HR Management Services: The Risks and Rewards of Outsourcing VS Insourcing

Outsourced HR management services can save your business both time and money.

HR Management servicesFrom screening new workers to managing existing employees, HR management services fulfill a variety of important roles. High-quality HR is essential, as it allows companies to run smoothly and attract the best talent.

However, not all businesses can afford the time or money it takes to maintain an in-house HR department. Outsourced HR management is a viable alternative, but not for all companies and not in all situations. It’s important to understand the risks and rewards highlighted below before moving forward with an outsourced solution.

Benefits of Outsourcing HR Management

Outsourcing is a notoriously affordable option, particularly for businesses that simply do not have the budget for an in-house HR department. Furthermore, outsourcing is scalable; many businesses accommodate fast growth by ramping up outsourced services as opposed to hiring new HR staff. Likewise, if downsizing proves necessary, outsourced HR can scale down accordingly.

Outsourced HR is particularly valuable among small businesses with fewer than 25 employees. The HR needs of such companies are not extensive enough to warrant in-house staff. Yet, employees rarely have the expertise or experience to take care of human resources necessities on their own.

This is particularly true as local and federal regulations undergo significant changes; business owners often fail to keep up with such shifts, and therefore risk noncompliance. In such situations, outsourced HR is a great middle ground. That’s because it allows small businesses to take advantage of both the cost savings of avoiding an HR department and easy access to HR expertise.

Risks of Outsourcing HR Management Solutions

HR Management servicesMany businesses benefit greatly from outsourcing, but the wrong management service can prove disastrous. Poor performance on the outsourcing provider’s behalf will not lead to cost savings. If anything, associated disruptions could prove surprisingly costly.

Distance can also prove problematic. In-house HR lends a certain sense of closeness between the HR department and other employees, and a feeling that is hard to come by with outsourced services.

The best solution is to choose a local service with an excellent reputation in the company’s community. Some companies that prefer in-house HR have also cited concerns regarding loss of control and the provider’s inadequate understanding of company culture. However, businesses can mitigate these issues by choosing a trusted HR service.

No form of HR is risk-free. It’s important to understand the risks and rewards of all approaches and to weigh these carefully to determine which approach is most valuable in a particular situation. With awareness and proper preparation, businesses can avoid most of the purported downsides of outsourcing, especially by choosing highly rated and personally vetted HR providers.

Not sure if outsourced HR management services are right for your business? Visit the Incompass website today or call (916) 974-939 at your earliest convenience to learn more about the potential role of outsourced HR in your day-to-day business endeavors.

Categories: PAYROLL & ACCOUNTING.