How many companies outsource their HR?
According to HR News, in 2021 24% of businesses in Europe outsourced all, or the majority of, their HR requirements.
HR outsourcing is more common among smaller businesses (SMEs) – as it makes more sense for them financially than having a dedicated HR resource in-house.
HR is among the most likely function an organisation would opt to outsource – others would include IT and marketing.
What is HR outsourcing?
HR outsourcing is essentially a contractual agreement between an employer and an external third-party provider whereby the employer transfers the management of, and responsibility for, some or all HR functions to the external provider.
Companies who outsource all of their HR generally don’t have an in-house HR resource. This is usually because they are small enough not to require a dedicated resource, therefore it works out more cost-effective to outsource.
Many types of HR outsourcing options are available to businesses however, and they may opt to outsource just one particular aspect of their HR function if they don’t have that specialist expertise in-house.
What HR services can be outsourced?
Any or all HR services can be outsourced, but certain types of tasks lend themselves better to being outsourced than others – for instance:
- HR process automation
- Digital transformation
- Socio-legal regulations
- International HR
- Wage costs
- Organisational restructuring
- Change projects (cost reduction, downsizing, etc.)
Why should HR be outsourced?
Human resources is a huge area covering recruitment and hiring, training and development and workplace culture and employee engagement among other things. The HR department is often one of the biggest on a company’s payroll. This can not only result in significant outgoings, but has the potential for uncoordinated communication between individual units to lead to inefficiency.
When you hire an HR specialist who can provide everything your company needs, you can leverage their experience and expertise across the board to improve cohesion, increase efficiency and save on salary costs.
A lot of the time when people think about outsourcing their HR, they assume they’ll be bound to a provider with a lengthy contract and a monthly retainer – where they are essentially at risk of paying for a service whether they need to use it or not.
However at Hunter Adams we work differently.
We don’t ask our clients to sign any binding contracts and we don’t work on a retainer basis.
We simply ask our clients to pre-pay for a “bank of hours” which they can then use as and when they need to at any point in future. Once their bank of hours depletes, they just top it up again to cover the cost of future HR support.
SMEs and charities receive around a 40% discount on rates, and the don’t need to think about monthly invoices as they’ve paid upfront.