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Home » Articles » HR outsourcing: An introductory guide

HR outsourcing: An introductory guide

The best way forward when building up workplace culture is around good employee engagement and staff recognition. After all, they are the company’s backbone.

If one is considering applying for or hiring new employees in their organization, be sure there is sufficient qualified manpower available all throughout the industry at all times.

HR outsourcing can help companies carry out responsibilities without much of a hassle—especially administrative duties. Repetitive tasks can unwittingly pile up and impede the department’s productivity.

What is HR outsourcing?

HR outsourcing is the practice of offloading responsibilities and business processes to an external provider.

In this case, some HR activities are outsourced to third-party services companies to lessen the burden of additional workload on the internal team.

Outsourcing as a business guide

Industry leaders have developed outsourcing to be as cost-effective as possible.

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Many business process outsourcing companies are still offering this guide as one of the most popular ways to reduce overhead costs and unnecessary expenses.

What is HR outsourcing?

HR outsourcing services

Even in outsourcing, there are still trends and changes that industry leaders and analysts have to watch out for. Their positions allow them to be ahead of the game, thus, their opinions are greatly looked up to by their peers.

The current trend in HR outsourcing services has seen a significant rise in the adoption of innovative models such as the professional employer organization (PEO).

As organizations increasingly seek comprehensive HR solutions, the role of the HR outsourcing provider or HR outsourcing partner becomes crucial in providing specialized services tailored to meet the evolving needs of businesses.

This trend challenges traditional models, including the reliance on an in-house HR team, as companies explore new avenues for efficiency, cost-effectiveness, and strategic HR management.

Keeping abreast of these trends is essential for industry leaders and analysts to provide informed insights into the dynamic landscape of HR outsourcing services.

Here are the following HR tasks you can outsource:

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Talent acquisition

Talent acquisition is the process of sourcing, interviewing, and hiring applicants.

Most efforts are made in human resources management as they are well-equipped to deal with candidates. However, certain companies, especially international conglomerates, outsource their TA activities.

From sourcing candidates up to hiring, these corporations chose to outsource these activities to third parties.

Admin tasks

Administrative tasks, as mentioned above, accumulate faster than one can imagine.

Sorting out legal paperwork, updating employee records, and straightening out benefits are all important tasks. But these can pile over some of the main functions of the department.

That’s why some businesses often outsource these administrative tasks to trusted third-party entities (companies and individuals) — such as Booth and Partners.

Payroll processing

Outsourcing payroll processing is a strategic choice for businesses aiming to streamline their financial operations. This is particularly helpful for organizations with 1,000 or more employees.

In-house HR staff handling payroll processing may find it hard to manage the intricacies associated with large-scale payroll tasks efficiently.

By entrusting this critical function to specialized service providers, companies can ensure accurate and timely payroll management, reducing the risk of errors and compliance issues.

Training and development

Efficient training and development programs are integral to organizational growth.

Outsourcing this aspect of HR services allows companies to tap into expert resources for designing and delivering effective training modules.

Benefits administration

Outsourcing benefits administration is a practical solution for handling complex employee benefit programs.

Experienced service providers manage tasks such as health insurance, retirement plans, and other employee benefits. They relieve organizations of the administrative burden associated with benefits management.

HR outsourcing best practices

When it comes to HR outsourcing, it’s pertinent to have best practices set in place. The human resource department is a sensitive area in a company. It handles employees, their well-being, and the company’s policies.

It’s just right that best practices should reflect the mission and the vision of the company.

Recruitment and talent acquisition

Recruitment and selection of applicants should be welcoming, professional, and friendly. These two shouldn’t act as the “gate” of the company; talent acquisition specialists shouldn’t act as the gatekeepers.

One of the most jarring situations as an applicant is when the interviewer (usually TA specialists) doesn’t give them the chance to prove that they’re capable.

For instance, instead of asking probing and follow-up questions, they would try to invalidate their experiences.

To combat this, companies should train their talent acquisition specialists on how to deal with people, bordering on empathy and professionalism correctly.

