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Factors to Consider in Outsourcing HR

by: Sarah Joson

Thursday, March 07, 2013 | Outsourcing News |

HRO Market to reach $162 billion in 2015

Outsourced human resources (HR) processes were unheard of 10 years ago, but one by one, organizations started to take notice of its benefits. The HR outsourcing segment is predicted to grow even more as organizations continue to find ways of reducing costs and combine service providers while improving their core processes.

In a survey done by Global Industry Analysts, a business strategy and market intelligence firm, participated by nearly 300 human resources outsourcing firms, they found that the HRO market has the potential to reach $162 billion by 2015, an increase from $103 billion 2007 and $61 billion in 2002.

However, businesses that are still deciding on whether they should outsource human resources processes or keep it in-house should review these factors when selecting the right human resources outsourcing service provider listed by Business2Community.com.

They should have strong financial credentials. HR outsourcing providers are often assigned to process critical methods such as payroll, payroll taxes, and insurance-related work. To make transactions easier and faster, choose a firm that already has a solid relationship with financial institutions, have a good reputation in accomplishing tasks, and have been doing those kinds of transactions for at least 10 years.  

Former clients should be raving about them. If you are going to partner with an HRO firm, it means all of its employees and whoever they’re affiliated with will somehow become associated with your company. So you have to do an in-depth research about the company. Start by asking for references from current and former clients that covers safety, benefits, and regulatory compliance.

Who are their clients?
Some HR providers focus on a specific industry and a specific niche while some have a much broader target market. However, it really depends on the needs of your business. If you are looking for people who have a certain skill to effectively work on your processes, then you would need a niche-specific HR firm so that they will understand what is actually going on in your company.

Can they work on local policies and regulations? Many businesses that outsource HR often face law and regulatory challenges. In some cases, HR firms from another region are not aware of some of the business and employee rules and laws, which can lead to problems.

Customizable approach for your business.
It will cost you more if you avail a service package with processes that you don’t really need at the moment. Make a list first and deliberate which employment, administration and compliance processes you need and find a suitable vendor that offers flexible HR services.

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