Do Small Businesses Really Need to Outsource HR?
Rob Turner

Outsourcing can give small businesses more flexibility and agility, without requiring them to shoulder significant costs as they grow and develop their operations.

The option to let a third party handle HR is increasingly popular, but should smaller firms consider embracing it, or is this only suited to larger organizations?

Ensuring regulatory compliance

This is perhaps the biggest single reason to consider outsourcing HR rather than orchestrating it in-house when you have limited resources.

While it may seem efficient to have a single manager responsible for all HR matters within a small business, this can create complications if it turns out that labor laws are not being followed to the letter.

The money you save by piling HR alongside other responsibilities will be irrelevant if you are hit with fines and potential legal action for some accidental transgression.

This is where a combination of using HR tools for small businesses and effective outsourcing can come to the rescue. Modern software platforms and external experts can guarantee that your company is fully compliant with the letter of the law, sidestepping plenty of potential pitfalls that you might not otherwise be aware of.

Overseeing recruitment & boosting employee retention rates

Recruitment can be a taxing and time-consuming process, as well as one which is potentially expensive, especially if it is necessary on a regular basis.

Outsourcing HR can solve a number of these issues, as getting a third party to seek out the best new hires and also make sure that working for your company is as rewarding and satisfying as possible will be convenient and cost-effective.

The key is to attract talented individuals to the team, then do your best to retain them for as long as possible. Higher retention rates naturally lead to lower recruitment costs, so this is a win-win situation.

Delivering training

Employee training is another important aspect of HR and one which you can allow specialists to wrangle for you through outsourcing.

If you do not have the resources to employ a full-time HR team on a permanent basis, then being able to turn to an external contractor when you need to train the staff will be ideal.

Perfecting payroll

Small business owners may feel like they are having to keep lots of plates spinning all by themselves, and payroll responsibilities can be another burden that you would rather not have to face each month.

Outsourcing HR can be beneficial in this context, empowering you with the knowledge and experience of someone who will be able to make sure that workers are paid on time, taxes are dealt with as necessary, and any inefficiencies are ironed out to offer up a raft of ongoing advantages to your firm.

Some providers will bundle all of these features and more into a single package, which should give any small business pause for thought. And since this is a competitive market, there is lots of choice and ample opportunities to make savings.