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December 07, 2021

Human Resource Outsourcing Statistics

Businesses continuously have the pressure to reduce costs and improve the bottom line, which makes many company leaders think outside of the box of traditional ways of operation or when finding talent

With the ever-growing cost of human resources, many businesses have had difficulty managing the job, so they choose to outsource their needs to a third party.

Growing your business is awesome but the need for more employees isn’t as simple as it may seem. Increasing employees means more taxes, benefits, payroll, policies, laws, and personalities is more than many businesses want to deal with. Human resource outsourcing is the solution.

Words are cheap, but numbers don’t lie. Let’s go over human resource outsourcing statistics to see the cold hard data. 

Human Resource Outsourcing Trends

The market for human resource outsourcing in the U.S is estimated at $9.7 billion in 2020. The market in Asia-Pacific is estimated to reach $5.1 billion U.S. dollars by the year 2027. 

Based on a survey taken by over 450 individuals that operate within the human resource outsourcing industry 69% of the organization’s services have less than 5,000 worksite employees.

While human resourcing outsourcing organizations maintain an average of 10,165 worksite employees, around 10% of the human resourcing companies have a worksite employee count of over 20,000. 

Around 60% of human resource outsourcing companies have less than 30 full-time employees, but many firms are growing and increasing their staff volume to meet current demands. 

The continued growth comes from the demand to improve process efficiency with the use of technology for a seamless employee experience while reducing costs.

Human Resource Outsourcing Statistics

  • The global human resource outsourcing market grows around 6% – 8% annually.
  • 58% of respondents of a survey stated they choose an employer to work for based on their technology offerings 
  • The human resourcing outsourcing industry is becoming a $100 billion market. 
  • 40% of organizations with at least 1,000 employees outsource
  • 27% of organizations with 50 or more employees outsource 
  • 64% of human resource outsourcing companies use a single software platform 
  • 78% of respondents to a survey indicated their human resource outsourcing provider met or exceeded their cost objectives. 
  • 59% of companies main reason to outsource is for cost savings
  • Outsourcing reduces costs by 15% on average.

Human Resource Challenges for Businesses

Human resource is a full-time job that takes a lot of time, money, effort, and research which is why many companies choose to leave it in the hands of experienced professionals. 

Here are some of the challenges businesses face when is comes to human resources:

  • Recruiting
  • Tax administration
  • Proving competitive benefits
  • Retaining employees
  • Managing insurance 
  • Maintaining compliance 
  • Offering quality affordable health insurance and retirement plans
  • Supporting consistent onboarding and training 

Costs of In-house Human Resource

There are many moving parts in a human resource department, from employee issues, benefits, compliances, job descriptions, headhunting, and payroll

It takes what seems like an army to get the work done accurately and successfully. Here are some of the hidden costs of managing your human resources in-house.

  1. The average salary and benefits of an experienced human resource professional are $88,500. 
  2. The cost of job postings, onboarding, and training 
  3. The cost of employee turnover 
  4. The money a business could save by finding lower healthcare and benefit costs
  5. The value of time spent 
  6. Penalties for inaccurate records 
  7. Employee lawsuits
  8. The cost of losing focus on other critical tasks

Benefits of Human Resource Outsourcing

Small business owners are stepping up and focusing more on employee happiness and company culture which is why many large and small companies are taking advantage of outsourced jobs

There are many benefits to outsourcing human resourcing functions for both the employer and its employees

Here are a few of the advantages:

Benefits of HR outsourcing for employers

  • Reduces overhead costs
  • Saves time 
  • Reliable compliance with laws and payroll 
  • Improving benefit offerings at an affordable cost 
  • Minimizes liabilities
  • Lower accounting costs
  • Experienced management of unemployment and workers’ compensation
  • Expert human resource management, including professional employee handbooks, policies, and procedures 

Benefits of HR outsourcing for employees 

  • On-time and accurate payroll 
  • Online access to benefits and pay stubs
  • Access to affordable benefits such as medical, dental, and vision
  • Professional help with employment-related issues 
  • Informative employee handbooks including company policies 

What Human Resource Business Processes to Outsource

The awesome part about human resource outsourcing is that you can outsource all of your HR functions. While some businesses choose to keep some of their HR tasks in-house, it’s typically best to outsource it all to the same provider. Here are some HR functions outsourcing services can take off your plate:

Payroll

Payroll is more than calculating hours worked and wages. Your employees count on you to withdraw the correct amount of taxes and benefit costs. 

