As your business grows, you will have a number of different options available to you in terms of how you handle your human resources. Ultimately, the decision of whether you should or should not outsource HR is a personal one: every business is different. Your decision will be based on immediate growth plans, culture, and business strategy. However, it does help to understand the pros and cons of outsourcing HR in further detail so that you can make a better decision regarding the right approach for you. Simply read on for more information…

Pros of outsourcing HR

So, let’s begin by taking a look at the benefits of outsourcing HR. In most cases, this is the most cost efficient route to go down. If you bring on someone in-house, you are not only going to have to fund their salary, but you will have other incentives and benefits to consider as well. You may also need to pay for employee training. You need to sit down and work out which option is going to be the cheapest overall. You should work out the costs over the period of a year so that you get a more accurate understanding. Moreover, no matter what option you decide, this is something you should constantly monitor to make sure the solution you have chosen is still financially viable.

Another reason why outsourcing HR is beneficial is because you will gain quick access to a team of experts. You don’t have to use the team and resources to develop this team in-house. Instead, you can have the peace of mind that your company’s HR matters are being handled by someone with the highest level of expertise. Of course, you can also build this level of quality and experience in-house, but it will require a great effort on your behalf.

You also need to consider the technology side of things when you are contemplating the benefits of outsourcing HR. A lot of small companies do not have the budgets for HR tech. Also, due to a low headcount, they don’t tend to have much negotiation power either. This is something you do not need to worry about if you outsource your HR commitments. Why? Well, the company you employ will either use its own HR technology, or they will benefit from large discounts because they are able to refer a number of clients. This eliminates the barriers of entry you would typically experience with HR technology.

The final benefit associated with outsourcing is the fact that it will free up time so you can focus on your core business activities. As a small business owner, time is of the essence, and generating as much money as possible for the business is a necessity. Outsourcing enables you to focus on the core activities of your business, i.e. those tasks that will make you money and grow your firm. At the same time, you can have peace of mind that your HR department is being managed by professionals with the necessary experience in the area.

Cons of outsourcing HR

Now that you are aware of the benefits of outsourcing HR for your small business, let’s take a look at some of the drawbacks. The main con associated with outsourcing is the physical distance and the disconnect that this can create. For a department as important as human resources, whereby employees are at the core of everything, having remote workers lead the way can be incredibly difficult. This is often why most businesses prefer to hire HR recruitment specialists so that they can hire the experts they need for their HR department to work in house. This enables employees and the HR team members to build strong relationships for the good of the company.

Another one of the key benefit of hiring HR professionals, rather than outsourcing, is the fact that your business will be the team’s priority. An in-house team is completely dedicated to your company and your company alone. On the other hand, an outsourcing business will have commitments to a number of different clients, and these clients will all have different needs. This can result in miscommunication and delayed responses, which can be very frustrating. It can be hard to accept that another business’ needs may need to come before yours, especially when you obviously value your business so highly and deem all matters urgent. The only way to ensure you never have to wait in line is to have your own in-house team that manages HR.

In addition to the points that have already been mentioned, another drawback is the fact that it is difficult for an outsourcer to help build culture unless part of the contract states that there is some dedicated on-site time, although this is often not the case. Plus, even if it was, an outsourced supplier will never be able to have the same feel or the capability to build a culture like an in-house HR team would. In a part of the firm that is so centred on employees, having this level of disconnect and lack of business culture can be a real issue.

As you can see, there are both pros and cons associated with outsourcing HR. You need to decide what is going to be right for your small business in terms of cost, future growth plans, and the efficient running of your company. Hopefully, by considering the benefits and the drawbacks, you will have a better idea regarding the right approach for you.