HR Outsourcing
Kamilia Moataz
October 17, 2024The human resources market is one that’s fast evolving and fast growing. Globally, the HR outsourcing market is forecast to reach $65.3 billion by 2030, up from $44.3 billion in 2023.
HR outsourcing involves engaging with a third-party HR services provider or an HR agency to handle a company’s HR functions and needs.
Companies can outsource one or more HR needs to an agency, like Tawzef. Some companies choose to outsource their payroll, while many prefer to outsource recruitment.
There are many benefits to working with an HR consultancy like improving employer branding, focusing on core business, and saving time.
It’s vital to keep tabs on the latest HR outsourcing statistics, data, and trends to make informed decisions for your organization.
In this article, we’ll be looking at the top HR outsourcing statistics and trends that can affect your company and hiring decisions.
Top HR outsourcing statistics to drive your next decision
Now let’s look at the most important statistics in the field of HR outsourcing.
80% of organizations outsource HR
While many companies may not say it out loud, a vast majority relies on HR outsourcing services to drive their businesses.
Research found 80% of companies using HR outsourcing solutions as they contribute to cost optimization, provide a high-level of HR expertise, and more.
Outsourcing HR functions can also support companies when it comes to compliance with labor laws and regulations.
Others benefit from HR operators such as employers of record, when deciding to hire employees from other countries.
Outsourcing HR services saves companies 22%
Among the top reasons companies turn to HR agencies are their expertise and their ability to trim and optimize costs.
Roughly, 58% of companies say they use HR outsourcing providers to “save money and reduce HR operating costs.”
Moreover, companies that outsource one or more of their HR operations can save 20-40% compared to those with an in-house HR team.
78% of companies are satisfied with HR outsourcing costs
Deloitte research found 78% of companies that used HR outsourcing services were happy with the services they received. Respondents found the HR outsourcing provider had ‘either met or exceeded objectives related to cost.’
One of the main reasons companies turn to HR outsourcing agencies is to reduce their heavy workload, cut costs, and meet financial goals.
HR service providers help organizations focus on their core business and save time and money on HR hassles they’re not familiar with.
Recruitment and payroll are top outsourced functions
Although companies have a wide range of HR operations they can outsource, recruitment is by far the most tiring.
That’s why 54% of companies outsource recruitment, while 37% outsource their payroll. Other studies show employee training to be among the top activities to be outsourced.
The recruitment cycle is often long and time-consuming for small in-house teams. So, handing it over to an agency with access to a large talent pool and recruitment expertise is a good idea.
Outsourcing HR reduces staff by 10-12%
It shouldn’t come as a surprise that working with an HR outsourcing provider will reduce your in-house HR staff. Working with a third-party provider can reduce in-house HR staff by 10-18%.
However, it’s important companies understand that working with HR outsourcing agencies can complement their internal HR team.
Companies often outsource the most time-consuming tasks or those they don’t have much experience with. These can include tasks like creating a compensation and benefits strategy, the HR policies handbook, and establishing the company’s HR strategy.
45% of small businesses spend a day a week on HR tasks
HR tasks can be time-consuming for small business owners who are not familiar or have experience managing such tasks.
Research has found that 45% of small business owners “spend at least one day per week” doing administrative HR tasks.
This can be costly for small businesses who need to focus on their core operations that drive business growth.
Outsourcing HR functions can alleviate this burden, allowing owners to dedicate more time to core business operations and strategic planning.
95% of HR professionals are using tech to manage people
Research by PwC found 95% of survey respondents saying they are “using or planning to use” to manage remote work.
PwC advises HR professionals using tracking tools to “strike the right balance in measuring engagement and results without eroding trust.”
HR outsourcing boosts employee satisfaction by 15%
Research by the Society of Human Resource Management (SHRM) has found that companies that have outsourced one or more of their HR functions have seen a 15% improvement in employee satisfaction rates.
The reason behind these results is that HR outsourcing helps organizations focus on their core business operations and their people.
They outsource HR tasks to specialized companies and personnel, leading to streamlined processes, on-time payments, and better access to HR services.
HR outsourcing trends for 2025
Besides the numbers, staying up-to-date with trends related to HR outsourcing keeps your organization competitive.
Outsourcing HR tasks helps organizations improve efficiency, save time and mitigate risks, particularly those related to labor laws and compliance.
Here are the top HR outsourcing trends for years to come:
Rising interest in customized HR solutions
Every organization’s needs will vary from another. Even if they’re in the same field. Companies in 2025 will seek more customized HR solutions to address their unique challenges and requirements.
Tailored solutions don’t come in the form of standard packages. But are tailored to each company. Often HR consultancies, like Tawzef, will provide these solutions, along with consultations to align with companies’ strategic goals.
By customizing HR services, companies can ensure they receive the exact support they need, enhancing efficiency and effectiveness. This approach also allows for greater flexibility, enabling businesses to scale services up or down based on changing needs.
Integrating tech with human resources
More companies and HR professionals are turning to technology, including AI, in the HR field.
From using recruitment and HR software to applicant tracking systems (ATS) to generative AI, HR professionals are exploring how technology improves HR operations and increases employee engagement.
AI can automate tasks like resume screening and provides data-driven insights into employee performance.
Moreover, outsourcing firms can provide access to advanced HR technologies and resources, enhancing operations and employee experiences.
Growing interest in global HR outsourcing
As companies grow, they seek help from external, often international sources. To ensure they are compliant and can recruit from abroad, companies are turning to employer of record (EORs) and global HR outsourcing providers for their recruitment needs.
Outsourcing HR helps companies access a global talent pool, allowing them to hire skilled workers from anywhere in the world. This approach reduces costs, ensures compliance with local laws, and brings diverse, high-quality hires. It also helps businesses stay competitive and adaptable.
Using HR outsourcing to improve employee experience
As you’ve seen with the above-mentioned data and statistics, HR outsourcing can have a positive impact on employee experience and satisfaction.
Creating a positive work environment and company culture improves employee retention and reduces turnover.
By using outside HR expertise from outsourcing service providers, companies can create better salary scales, benefits packages, and focus on the people aspect of their organization.
Recruitment marketing to increase via social media
One of our top talent acquisition statistics and trends related to recruitment marketing and acquiring talent through social media.
Research shows 98% of recruiters are using social platforms like LinkedIn and Facebook to find talents. Outsourced recruitment agencies are doing the same thing.
Growing interest in remote work support
As many companies adopt and manage hybrid teams, managers are struggling to manage talents in different locations. HR outsourcing can provide managers with the necessary training to manage global remote and hybrid teams.
Moreover, outsourcing HR functions supports remote work by providing tools for employee engagement, virtual wellness programs, online training, and compliance management. It streamlines onboarding, payroll, and scalability for remote and hybrid teams.