11 Reasons and Benefits of Outsourcing Your HR Services

11 benefits of outsourcing hr services

In the world of business, outsourcing is a concept companies have been using for years and decades.

There are many reasons and benefits to outsourcing, specifically human resources outsourcing or HRO.

Whether you’re a small, medium, or large-sized business, even if you have thousands of employees, you can benefit from HR outsourcing.

Research shows that nearly 35% of companies with 1,000 employees or less outsource at least one HR function. Meanwhile, the “two most commonly-outsourced HR functions” are employee training activities (58%) and recruitment (38%). (source)

Before we dive into the benefits of outsourcing your HR services, let’s first clarify what HR outsourcing is, and why your company needs it.

What is HR outsourcing?

what is hr outsourcing
What is HR outsourcing?

Outsourcing is the process of having another company, entity, or person perform certain work for you.

Companies usually turn to outsourcing because they lack the manpower needed to perform a certain task.

Meanwhile, HR outsourcing specifically covers the process of outsourcing one or more HR functions. Sometimes, companies have needs that they can’t perform in house, like creating an HR strategy or needing business process outsourcing.

Sometimes, companies don’t have the need to hire a person or team full-time to perform a task. Sometimes, they don’t even have the skillset to hire those people.

Is outsourcing HR a good idea?

is outsourcing HR a good idea? discover the 6 situations when you need to outsource hr
Is outsourcing HR a good idea?

A frequently-asked question when it comes to HR outsourcing is whether it’s a good idea or not.

Is HR outsourcing a good idea?

Do I need HR outsourcing services?

Will outsourcing my HR needs benefit my company?

These are all variations of the same idea: Should you–or should you not– outsource your HR needs or not?

Here are a few ideas to help you decide if you need an HR consultancy company or outsourcing service:

  1. When you need a large service that your one-or-two-person HR team can’t perform. Examples include: developing an HR strategy, creating a GAP analysis, reviewing or re-doing your company’s salary structure,…etc.
  2. When you need a very small service that doesn’t require hiring someone full-time such as payroll processing.
  3. When you need an expert in an area you’re not experienced with.
  4. When you need a combination of accounting and HR services.
  5. When you need occasional recruitment or employee outsourcing services.
  6. When you’re not sure which HR service your business needs.

What are the benefits of outsourcing HR services?

11 benefits of outsourcing hr services
11 Benefits of outsourcing HR services

Now, it’s time to explore the benefits of outsourcing your HR needs to an agency like Tawzef.

As you will see, there are many benefits. However, not all of them may relate to you.

1)  Fewer operational costs 

One of the top benefits of outsourcing HR is that it helps you reduce your operating and administrative costs.

You don’t need a full-time hire for a few days’ work each month or for irregular work needs.

Working with an HR outsourcing service provider, like Tawzef, not only saves you time and money hiring people you may not need, but also provides you with the opportunity to get services you do need.

2)  Access to HR software 

Another major benefit of working with an HR company is getting access to expensive HR software at a much lower cost.

HR software is quite expensive for small and medium-sized businesses. But working with an HR company, especially a long-standing one like Tawzef, means you can get access to this costly software at a fraction of the cost.

HR software costs can range for a few hundred dollars a month to thousands of dollars per month and per year.

One of the most commonly-requested types of HR software is the human resource management system (HRMS).

3)  Training opportunities

Companies need to train their new and current employees for work purposes.

Training can vary from soft skills training, like negotiation skills for sales and marketing professionals, to more hands-down business-focused training.

Training allows companies to upskill their employees, which translates to higher business productivity and efficiency and better employee retention.

4)  Faster hiring

A major benefit of HR outsourcing services is recruitment.

Every business will need to hire people in order to grow. But the recruitment process is becoming longer and harder, especially as more college graduates enter the market, while companies have limited vacancies available.

Working with an HR outsourcing service provider, like Tawzef, means you get all the hiring expertise the company has to offer.

5)  Lower employee turnover 

Many companies are unaware of the impact and cost of employee turnover on their business. When an employee leaves, the company incurs money. Sometimes, they don’t see that money but what happens is:

impact of employee turnover
Impact of employee turnover

Your company may not see that it’s spending more money. But the fact is, it’s losing more money because of employee turnover.

This is especially true for sales and marketing positions, where employees’ efforts can be seen and felt by many.

6)  Payroll management

HR companies offer different levels of payroll processing and management.

The basic level is payroll processing, where a company delivers its monthly employee attendance sheets and other information to the HR firm.

The HR company calculates employees’ salaries and informs the company how much each employee should get paid each month.

A more advanced level falls under manpower services, or manpower outsourcing services, which covers both payroll and recruitment.

7)  Manpower outsourcing

It’s important to clarify that there are differences between payroll outsourcing and manpower outsourcing services.

While payroll relates to calculating employees’ salaries, manpower covers recruitment, employee outsourcing, and payroll.

Under manpower outsourcing services, your company delivers employees’ monthly attendance sheets, calculates salaries, and pays them out to your employees.

The HR company is also responsible for collecting and paying employee taxes, making social insurance deductions, among other payments.

8) BPO

Business process outsourcing (BPO) involves subcontracting a company’s process needs to a third party. This third party is called a BPO vendor.

BPO covers IT services, call center services or the entire call center unit, and HR services, among other services.

One of the benefits of working with long-standing HR outsourcing service providers like Tawzef is that you get HR and BPO services.

You can pick which service you need and you can get a consultation as to which services best fit your business.

Further reading: How HR Consultancy Firms Can Drive Businesses Forward

 

9)  Access to additional services

An HR consultancy offers HR outsourcing services along with additional business-related services, such as:

10)  Fewer legal risks

For a company to operate, whether in Egypt or any other country, it must have the necessary paperwork required by the local government.

An HR company performs this task on behalf of your company to ensure you’re in compliance with local laws and regulations.

Compliance also includes ensuring your employees have social insurance (a government requirement).

All of these services mean your company encounters fewer business and legal risks. HR companies may also inform you with government-mandated updates to hiring laws and legislation.

The number or degree of services provided may vary from one HR company to another.

 11)  Focus on revenue-generating activities

When you hire an HR outsourcing provider, you let them manage those needs and services you can’t do or don’t want to do in-house.

This allows you to focus on your revenue-generating activities so you can grow your business, and accordingly, your profits.

Wrapping it up

As a company, you specialize in a certain area. Other areas are new to you, like creating a GAP analysis, creating a salary structure, managing employee affairs such as employee engagement activities,…etc.

By hiring an HR outsourcing service provider, you get all of the above-mentioned benefits. You’d also be hiring an expert for an area you’re unfamiliar with.

To make the most of your partnership with your outsourcing provider, be it Tawzef or any other company, we recommend using an outsourcing agreement.

An outsourcing agreement ensures you know which services you’re getting and the expected deliverables.

 

Need help hiring or managing employees? Want to create a call center but don’t have means or know where to begin? Need HR services that you can’t perform in-house? Get in touch with Tawzef and our team of business and HR experts will ensure your needs are met.

 

 

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