HR Outsourcing For Small Businesses

HR Outsourcing For Small Businesses

With limited funds and resources at hand, it’s always best to outsource some or all of the non-core activities. Outsourcing hr functions lets you focus on your core business activities. Not to forget reduced workload means peace of mind too. In this article, we’ll discuss, what is hr outsourcing, small business hr outsourcing, the benefits of hr outsourcing for small businesses, and other question like

  1. What is hr outsourcing(HRO)?
  2. Do small businesses need HR?
  3. What HR services can be outsourced?
  4. How much does it cost to outsource HR?

Spending a good amount of money on administrative functions has never been a big deal for large size corporates. However, when it comes to small businesses, it is a big deal. If you are a small organization, you know how hard it is to squeeze every penny out of your finances. Plus the team is always preoccupied with more important tasks at hand. 

What is hr outsourcing(HRO) for small businesses?

As the name says, HR outsourcing is an arrangement between a service provider and the company. Whereas the service provider agrees to handle the specific HR functions on behalf of the company for nominal fees. The most common outsourced hr functions are recruitment, payroll, compliance, and training. Small businesses looking to outsource HR functions should also consider the legal structure of their company. Understanding how to form an llc can provide the legal protection and flexibility needed, allowing owners to focus more on strategic partnerships, like HR outsourcing, to grow their business efficiently.

Do small businesses need HR and HR outsourcing? 

Being a small business owner, it’s ok to be extra cautious about the finances. We have been there. A survey reported, Most small business owners spend at least 70% of their time worrying about hiring the right resources, interviews, discipline, productivity, work culture, payroll, benefits, performance assessments, etc. I know that’s a lot. 

But, hey your managers can help you do that right? It’s not much. Of course, they can. 

Oh, just one question, Can they do it per the state and federal labor laws? Or Do they understand the cultural needs of the organization? Or are they well versed with performance management tactics, payroll management, grievances handling, etc.

I guess not! 

ask yourself, what are you paying them for?

An HR or human resource department deals with humans (employees). They say” human resource is the ultimate resource”. Every employee comes from a different background. They all have their own needs. An HR understands the culture of the organization. His primary job is to identify the right people for the organization and nurture them to be leaders of tomorrow. 

Don’t expect the same kind of understanding or expertise from your accountant or admin guy. If you are struggling with finances, outsource. Find a compatible HR outsourcing company, tell them your challenges and they’ll help you. Simple. 

What HR services can be outsourced?

The answer is “Anything and everything!”

Yes, Every function of the HR department can be outsourced. If you are seriously thinking about outsourcing HR operations, the range of HR tasks that can be outsourced will surprise you. Starting from recruitment, interviews, tests, application management, payroll, benefits management, performance management, employee Handbook preparation, HR policies implementation, compliances, training, admin, and many more. 

Pro tip: instead of outsourcing your HR operations to multiple vendors, find someone who can help you with everything. Thank me later. 

Finding that one outsourcing partner that fully aligns with your goals, SOP’s, functions, and employees is the key. Mr. K Rhodes, General Manager HR of a leading real estate company from Newyork says, outsourcing the HR department to an external provider has been one of the best decisions he has ever made. Keeping a few key functions aside, the company has outsourced almost every function of the HR department. At the same time, he also cautions about hiring the right vendor. He says the HR Outsourcing for small businesses is still in beta mode. Not every consultant you meet will be able to fulfill all your requirements. 

The real challenge begins after the onboarding process. Once they start working with your in-house team, you’ll come to know about the efficiency of the service provider. 

There are hundreds of hr outsourcing services providers in the market to choose from. You’d be able to pick anything from bundled packages to custom-tailored services for your organization. But picking the right service provider is vital for your company’s success. 

How much does it cost to outsource HR?

Pricing has always been one of the main concerns for small businesses. However, HR outsourcing services can be customized as per the requirements and budget. The fees for hr outsourcing services start from $40 to $1500 per month based on the number of employees and services. 

You might wanna put on your negotiator hat to get a good bargain. Ideally, outsourcing service providers charge anywhere between 4-8% of the salary of the employees. That should give you an idea of how much you’d be paying for outsourcing HR functions. Also, it’s not just about the service. You need someone capable, trustworthy, and flexible. Choose wisely!

If you are looking for more tips and recommendations on HR Outsourcing for small businesses, check out the recommended article section. we’ll bring you a list of some of the best service providers in HR Outsourcing for small businesses section.