Business 101: Benefits Of Outsourcing Your HR Department

The HR department is the most important department within any company because it is the unit that processes the hiring and firing of all employees of a company. Some might even say it is the first department that a potential employee gets to know up close and the last it says goodbye to.

However, despite its importance, the management of the company may want to outsource their HR department instead, especially if your industry is in flux, competitors are getting stronger, and the profits of your company have gone down lately.

There are some distinct advantages to outsourcing this unit so it is best to be aware of these benefits well in advance before your company agrees to outsource.

How Your Company Benefits When HR Department is Outsourced

  • Reaps Cost Savings: The HR department of any company can be quite expensive to maintain because of its many functions. When your HR department is outsourced, that means your company will not have to pay for many expenses of the HR department. Things such as soaring salaries and costly benefits will be the least of your worries.

It also means that the management of your company can use the cost savings to prepare the other departments for a more competitive stance in your industry. The cost savings become a “war chest” that management can use for other business functions such as developing new products and/or services.

  • HR Functions Can Be Managed Without Negative Effects on Other Departments: Your company can choose to cut the outsourced HR department down to a level that will help the company survive, or add more functions if the company is profitable, as management sees fit. Other departments of your company will not experience any losses and may continue to function at their optimal best.
  • Payroll and Accounting Avoid Delays: Paying your employees will get easier because this function can be separated from the managerial functions of observing employee relations and dealing with issues among rank-and-file. The Payroll and Accounting system will proceed smoothly for the good of the entire company so that there are no delays in paying employees.
  • Your Company Can Pick and Choose the Best Companies to Outsource HR To: The HR department functions can be outsourced to the best companies around (such as Law At Work) rather than run by a problem-ridden department in-house. This means it will be run by professionals and there won’t be any need to pay employment benefits to that department anymore.
  • Outsourcing Allows Professionals To Keep Track of Amendments to Labor Laws: One of the most difficult problems of your in-house HR department is monitoring changes to labor laws and other laws that may impact on HR functions. When you outsource the HR work, the outsourcing company will devote its resources to monitoring amendments to laws that affect your company, including labor regulations and laws that affect the compensation of your own employees.
  • Your Company Will Be Able to Delegate Other Tasks to the Outsourced HR Department: When employee hiring and training is outsourced, managers and other professionals will be able to concentrate on ways to raise revenues for the company instead of getting sidetracked into routine administrative functions.

Managers are supposed to manage teams within your company so that you are best able to serve your clients and/or customers. When the HR department is outsourced, managers can devote their time to managing those teams because the HR outsourcing company will be responsible for employee development and tackling employee behavior issues within the workplace.

  • Your Company Will Have Better Odds for its Survival if HR Tasks Are Outsourced: A company that is still small will be able to compete better in an industry against the giants if it outsources its HR department function. This is because your small company will be able to snatch business opportunities as a more nimble and flexible organization because there is no need to worry about HR functions. Revenues will be able to grow so that your small business can survive and thrive.


In today’s business environment, competition is very much apparent in any industry you encounter. One way your company can survive the competition is if it outsources its HR department to a professional company. Many companies are already trying this out and it seems that the small and medium enterprises are the ones who benefit the most by doing this. Your employees, managers, and upper management will be able to focus on raising much-needed revenues instead – this is important so your company can set aside cost savings into the company “war chest” for future use in revenue-generating activities and programs.

Author: Editorial Team

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