Outsourcing your payroll duties puts the responsibility in the hands of professionals to ensure your business is compliant with federal and state laws and provides accurate and on-time payroll to your employees

Employee Benefits 

Human resources handle all things that deal with employee benefits, including health care, dental, vision, and 401(k). Employees expect these benefits without fail. 

Human resources are responsible for handling the mounds of paperwork benefits packages required. It takes expertise to seamlessly tackle open enrollment, terminating benefits, renewals, and annual audits. 

Human resource outsourcing means these critical functions get handled by experienced professionals that know the ins and outs of employee benefits to ensure everything is in working order without fail. HR is also responsible for shopping around to ensure you offer competitive benefits for the best price. 

Employee Relations

There are many laws that go into having employees. Outsourcing your human resources takes the burden off of researching laws and ensuring your business is compliant. 

HR is also responsible for handling issues employees experienced or witnessed in the workplace, whether it be discrimination or harassment. 

Workers’ Compensation 

Worker’s compensation claims are typically handled by HR, including ensuring employees are treated fairly and receiving medical care when injured. 

Human resource also ensures renewals get completed on time, and your policies stay up-to-date. They also shop around to ensure you’re receiving the best rate. 

Staffing

If you’re a business owner or have been responsible for recruiting employees, you probably understand what extensive job staffing is. Many companies use human resourcing outsourcing for hiring and onboarding new staff to avoid wasted valuable time and headaches. 

Human resources will create job descriptions, advertise open positions, review applications, and schedule and conduct interviews. When you outsource your human resources, they will only bring you qualified candidates that have already screened to ensure they are a good fit saving you a ton of time. 

Human resources will also conduct pre-employment screenings, including background checks, drug tests, and verify references. When you choose a candidate you want to hire, HR will handle the hiring and onboarding paperwork. 

If your business requires any pre-employment skills testing, human resources will get candidates tested to ensure they have what it takes to get the job done successfully. 

As you can tell, staffing is a lot of work and a full-time job for many companies, so putting it in the hands of recruiting specialists is a huge time saver and helps your business hire the top qualified candidates. 

Advantages of Human Resource Outsourcing

It’s estimated to cost $1,469 per employee per year to handle human resources functions in-house. When most businesses are always looking at cutting costs, outsourcing is an excellent way to lower overhead expenses.

Another benefit of human resource outsourcing is your internal employees can focus on the core business functions rather than any tedious HR paperwork. Employees will also be happy with the benefits packages you offer since your experienced HR outsourcing provider will do the essential homework to ensure you’re getting the best bang for your buck. Great benefits are a huge perk for an employee, which adds to their job satisfaction.

Having experienced recruiters will help your business hire awesome qualified employees that will match your company culture and meet the needs of the job description. Afterall, employees are the backbone of an organization and definitely add to the company’s success. 

Outsourcing any business function is a huge time saver. Any way you can save time while increasing productivity and improving efficiency is a win when it comes to business. 

For this reason, the outsourcing industry, including human resource outsourcing, continues to grow as an increasing number of companies are taking advantage of this service. 

Disadvantages of Human Resource Outsourcing

Without a doubt, there are a ton of advantages and great benefits of human resource outsourcing, but there are some drawbacks too. You may feel that you are losing control when you outsource your human resources. After all, you are putting these essential duties in the hands of a third-party organization. 

Keep in mind, your outsourcing partner works for you, just not in-house. If they value your business, they will ensure they provide you with top-notch service and competitive benefits packages, so you and your employees are satisfied. 

If you feel your HR needs are not being met to your satisfaction, look for another provider that will suit your requirements before your contract is up. 

In Sum

Human resource business process outsourcing statistics are the hard facts that show where the industry stands and where it’s expected to go. Hiring a third party of experienced professionals to handle all of your HR functions will save you time, money, and improve efficiency and accuracy. 

Human resource handles much more than hiring. There is a ton of paperwork, research, and knowledge needed to get the job done successfully. 

Employee satisfaction improves with smoother HR processes and support. It’s best to have your human resource outsourcing provider handle all your HR needs for a seamless process without fail. 

Are you ready to take the plunge and outsource your recruiting process to the pros? If so, contact AwesomeOS today. 

 

Sources:

Managing Human Resources | HBR

Everest Group Projects Robust 6-8% Growth for Multi-Process HR Outsourcing in 2019; Transformation to Next-Gen HR Model Is Driving Growth | PRWeb.com

The Littler® Annual Employer Survey | Littler

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