In-House vs. Outsourced HR: Why It Matters to Your Bottom Line

Jan 29, 2020
| Dan Sheridan, President
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The ever-increasing complexities of human resources administration has made the job of being an employer extremely challenging. Changing state and federal regulations require navigating a tricky gauntlet of mandates with costly repercussions at stake.
 
Meanwhile, investing in a dedicated HR team can drain crucial resources which may be better invested in the revenue-generating aspects of your business. So, the question becomes, should you build your HR team internally or partner with a professional employer organization (PEO)?
 

Shift your HR staff’s focus away from busy work toward business strategy

Burdening your HR department with mundane tasks does little to fuel your business objectives. Small employers who are not set up to support a full team of HR professionals end up saddling senior human resources administrators with time-consuming assignments which can be readily performed by a PEO. In this way, outsourcing HR relieves your internal departments of the daily minutiae and enables onsite staff to focus on recruitment, increasing employee productivity, and other tasks to strengthen your organization’s forward trajectory.
 

Apply more of your HR budget toward retaining great employees

Good employers maintain a strong corporate culture and positive work environment. Doing so results in
increased engagement and minimized of absenteeism, which in turn grows your bottom line. Outsourcing HR enables you to achieve cost savings you can apply toward recognizing and rewarding top performers who provide valuable contributions to your company.  
 

Compete with bigger organizations to secure quality talent

Small employers are constantly up against name recognition and sweeter offerings from bigger competitors, a dynamic particularly evident in metropolitan areas. By utilizing the expertise and technology offered by PEOs, smaller businesses and start-ups can become more competitive in hiring. Tapping into a PEO’s expertise at brainstorming creative perks and meaningful benefits packages means you are no longer relegated to competing on salary alone and can offer ancillary benefits big employers may be unable to match.
 

Reduce your cost of service

In addition to your in-house HR staff, you likely also contract payroll administrators, benefits administrators, legal assistance, accounting support, and more. The ancillary costs can cause your
human resources budget to balloon. Here is where the cost-saving benefits of working with a PEO become unmistakable. By partnering with an outsourced provider, you gain access to decades of collective experience in HR administration, use of cutting-edge technology and expert advice and insight when you need it – all contained in a single service fee.
 

Protect your business from compliance penalties

Failure to comply with tax law or Department of Labor regulations can cost you dearly. Unintentional errors can result in crippling fines that may derail your upcoming strategic objectives – or potentially put you out of business. Compliance violations also have the potential to damage staff morale or cause your company’s reputation to take a hit in your industry. If faced with an audit, your internal HR team must detract time and attention from their daily tasks to compile records, sometimes stretching back years.
 
Outsourcing HR to an experienced and certified PEO who monitors compliance in real time provides the peace of mind you are operating in full compliance, as well as access to experts who are on-hand to help you navigate an audit or compliance violation.
 

Minimize your investment in HR technology

By outsourcing your HR duties to a third party, you gain the benefit of leading-edge technology tools without having to invest in costly hardware or software to be used only by you. PEOs are able to offer an enormous economy of scale by consolidating their clients onto advanced data platforms whose cost would normally be out of reach for small businesses. These platforms offer features designed to improve the employee experience and streamline the workflow of your existing HR staff. For example, 24/7 access to employee or management portals on a desktop or mobile device empowers your staff to find answers and perform basic HR functions themselves. Meanwhile, a cloud-based HRIS platform streamlines the hiring and benefits administration process for your in-house HR teams, thus eliminating stacks of paperwork and associated time drain.
 
Unless your organization is already operating on a massive scale, you will likely see a noticeable cost savings upon deciding to partner with a PEO. For small or growing businesses, the value of services received, reduction of hard costs, and ability to redirect your existing HR staff toward bigger-picture thinking makes the decision to outsource HR a no-brainer for your balance sheet.
 
Is your company maximizing your investment in HR? Download our expert-authored eBook, 10 HR Symptoms That Can Be Cured Through Outsourcing and PEO, to find out.