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HR & Development Services

What is HR Outsourcing (HRO), and what are the benefits?

Thursday, 11 May 2017
With six in every ten HR professionals reporting that their HR function outsources parts of their work and a huge third of SMEs outsourcing for more complex HR advice we thought we would give you more information on what HRO is, and how it can benefit your business.

HR outsourcing is a great way of helping meet increasing demands being placed on the HR function of a business, or even introducing a HR function to the business. 

So, what is it? 
Human Resources Outsourcing, or HRO, is the process of paying an external provider to deal with your Human Resource needs, whether this is a one off (for example, a disciplinary meeting or advice on a particular matter), or contracting a firm to look after all your HR needs. 

Busy people
You're trusting a key function of your company to an external third party, so if you are minded to go down this route, ensure that the organisation has a solid track record, offers superior customer service, and is a good fit with your organisation. Your vision should be engage with a third party who wants to work with you as a partner, tailoring its services and products to your exact needs.
 
In addition, always ensure you take time to consider the potential benefits and costs and it’s important to create a clear strategy for managing the change from in-house HR to outsourcing. Organisations should also consider making time to regularly review whether HR outsourcing is working for them, to ensure the most effective HR function possible.

 
How could this help your organisation?
HRO comes with various benefits that can vary from business to business, here are a few of the most common positive effects that organisations see when outsourcing their Human Resources:
  • Reduced costs - it’s been found that companies that outsource their HR and payroll functions experience a cost saving of at least 9% (Source: The Outsourcing Institute).
  • Increased flexibility - it’s possible to scale up and down more efficiently and it’s easier, and cheaper, than hiring more staff.
  • Improve compliance and streamline your HR processes
  • Gain access to greater HR expertise that is not available internally.
  • Reducing your risks by ensuring the business is legally compliant and kept up to date on ever changing employment laws.
  • Allow your organisation to focus on the core business knowing your people process are in safe hands.
  • Provides much needed capacity for any existing HR function to operate more strategically within the business.
 

We are often asked whether HRO is right for a business at a given stage in their growth, or whether there is in fact a need for an in-house presence. Organisations in this position have benefited from the insight a HR Audit can offer. You can read more about HR audits here or please do get in touch with any questions you may have.
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