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Human Resources Outsourcing & Small Employers: A Perfect Match in a Tough Economy

Guest post by: Ari Rosenstein

Article Overview: As we face an uncertain economic future, one thing is for certain - employers must remain focused on cost-containment and improving efficiencies. One way businesses are addressing these employment challenges is through Human Resources Outsourcing.

Human Resources Outsourcing & Small Employers: A Perfect Match in a Tough Economy

We are already approaching the mid-point of 2010, and the economic forecast remains unclear. While pundits in the first quarter predicted an economicrebound, albeit with a few bumps along the way, the most recent economic indicators remain mixed, at best. Just this week, the ISM (Institute for Supply Management) reported that US supply sectors continued to grow in May, for the third consecutive month. At the same time, ADP released monthly employment figures well below analysts' predictions. As we continue to face an uncertain future, one thing is for certain - employers must remain focused on cost-containment and improving efficiencies. One way employers are addressing these employment challenges is through Human Resources Outsourcing.

How Does HR Outsourcing Work?

Like any outsourcing relationship, human resources outsourcing is the practice of using an outside expert to manage the day-to-day administration of non-essential employment tasks. Off-site specialists handle the non-core activities related to employment administration, payroll, benefits, taxes and workers' compensation insurance. and other complex workplace regulations.

Primary Reasons to Outsource

There are many reasons why small companies outsource their HR functions. These can include:

• Reducing employment cost and expenditures by accessing the HRO firm's economies-of-scale
• Increasing corporate efficiencies
• Accessing more comprehensive and competitive health insurance plans
• Reducing risks and exposures related to governmental regulations
• Focusing internal resources on core business activities

The Value of Outsourcing HR

In a survey conducted by the Society for Human Resource Management, or SHRM, professionals in the industry were asked their opinions on HR outsourcing, and the majority listed "saving money" as the No. 1 reason. However, other reasons for outsourcing included:

• Focusing on strategy
• Improving compliance
• Improving accuracy
• Lack of in-house experience
• Taking advantage of technological advances
• Offering services they could not offer.

In that same SHRM report, HR professionals said the top function outsourced was 401k administration, along with training, health care and employee benefits administration, payroll, staffing, background checks, recruitment and policy writing.

Once HR and other operations are outsourced, many companies are showing a strong return on investment, according to a recent survey of American executives. A survey of executives at the IDC Midwest Conference showed nearly 85 percent of the respondents saved as much as they spent on outsourcing, with 26.4 percent reporting a savings of twice as much. And the savings, according to nearly 95 percent of the respondents, went toward operational performance and innovation, which improved shareholder value.

To investigate if HR Outsourcing is right for your company, please contact us for a complimentary HR Cost Analysis.

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Article Tags: employment challenges, HR outsourcing, human resources, outsourcing



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