Outsourcing HR – How Does It Work?

Outsourcing HR – How Does It Work?

October 14, 2021By admin

Human resource managers oversee other employees’ well-being and productivity to encourage growth in the company and happiness in the workforce. Companies with a robust HR department have a great advantage over companies that do not.

HR managers commonly use outsourcing in their business strategies, a contractual agreement between an employer and a third-party provider. Outsourcing can be a helpful tool for small businesses that may not have all the resources for a dedicated, fully-staffed HR or administrative department.

Different types of services are available to businesses that want to outsource HR or other administrative needs; this article will cover some of the various outsourcing options available to businesses of all sizes. 

Business Process Outsourcing (BPO) 

With BPO, the employer contracts third-party providers to take care of administrative processes off-site and be available as a resource at all times. With this outsourcing method, BPO provides the service and the software, which helps take a lot of pressure off the company to stay on top of all their business information and data collection. BPO can help with organization, benefits auditing, or other related administrative processing. 

Software-As-A-Service (SAAS) 

Otherwise known as SAAS, this outsourcing method is a software licensing and delivery model. What makes this service unique is its ability to be accessed via a web browser. It’s hosted remotely by a third-party vendor to help companies stay organized and save money. 

In HR, this is typically accomplished with payroll applications and talent management. Most companies with dedicated HR departments will select a SAAS they prefer to help organize all their tasks and processes.

Single-Source Outsourcing

Otherwise known as single sourcing, a business chooses one supplier to care for all their operational needs. It all starts with talent acquisition and also includes payroll, labor management, and benefits administration. The business will outsource everything from managing employee needs, turnover, and even sourcing new hires. 

Professional Employer Organization (PEO) 

A PEO is an HR outsourcing company that provides HR management benefits to a business’s employees; this is accomplished through a co-employer relationship and an employee leasing arrangement. This means that employment responsibilities are shared between an employer and the PEO. 

For example, the employer may maintain control over employee performance. But, the PEO would still be in charge of taxes, payroll, and benefits. Since PEOs are usually offered to companies of 50 employees or less, they are the ideal outsourcing strategy for small business owners. 

If your business needs an HR outsourcing company or help with mass payroll and multi-state payroll, Brabo Payroll is here to help! We work with small to medium-sized businesses, and we have decades of experience working on the specific needs that arise for companies of that size. Our HR systems are designed to be customized to meet small to medium-sized businesses’ needs daily. 
Please reach out with any questions; we’re here to help!