Human Resources Outsourcing Small Business

The 3 Core Advantages Gained by Outsourcing Human Resources

CoAdvantage
CoAdvantage
October 27, 2020

Outsourcing HR gains three big advantages for businesses: time, money, and competitive advantage. Even better, outsourcing can have an outsized impact for small and midsize businesses (SMBs) in particular; and this is true even if all your team does is offload transactional HR tasks to a third-party. But how exactly does outsourcing deliver these core benefits?

Gaining Time

Small business owners consistently put in far more time than the average employee. According to SCORE and the New York Enterprise Report, small business owners work nearly twice as much as regular employees. Gallup research adds that 39% of owners work more than 60 hours a week. 

That heavy workload often includes HR responsibilities that are important but time-consuming. Outsourcing HR helps return valuable hours to business owners and leaders by streamlining administration and removing much of the day-to-day burden from their plates. 

Saving Money

HR outsourcing reduces overall business expenses. In fact, reducing costs is the most common reason cited by businesses for why they outsource HR. And the numbers show that HR outsourcing delivers solid savings. The Hackett Group has found that “world-class” HR organizations (that is, high-performing HR teams when compared to HR in businesses at large) operate at 25% lower cost and with 31% fewer staff – and they’re 91% more likely to have HR business partners. In other words, outsourcing allows organizations to streamline HR functions and reduce related staff expenses.

Achieving Competitive Advantage

By outsourcing, employers can leverage big-company, enterprise-grade HR services (like Large Group Health Plans), even as SMBs. In fact, nearly half (44%) of companies use outsourcing to gain access to services they could not provide on their own. 

Outsourcing HR through a Professional Employer Organization (PEO) brings even more advantages such as: 

  • Saving time 
  • Enhancing productivity
  • Reducing HR administration costs
  • Comprehensive HR solutions backed by experts

A PEO can give small businesses a competitive advantage in the labor market as well, even when hiring lulls. 

What HR functions should be outsourced to gain these advantages?

There’s no one-size-fits-all answer to this question; it depends entirely on the organization’s unique circumstances and business objectives. HR service and support, payroll, benefits administration, training, recruitment, talent management, and more are all viable options for outsourcing.

For employers weighing these choices, it can be difficult to know which path makes the most sense. That's why we've created an informative comparison guide that clearly explains the differences between PEOs, ASOs, and payroll providers. The guide is designed to help business leaders evaluate their options side by side, understand the strengths of each model, and choose the HR solution that best supports their goals.

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about CoAdvantage’s ability to create a strategic HR function in your business that drives business growth potential, contact us today.