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5 steps to outsourcing

According to Forbes, an estimated 50 percent of large companies outsource all or part of their HR services.

Today many functions have moved to Human Resource Outsourcing and Administrative Outsourcing Companies.  Not only is this trend continuing to develop in the larger business world, but smaller businesses are now starting to jump on board.

Companies are always looking for ways to reduce costs and improve efficiencies and productivity. HR departments have been shrinking as Companies turn more and more of the responsibility over to outsourcing professionals.

The bottom line is that Company owners and management gain more time to concentrate on their business.

What should you consider if you are thinking about outsourcing? Follow these steps:

1. What are the reasons you are considering outsourcing your HR Support?

The Society for Human Resource Management surveyed HR professionals in the US to see if they outsource any HR functions, and if so the reasons why.  Here are the top three reasons from the survey:

  • Save costs:                 26 %
  • Focus on strategy:      23 %
  • Improve compliance:   22 %

Ask yourself what you are trying to accomplish by outsourcing some or all HR support services.

  • Is it to save money?
  • To have a greater assurance on your Company’s compliance against labour laws? Or
  • Are you spending too much time on HR and not enough time growing your business?

Perhaps the reasons are all three? Many smaller businesses will tell you that’s the reason.

This is your first step; figure out why you are considering this strategic direction.

 2. What HR services do you want to outsource?

  • How do you process payroll?
  • How about benefits and HR administration?
  • Do you have recruiting and staffing needs?
  • How do you manage employee records and HR policies?
  • Are you complying with all local labour laws?
  • How about training?

Think about this and decide whether it’s in your best interest to consider outsourcing some or all.

There are vendors out there that can do some of these HR services for you, and there are some that can do it all.  That’s another important question for you to answer. Would you sooner deal with one Company for some of these services and another Company for others? Or, would you sooner partner up with one that can do it all?

3. How do you find service providers and evaluate capabilities?

The best way to find a service provider is through the internet. Search with such terms as “HR Outsourcing” or “HR Services”. These search words will pull up vendors with these capabilities.  Then, look for those that are near you – it is recommended that you find a Service provider within your local area to ensure they are aware of the complexities of local labour laws.

Human Resources should still be “high touch” and that can best be handled with a partner that can visit your location on a regular basis and as needed. Contact them and meet with them in person. Ask around to others that may have used the vendor and review their testimonials. Ask for and check references. Meet the people that you will be working with.

4. Service provider selection and transition

Once you have met with local service providers and received proposals, pick the one that’s best for you. But as the expression goes pick your partner wisely. Do your due diligence and remember you usually get what you pay for. Don’t be swayed by the sales presentation. Know what you need and don’t buy anything more. Find the Company that cares about you and your culture. Make sure you know your annual cost.

5. Agree the transition plan

Once you select the service provider that’s best for you, they will implement an orderly transition plan based on your remit and requirements.  HR experts will want to conduct an audit to see how processes are performed, and to review many areas for compliance. By conducting an audit, they can then move into high gear managing those services that you have decided to outsource.

Outsourcing has become the rule, not the exception and can make a business leaner, more adaptive, smarter and more profitable. Outsourcing certain business processes just makes sense from a strategic perspective. If you are considering outsourcing your HR Services, follow these simple steps to learn more and make the best decision for your company.

If you are looking for further information on this topic, please email me at


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Claire Donnelly

Written by Claire Donnelly

A Business Growth and HR Strategist helping medium size companies to Scale Up using proven systems. Claire is an MCIPD qualified Human Resource professional, with 25+ years’ experience working within various industries and 10 + years’ experience of HR practices throughout the Middle East. As a HR Generalist she has held a number of senior and Board level HR positions. She is experienced in working at both strategic and tactical levels.

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