5 Reasons Why Small Businesses Should Outsource HR

5 Reasons Why Small Businesses Should Outsource HR

by on 13 Oct, 2021

As a small business, you face serious challenges that larger companies dont. Not least of these is with your human resources department and the many roles they need to fill within an organization. Larger competitors have a full HR staff with varied expertise and a comprehensive plan to tackle all the needs of their employees. Smaller businesses are often left to make do with just a portion of the HR staff that they realistically need, and some companies even try to get by without a dedicated HR representative.

However, HR cannot be neglected in today’s business world. If you aren’t giving your human resources department the help it needs, you’re letting your entire workforce suffer. While you may not be able to accommodate a large HR infrastructure, outsourcing HR can give you a leg up. Competing with larger organizations is one of the key reasons why outsourcing HR is important. By reinforcing your HR efforts with outsourced expertise, you can fully take care of your team and level the playing field between your small business bigger competitors. 

Small Business Challenges HR Outsourcing Can Help Overcome

By outsourcing certain HR functions for your business, you can compete more fairly in many vital areas. 

1) Competition for Talent  

Any business wants the best team they can get to succeed. Often, however, Fortune 500 companies have ways of appealing to new recruits that small businesses cannot. A lot of this is due to the depth of a larger corporation’s HR ecosystem. An HR team at a larger company has more members in their benefit plan and thus can negotiate better benefits packages. Comprehensive HR outsourcing services include access to a master benefits package negotiated at scale by experts. This means Fortune 500 benefits at prices small companies can afford. 

Furthermore, a well-developed HR department can help cultivate and encourage a positive company culture that brings more qualified candidates who want to work with them. An HR team supports the talent at your organization, and outsourcing provides the opportunity to get the same quality of human resources infrastructure with far less cost than a large-scale, in-house HR department.

2) Lack of HR Expertise  

HR in the modern workplace isn’t just one specific discipline, but a massive variety of tasks requiring separate knowledge and training. As a small business, you can’t do what the major corporations do and have a specialist in-house for every field like payroll, benefits administration, legal compliance, and conflict resolution. 

If you just have a small HR department, you can’t expect to have staff with specialties in all the disciplines HR requires. The scope of HR in modern business is a vast ecosystem that requires different expertise and experiences on your team. Outsourcing solutions for your HR department get you the expertise you need to tackle every facet of HR without hiring expensive specialists.

3) Increasing Overhead  

Increasing the size of your HR team is necessary if you want to keep up with a growing workforce and offer competitive employee support and benefits. The costs of hiring HR personnel go beyond just salaries and benefits, however. A search for a candidate itself can be costly and time-consuming. Even after months of looking for the right person, you’ll have to invest in training and equipment expenses. 

An HR outsourcing solution gives you the talent you need without hiking up your overhead costs in an unmanageable way. This provides a quick and effective solution when you need to expand the scope of your HR department without spending an arm and a leg. 

4) Legal Risks   

The HR department navigates a lot of the legal pitfalls associated with doing business. The rules and regulations that HR professionals follow are a constantly evolving landscape. Keeping up with all the local, state, and federal regulations are by itself more work than one generalist can handle. The fines and legal liability from failing to meet regulatory compliance standards can have real costs for a business. Without a diligent HR department, employee lawsuits could threaten to sink any small business. 

You cannot afford to let your business get behind on compliance. Getting qualified and expert personnel to HR matters when needed can help shield you from legal liability and unexpected fines or fees. 

5) Loss of Productivity  

HR responsibilities need to be accomplished. If your HR staff isn’t sufficient, the only option available is likely to assign non-HR personnel vital human resources tasks. This makes your team less efficient and means that HR tasks are done less reliably. Utilizing business and HR outsourcing solutions to attract the professionals you need can help get your team back to working on growing your business. 

Give Your Team the Support They Need with HR Outsourcing Solutions

You can’t afford to neglect HR in your organization and spreading your in-house human resources team too thin means that your entire company ecosystem is weaker. This creates a less engaging culture for your team and weakens your protections from legal liability. Outsourcing solutions for HR can offer you expert HR representatives when you need them at a fraction of the cost of recruiting and training a new hire. 

Don’t let the Fortune 500 companies’ access to a complete Human Resources department get them further ahead; use a robust HR outsourcing solution to level the playing field and get the support you need.


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Disclaimer: this article does not represent expert advice and is provided for informational purposes. Please get in touch if you would like expert HR advice.

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