HR outsourcing can encompass a wide range of HR functions, including:

Payroll: One of the most common outsourced actions is payroll and with some solutions such as PEO (Professional Employer Organization) offerings it is mandatory.  Payroll provider services range drastically from the simple tasks as calculating employee pay, withholding and paying taxes, and issuing paychecks or direct deposits all the way to more expansive offerings such as job costing, time clock and PTO management, and tip credits.

Benefits administration: This includes tasks such as enrolling employees in benefits plans, managing changes to benefits plans, COBRA administration, answering employee questions about benefits that available to them, and health advocacy programs that help negotiate medical billing discrepancies.

Recruiting: The most common recruiting services include highlights such as posting job openings, reviewing resumes, applicant tracking software, and conducting interviews.

Training: This includes tasks such as developing and delivering training programs for employees. These programs often include content libraries that can be accessed at any time in addition to webinar and live trainings.

Performance management: As remote work becomes increasingly popular, so has the implementation of performance management software. From setting performance goals, conducting performance reviews, and providing feedback to employees this service makes things easier for management to highlight the successes of their employees and identify areas to invest resources for improvement.

Employee relations: This includes tasks such as handling employee complaints and grievances, mediating conflicts, and enforcing company policies.

Compliance: One of the more important but often overlooked aspects or HR outsourcing, compliance management helps ensure that the organization is in compliance with labor laws and regulations, and handling any related paperwork for those processes.

Co-employment Services: Through Professional Employer Organizations or PEO’s and Employer of Record (EOR) providers companies can partner with third parties to mutually employ their employees. This can allow their employees to have access to the third parties Workers Comp Insurance, Medical Insurance, and other Employee Benefit programs. It can also allow the company to offload many of the human capital management liabilities by shifting them to the PEO or EOR provider.

There are several reasons why companies choose to outsource HR services:

Cost savings: HR outsourcing can save companies money by allowing them to outsource non-core functions to a specialized provider, which may be able to perform the tasks more efficiently and at a lower cost.  This is especially true for small and medium-sized businesses, which may not have the resources to hire and train entire teams of in-house HR staff.

Access to expertise: HR outsourcing can give companies access to a wider pool of talent and expertise, as well as to the latest HR best practices and technologies.  This value becomes even more important for companies that do not have an HR department or that have limited HR experience.  It is important to ask questions about the qualifications and structures of the individuals that you will have access to as they vary greatly.  Some solutions provide access to technology that acts as a guide to help you understand how to complete HR tasks without having to do any research.  Others provide a call center style solution where you will be able to call through a phone tree to be connected to an HR Professional.  The highest level of service provides you with a dedicated support team that you work with directly. In this format your support team is able to develop a relationship with your business and have a better feel of your company culture and goals when providing assistance.  There are also varying levels of expertise to consider when researching your options.  Some vendors provide minimum criteria for HR support professionals such as a limited amount of experience, varying levels of certifications, or even HR Attorneys who can offer legal advice when needed.

Time savings: HR outsourcing can save companies time by allowing them to focus on their core business activities while outsourcing non-core functions to a specialized provider.  For companies that do not have the time or resources to handle HR functions in-house, outsourcing HR is an invaluable solution that can expedite growth and increase margins.  For those with HR teams, outsourcing some aspects of their HR needs allows that team to focus more on making an impact for the company as opposed to being bogged down by some of the more tedious and time consuming administrative burdens that accompany the Human Resources field.

Flexibility: HR outsourcing can provide companies with greater flexibility, as they can scale up or down their HR services as needed.  For those companies that experience fluctuations in their workforce or that have seasonal or project-based staffing needs it is important for them to have contracts in place with their vendors that allow them a pricing model that favorable addresses these changes throughout the year.

Risk management: HR outsourcing can help companies to mitigate risk by ensuring that HR functions are handled correctly and in compliance with labor laws and regulations.  While labor laws and compliance were already increasing in complexity throughout the early 2000’s, the regulations and constant changes brought on as responses to Covid 19 beginning in 2020 has seemingly placed all companies into a scenario where they are subject to complex or constantly changing HR regulations.

How to Outsource Human Resources

If you are considering outsourcing HR services, here are some steps to follow:

Identify your HR needs: Consider which HR functions you want to outsource and why. This will help you to determine which providers to consider and what to look for in a provider.

