What Is HR Outsourcing?

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Whatever your company's human resources requirements, there's an HR outsourcing firm out there to meet those needs. Some HR outsourcing firms are generalists, offering a wide variety of services, while others are specialists, focusing on specific areas such as payroll or recruiting. Depending on the size of your business and how much control you want to maintain over HR functions, you can either outsource all your HR tasks or contract for services a la carte.

The basic services offered by HR outsourcing firms may include:

• Overseeing organizational structure and staffing requirements
• Recruiting, training, and development
• Tracking department objectives, goals, and strategies
• Employee and manager training
• Benefits administration
• Employee orientation programs

Businesses that outsource HR are typically small-to-midsize firms with between 25 and 1,500 employees. These businesses view HR outsourcing as a strategic tool that relieves them of HR responsibilities and enables them to focus on what they do best. In addition to allowing you to concentrate on your core business activities, outsourcing provides some key benefits, including:

• Providing you with skilled professionals who are focused specifically on HR
• Helping you reduce and manage operating costs
• Improving employee relations

If you need to hand off the entire HR function, consider a professional employer organization (PEO). A PEO becomes the employer of record, handling employee relations, payroll, benefits, workers' compensation, and all the other areas that fall under the HR umbrella, while you manage the employee's everyday business responsibilities. For a step-by-step guide to using and hiring a PEO, check out our Buyer's Guide on Outsource Your HR Using a PEO.

If you don't need the comprehensive services of a PEO, you can contract specific projects through an HR outsourcing firm to help you:

• Implement a human resource information system (HRIS)
• Create or update employee handbooks and policy manuals
• Develop and implement a compensation program
• Create or review a performance appraisal system
• Write and update affirmative action plans
• Provide sexual harassment training

Referrals, the Yellow Pages, and the Web are the best resources for finding an HR outsourcing provider. You have the option of working with an international, national, or regional provider. Any one of those may be able to meet your HR needs.

Whether you're looking to outsource the entire HR function, a portion of it, or a specific project, it's good to know you've got options — lots of them.