Onboarding and training

There’s no doubt that onboarding and training are two of the most important parts of the new hire experience. One best practice of onboarding and training is to be open to any questions, concerns, and suggestions of newly hired employees.

This way, the company can have insight from a newcomer’s perspective.

HR outsourcing best practices examples

Transparency amongst the employees

No matter how small or big, good or bad the news is, it should be the management’s priority to keep their employees updated.

Oftentimes, the HR department is the main channel for the top management to pump out company-wide emails and updates.

Transparency in staff recognition

Recognizing the staff gives them the platform and the opportunity to be somewhat the role models for the rest of the employees. When it comes down to recognizing the efforts of the workforce, companies should be able to commend these individuals positively.

Another key to successfully running a company is cultivating a healthy and positive workplace.

Continuous learning

As all professional employees know and understand, each sector grows exponentially. For them to catch up, they have to upskill, challenge, and hone what they know.

Continuous improvement and learning programs can be offered by the company and run by the HR department.

Employee benefits, incentives, and compensation

These three—benefits, incentives, and, most importantly, compensation—are just some of the motivators that employees look forward to. One best practice that comes to mind is being generous to deserving employees.

Even when outsourcing the HR department, these should still be a priority to the company.


When it comes to compliance, the HR department should be able to hold employees accountable for their actions as a best practice.

Not only does this make the workplace safer and more efficient, but it also evens out the “playing field” for each and every employee in the company.

Sanctions, termination, and resignation

As much as everyone hates to go through sanctions, terminations, and resignations, companies and their respective HR departments (or HR outsourcing partners) should still have best practices in place.

From due process to complete documentation and clearance, the HR department should be able to handle these objectively.

Under any circumstances should the HR department give sanctioned/terminated/resigning employees a hard time processing their papers.

Benefits of outsourcing HR functions

HR outsourcing, like any other outsourcing practice out there, has benefits that can tremendously help businesses and companies while saving up resourcing.

The biggest benefit of the model is this: A more efficient overall cost-cutting approach will result in a better outcome and internal satisfaction for the business.

Higher employee satisfaction

The key to having a successful workforce is employee satisfaction. Some might say that outsourcing jobs can lead to further job dissatisfaction but let’s take a closer look at the other side of the argument.

Outsourcing allows businesses to “expand” their operations, and this expansion allows the outsourcing company to open its doors to the public.

This means there are more opportunities to have a stable job, especially in this economy.

Lower overhead costs

Outsourcing is a business model developed to be more efficient and cost-effective without the added hassle of physically expanding and hiring an extra labor force.

When it comes to outsourcing HR services, there are two common ways to do it.

The parent business (client) either outsources the work to an outsourcing company (provider), or the client outsources the work to a freelancer or independent contractor.

Either way, it’s less expensive than hiring internal teams.

The client doesn’t have to pay any mandatory benefits (401K, medical, dental) as the provider or the contractor shoulders it for them.

What are the benefits of outsourcing HR?

Flexibility is now an option

Flexibility when it comes to workload, that is.

Outsourcing means that an internal team’s (repetitive) workload can be lightened, thus making them more flexible when a bigger project comes along.

Working with HR experts

Outsourcing allows businesses to tap into an unending supply of talent and highly qualified applicants. HR outsourcing does the same things, but it’s limited to the field of human resources.

Nevertheless, having an abundance of experts in the field is never a bad thing.

HR outsourcing guide for 2024

HR outsourcing trends are ramping up for the next year. From diversity, inclusivity, and equal opportunities to all, these things are coming up fast.

The general progress of the public towards these movements can be considered a big shift for businesses as well.

While society still has a long way to go, observing these things in the workplace is key to having a diverse and positive workforce.

Furthermore, this HR outsourcing guide provides valuable insights into the benefits and considerations associated with partnering with an HR outsourcing company.

Understanding the intricacies of outsourcing HR functions can empower your organization to streamline processes, enhance efficiency, and focus on core business activities.

We hope you find this useful as this can help your organization to make informed decisions and optimize its human resources management for sustained success.

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About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.

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