Research providers: Look for HR outsourcing providers that specialize in the functions you want to outsource and that have a proven track record of success. It is important to factor in what your needs are currently and what they will also be in the future to minimize disruption and put in place strategies that create clear long term pathways. Leveraging the resources of HR Outsourcing Consulting firms like PEO Focus is a great way to get ahead of the process and bring an expert on to your team to improve the search.

Evaluate providers: Consider factors such as cost, expertise, and customer service when evaluating potential providers.  This involves requesting proposals, references, and demos to get a feel for how each partner varies their solutions and which ones are a better fit for your organization.

Negotiate terms: While vendors may try to be rigid on most terms the truth is they can be very flexible, they just don’t like to be.  This is one of the most overlooked facets of partnering with Outsourced HR providers.  Nearly all parts of the terms of the outsourcing agreement, including the scope of services, fees, and any other terms and conditions are completely open for negotiation.  The PEO Focus team works hand in hand with yours to ensure that the agreement is fair and mutually beneficial.

Implement the outsourcing agreement:  Work with the provider to implement the outsourcing agreement, including any necessary training or transition periods.  This may involve transferring data or other assets to the provider, as well as communicating the changes to employees.  The implementation period is unfortunately the area where the most problems are likely to occur with your new HR partner.  Laying down a clear timeline of dates and expectations can go a long way towards minimizing mistakes and frustrations involved with the implementation process.

There are many providers that offer HR outsourcing services and ultimately the best partners for you may not be the best for someone else.  It is important to find the vendors that best suit your needs and depending on your business current situation and goals for the future this could mean partnering with a company that is extremely well known or identifying a smaller provider that’s business model lines up more closely with that of your own.  With that said, some of the providers out there for different HR Outsourcing Solutions:

Payroll: Payroll is no longer just payroll. As technology continues to make advances annually, payroll providers now offer a wide range of offerings in addition to payroll such as benefits administration, recruiting, workforce management, some HR consulting, expense management and training. While nearly everyone has heard of ADP and Paychex, there are many providers out there such as isolved, Paylocity, Paycor, Netchex, and others who offer thorough and flexible solutions for their clients.

Professional Employer Organization (PEO): PEOs work by entering into a co-employment relationship with their clients.  In this arrangement, the PEO becomes the employer of record for tax and employee benefit purposes, while the client remains responsible for managing the day-to-day operations of the business.  This allows the client to outsource HR functions to the PEO while retaining control over their business.  Publicly traded companies in the PEO space include Insperity, ADP TotalSource, Paychex and TriNet while the private sector includes names like Questco,  Vensure, EngageHR, CoAdvantage, Justworks and others.  With over 700 different PEO organizations providing services it is important to go through a careful vetting process when identifying which group is the right fit to partner with.

Benefit Third Party Administrators (TPA’s): Benefits administration providers are companies that specialize in managing employee benefits programs, such as health insurance, retirement plans, and employee assistance programs. Some of the well known names in this space include Mercer, Aetna, United Healthcare, Cigna, UMR, Sedgwick and TrustMark.

Recruiting Providers: Recruiting providers are companies that specialize in helping businesses to find and hire top talent.  Recruiting providers may handle tasks such as posting job openings, reviewing resumes, and conducting interviews.  The top recruiting firms tend to be very vertical focused to leverage their contacts and pool of talent more efficiently.  Firms like Robert Half, Korn Ferry, Randstad and Lucas Group are some names that have set themselves apart in the space.

When selecting an HR outsourcing provider, it is important to consider which provider is the best fit for your organization's needs and budget.  Some providers may be more suitable for small businesses, while others may be better suited for large organizations.  Some providers may specialize in certain industries or HR functions, while others may offer a more comprehensive range of services.  It is also important to consider factors such as customer service, reputation, and flexibility when evaluating different providers.

HR outsourcing can be a valuable option for companies looking to save time and money, access expertise, and improve HR processes.  When outsourcing HR functions to a specialized provider, companies can focus on their core business activities while ensuring that HR functions are handled correctly and in compliance with labor laws and regulations.

By following the steps outlined above and considering the most popular providers, companies can effectively outsource HR services and achieve their HR goals.

For more information or assistance in navigating the complexities of an HR Outsourcing search you can call the PEO Focus team at 888-991-7367 or email us at info@peofocus.com with any questions.