Top 7 Human Resources Outsourcing (HRO) Companies for Small Businesses

Over the years, American companies have embraced Human Resources Outsourcing (HRO) as a way to save money and time by allowing a third party provider to fully or partially handled functions related to running a human resources department. If you’re considering outsourcing, we’ve put together basic information to help you decide if it’s the right choice for your company.

The Most Common Functions Outsourced

A recent study showed that the most areas outsourced in HR are:

401K Programs
Health benefits management
Pension benefits

These areas are typically very complex and require a very specific level of knowledge. Including employee benefits and taxation law. Outsourcing these functions to a provider with a fully trained staff well versed in various aspects of the law is crucial for any company. It can also decrease the chances of your company getting into legal trouble which is more likely to happen if you handle your human resources department in house.

HRO vs In House Human Resources Department

The time and expense it takes to build and train an in house human resources department is not an option for many companies. Particularly, small businesses who lack the finances to employ a human resources staff. It should be noted that companies hire providers located onshore(Within the U.S) as well as offshore. (Outside of the U.S.)

There are other functions within HR that simply make outsourcing a smarter and more efficient choice. Recruiting, occupational safety reports, and other common workplace issues can all be handled by an HR outsource provider. That means a lot less time dealing with issues that are not essential to your main business focus.

BPO

Human resources outsourcing comes under Business Process Outsourcing. Although BPO spending is down in the U.S., it is still a highly sought after area for U.S. outsourcing buyers. Even though recent trends suggest providers are asking a higher price for their services, the costs are still lower than it would be if a company hired an in house staff.

Employee Perception

In U.S. companies, employee benefits can be more important to an employee than their own salaries. So the proper administration and management of medical benefits, retirement, vacations and other employee concerns can go a long way with current employees as well as for future hires. This may also help reduce employee turnover rates as well.

The Bottom Line

Companies have to take every advantage to remain competitive. Another benefit of outsourcing HR is the ability to show companies where and how to cut costs to save even more money. Since providers often have many different clients, they also tend to have strong relationships within the HR industry.

This often gives them the ability to negotiate for better group health plan benefits. With healthcare costs spiraling out of control in the U.S., this is a major advantage of HR outsourcing. This can lead to higher profits and a company that in the long term runs more efficiently.

Of Course There Are Some Legitimate Concerns

Probably the biggest concern among companies considering outsourcing is the private company and employee information. It’s a valid concern. Afterall, if your company’s most important financial information and employee data is compromised, your company could lose a substantial amount of money in legal fees and damage control.