Why is it important?

Last week, one of my friends, who runs an IT start-up, told me his trusted technology lead had started under performing. My friend was worried. Had his tech lead lost interest in the company vision? Had he been approached by another start-up with a more exciting offer? When confronted, the tech lead gave my friend the most unexpected response: he said he was spending so much time and effort doing background checks for the coders he was hiring that he had lesser time to focus on his core work which was tech innovation. As a result, he was getting irritable and demotivated. That’s when my friend realized he had another option that would ensure his tech lead’s well-being without compromising on the quality of background checks: HR outsourcing.


HR outsourcing involves hiring an experienced third party to handle some of your people-related tasks, end to end. This idea has gained currency in recent times because the HR function itself has metamorphosed into a complex discipline. Every sub-function from compensation & benefits to learning & development has new standards to adhere to. For small or mid-sized firms, performing these functions can turn out to be unfeasible, time-consuming and distracting. But even large firms can resort to HR outsourcing to free up executive time for more strategic HR tasks.


If you’re considering HR outsourcing but are unsure if it’s right for you, here are 6 proven benefits you can expect:


Maintain focus: A lot of HR tasks can be tactical. Like background checks. This kind of work, while important, is of no strategic use to you. It does not help you directly achieve your end goal. Some other HR tasks can involve skills you don’t have. Like employee counselling. Again, in the time it takes you to build the skill and deliver, you could have sharpened your focus on your core work. HR outsourcing ensures you and your top talent maintain their focus on the work for which they were hired.


Develop capability: In the short term you can perform some tasks on your own without compromising on quality. Like taking a training session in Excel for sales managers. But in the long run, training requirements get more complex: managerial competence, decision-making, emotional intelligence. Then relying on external experts allows you to increase the quality of the HR capability.   


Save money: You will find it cheaper to use HR outsourcing than to hire people to do the same job. Optimizing money is one of the top three reasons executives resort to HR outsourcing.


Be risk-ready: Suppose your tech lead does indeed put in their papers. Now you’re scrambling to get his work delivered and look for a worthy replacement. On the other hand, if you’ve outsourced your recruitment function, your trusted HR partner will worry about hiring his replacement, while you focus on critical client outcomes.


Be legally water-proof: Many HR actions involve legal risks and having a well-informed HR outsourcing partner will ensure you are covered from these risks adequately.


Engage your people: Last but not the least, ensuring certain HR tasks are outsourced will enable your staff to be productive and happy. If the tech lead knows he doesn’t have to worry about background checks he can do what he was hired to do. He concludes his employer values his work and empowers him to give his best.


What can and should you be outsourcing?

SHRM recently shared their list of 10 HR functions that can and should be turned over to an outsourced HR administrator, completely or in part:

·         Background checks

·         Employee assistance and counselling services

·         Flexible spending account administration

·         COBRA administration

·         Health care benefits administration

·         Temporary staffing

·         Pension benefits administration

·         Retirement benefits administration

·         Employee relocation; and

·         Payroll administration.