7 Benefits of Outsourcing Human Resources

Benefits of Outsourcing Human Resources

Human Resources (HR) outsourcing is when you contract with a third-party supplier to manage some or all of your HR functions. Some of these functions can be:

  • HR administration
  • Payroll
  • Compliance
  • Recruitment
  • Compensation and benefits
  • Talent acquisition

According to a recent Technavio report, the global human resource outsourcing market is predicted to grow by USD 10.90 bn from the years 2021 to 2023. This positions human resources among the most outsourced services, particularly because of its numerous benefits.

Benefits of Outsourcing Human Resources

1. Outsourcing HR is cost-effective for small and big companies

One of the major benefits of outsourcing human resources is cost-effectiveness. The cost of outsourcing HR is significantly less than hiring one HR employee, and even much less than hiring a full team. Because of this, outsourcing HR can be beneficial for both small and big companies, especially businesses too small to have enough funds to hire an internal HR team.

2. Outsourcing HR can help you focus on the core competencies of your company 

Hiring an external provider for HR tasks can help you increase your revenues as your company takes the extra time to focus on the core aspects of your business. Outsourcing may be an ideal solution for you if your employees spend an excessive amount of time on HR-related work compared to other business tasks. Your employees can finally focus on what really matters while the outsourced team works on tedious paperwork related to payroll, administration, and compliance management. 

Benefits of Outsourcing Human Resources

3. Outsourcing HR will help you mitigate risks without wasting valuable time

An HR risk-mitigation plan establishes methods to make your company function more efficiently and helps you manage personnel better. It also protects your firm from legal issues since outsourced HR professionals are up-to-date with employment laws and can therefore help avoid costly employee lawsuits. Additionally, they’re constantly auditing the company’s policies and practices. This can help you avoid fraudulent activity and uncover weaknesses in the financial system.

4. Outsourcing HR can help you improve performance by using the most advanced technology  

Outsourced HR experts help employees exceed the company’s goals by implementing strategic performance management plans. These plans are carefully designed with the most advanced tools and metrics to measure performance. In effect, these can help you manage your staff more objectively. 

Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.”

James Harrington, author of Business Process Improvement.

5. Outsourcing HR can help you attract talent and retain them

One of the most important HR processes is recruiting and it requires proper strategic planning. HR experts create job listings, screen candidates, and set up interviews to find the most qualified candidates for your company.  

Another important HR process is establishing proper employee benefits. A solid employee benefits package can be a competitive advantage over other companies. In collaboration with external providers, outsourced HR experts prepare benefit programs that may include medical insurance, paid-time-off benefits, educational assistance programs, retirement plans, and vacation days. 

6. Outsourcing HR can help you maintain company culture

Company culture is the values, beliefs, attitudes, and behaviors shared by the people within a company. Having a strong and well-defined company culture can transform your company into a team. Outsourced HR personnel work hard to maintain and foster the company’s values. They achieve this by recruiting personnel aligned with the culture. What’s more, they guide managers into creating an environment where staff members are encouraged to thrive as they promote, nurture, and reinforce the company culture.  

7. Outsourcing HR boosts morale

HR experts can also engage and motivate employees. They address employees’ concerns and provide opportunities for career development. They may even create employee incentive programs. Moreover, HR personnel can provide support to employees’ mental health. 

An employee that feels safe, appreciated and understood is an employee that will perform better.

Improve employee performance and lower your HR and recruiting costs with Sourcefit

While you focus on the core aspects of your company, our outsourcing solutions can assist you in managing your most challenging HR requirements. Sourcefit provides complete HR services to help you build a high-performing HR team dedicated to helping your company grow. 

To learn more about outsourcing, you can read our 8 Questions About Outsourcing You Should Ask article. We invite you to follow us on social media and to visit our website to learn more about our services.


About Us: Sourcefit is a widely recognized US-managed business process outsourcing company based in Manila, Philippines. We proudly serve over 100 clients with a workforce of more than 1,300 employees. Our global centers can serve multiple markets, and our staff is highly proficient in English, Spanish, French, and Portuguese. Whether you need a few or many employees, we can help you achieve your business goals and build high-quality offshore teams.

Latest Awards

Sourcefit’s commitment to excellence has been recognized through numerous industry awards and certifications.

We recently received the Fortress Cyber Security Award from the Business Intelligence Group. Sourcefit was also honored with the prestigious recognition of Best Outsourcing Solutions Provider in the Philippines during the 2023 Business Excellence Awards.

Other awards include: FT ranking of 500 high-growth Asia-Pacific, The Marketing Excellence Awards, Inquirer Growth ChampionHR Asia Awards, among others.

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