Human resources should be one of the main propellers of a company to succeed. Unfortunately, it has become the opposite for many companies today. Employee benefits rack up overhead costs like no any other expense in a business. Monthly premiums for programs such as employee compensation and health insurance are just two of the staggering costs a company has to handle in order to keep his business going. Support tasks such as keeping up with state and federal regulations, processing claims, and addressing worker inquiry stack up the costs even higher.
Rob J. Thurston of HR Consulting Group says that the trend in the last decade has been to outsource employee benefits because of the negative effect of in-house processing on bottom lines. Companies are realizing that their core competency doesn’t lie in benefits administration and that they would earn more if they pay outsourcing firms to handle these needs for them.
The Extent of Human Resources Outsourcing
Numbers don’t lie in terms of the ongoing trend to outsource HR needs. Last year, one study revealed that 29% of those surveyed said that they are outsourcing some of their HR processes. Tasks that are most commonly outsourced include pensions at 64%, payroll at 66% and legal processes at 69%.
Thurston observes that companies who have more than 20 workers would find it more inexpensive if they outsource the administration of their employee benefits. Startups with very small number of workers would also gain huge competitive advantages if they outsource their labor-intensive tasks, so their workers can focus on their core competencies.
Even large companies have turned to outsourcing to optimize their human resources. Companies like Unilever, Boots The Chemist, BT and Procter & Gamble have resorted to outsourcing huge sections of their HR requirements through contracts spanning 5 to 10 years. Interestingly, smaller companies tend to outsource limited parts of their HR needs to BPO firms and keep the management of their human resource processes internal.
Perhaps one of the most significant advantages of outsourcing a company’s human resource processes is the increase in employee morale. According to Cathy Tripp of Watson Wyatt, a consulting firm in Minneapolis, outsourcing can definitely enhance the quality of services employees receive from their companies. To illustrate, instead of burdening your HR staff with call-related tasks, you can transfer all of these to an outsourced call center team, leaving your HR staff with a lighter load that they can better concentrate on. The result? More productivity with a higher level of quality that ultimately benefits you.
The human resource factor need not be the downfall of any business. It should be the key to unlocking its hidden potentials and the main driver for its growth and stability. If you are burdened rather than helped by your HR processes, it’s high time you try outsourcing.