing company. Expertise in your software — whether that’s Bamboo HR or Workforce Now — is also key when hiring an offshore HR employee.

Most of all, don’t forget soft skills. These skills are a reflection of an employee’s emotional intelligence, sense of responsibility, and ability to resolve conflict and manage their emotions. 

Here are the most important offshore staff soft skills to look for in a candidate:

• Conflict resolution
• Leadership
• Adaptability
• Teamwork
• Active listening
• Empathy
• Problem-solving
• Critical thinking
• Creativity

Streamline Your Operations With KDCI Outsourcing’s Outsourced Human Resources

A business can’t live without a human resources department. However, how successful and resilient your HR department is depends on how well it can adapt to changes and manage all processes. Unfortunately, HR staff are stretched thin. 

At KDCI Outsourcing, we help your HR department streamline its operations through our world-class outsourced human resources — designed for efficiency, scalability, and innovation. We build offshore HR teams that are talented and culturally compatible with your business.

Transform your HR department with KDCI Outsourcing. Whether it’s an inquiry or a proposal, get in touch with our team today!