What does HR outsourcing mean?

To outsource HR means that instead of managing human resources functions on an internal level, the businesses can hire an external company to conduct the services. Small and medium-sized companies can specifically benefit from outsourcing HR services, this is because SME’s often don’t have the resources, knowledge or time to adapt to all the continuous updates in employment, legislation and laws –outsourcing allows a third party to manage all of this for you.

Why should you start HR outsourcing?

The answer is simple; the business should focus on its core business. Efficiency, cost-reduction and expertise lie behind the trend of using outsourced vendors to handle human resources functions. Outsourcing relieves small and medium-sized business owners to concentrate on their business, control costs, access the best in human resource information system technology and improve employee service. Payroll, benefits administration, recruitment and tasks related to risk management lie on the top of the list of HR functions commonly outsourced –but we will look at there in more details further on.

Payroll, benefits administration, recruitment and tasks related to risk management lie on the top of the list of HR functions commonly outsourced –but we will look at there in more details further on.

Here are 4 reasons to outsource HR functions;

1. Cost-saving

Small companies often cannot justify hiring a full-time HR employee, therefore a subcontracted HR vendor can cut costs on salaries. Moreover, the company will save costs on expensive software systems used such as a payroll system. Outsourcing can also lower costs by reducing the expenses associated with bringing on new employees. It also allows for personnel cover in case of employee holiday or sickness, outsourcing gives you access to a whole team.

2. Mitigate the legal risks

Many organisation leaders do not apprehend how critical the rules and legal guidelines for HR can be. By outsourcing the HR activities to experts, the company ensures to downgrade the exposure to legal risks associated with employment law and rights and allows you to always be up to date on the latest changes and best practice. It also allows you to have experts on hand to answer your questions, disputes with employees can be expensive and damaging to an employer’s reputation so you should not leave things to chance.

3. Focus on the core business

Business owners and top management often feel very passionate about their innovation, product or service. Very few, however, get into business because they love dealing with employment contracts, pension schemes or educating staff on bullying and harassment. Outsourcing some or all HR functions to experts will give employees a chance to focus on the core business.

4. Employee happiness

When employees have access to great benefits, can participate in professional training and know that their company want to make sure HR queries are in the hands of experts, they will most likely be happier. A happier workplace often leads to lower recruitment fees and allows the business to run smoother because of low staff churn rate.

Outsourcing some of the more administrative HR functions will also allow the internal HR team to focus more on coaching, counselling and succession planning, which will improve the overall performance of the employees.

Which HR functions can you outsource?

You can subcontract all aspects of the HR department -payroll, benefits administration, recruitment and tasks related to risk management sit on the top of the list of HR functions commonly outsourced.

Payroll

Payroll is one of the most common function companies choose to outsource. The services could include setup and PAYE Registration, handling payroll calculation, taxes, deposits and payments.

Recruitment

Companies can choose to outsource the full recruitment lifecycle. This can include screening, interviewing, performing background checks and setting up employment contracts. This can ensure a professional and smooth onboarding of new joiners, whilst ensuring everything remains compliant and is done effectively.

Benefits management

In the United Kingdom, it’s common for a business to offer benefits to initially attract talent, retain talent and inspire them to increase productivity. Work-life benefits such as employee childcare, pension and employee counselling are ideal candidates for outsourcing. It can ve very time consuming and difficult to know which benefits to put in place and offer your workforce, so an expert HR team can advise on what is best practice and expected in your industry.

Compliance and Risk Management

New laws and regulations impose considerable responsibility on HR to keep track off. Staying current on legislation takes time; failure to meet guidelines can lead to penalties and exposes a company to litigation.

Other most common HR functions to outsource; 

  • Coaching
  • Background checks
  • Temporary staffing
  • Creating/updating employee handbooks and policies
  • Harassment training 
  • VISA administration
  • Staff rewards and recognition management
  • Temporary Staffing
  • Pension Schemes
  • Relocation

What are the challenges with HR outsourcing?

Whilst outsourcing for many companies can feel like a distant provider with whom you have no real relationship, choosing a hands-on provider like Goodwille who takes the time to understand your business & employees can be advantageous.

Outsourcing human resources when expanding to the UK

Entering a new geographical location is an important business decision, the more that can be taken off the company’s shoulder and be outsourced, the more likely the venture is to succeed. Many business owners expanding overseas have the belief that what works in the home market will work in the UK, however, this is not the case as each country has its own cultural approach to employment contracts, rights and obligations, and knowing the practical solutions to transposing business practice from one country to another a key for a smooth setup in the UK.

Goodwille can act as a fully outsourced HR function or support overseas HR team when in initial stages of recruiting employees in the UK. To find out more visit www.goodwille.com/human-resources or please contact our HR Manager at jacqui.brown@goodwille.com.