According to PR Newswire, the global human resource outsourcing market will reach $45.8 billion in 2027. The statistics are a testament to the growing popularity of outsourcing services. Companies also outsource accounting, marketing, and IT roles. It’s intriguing that, despite the direct control traditional in-house HR gives, Professional Employer Organizations (PEO) are becoming more popular. Discover the five compelling reasons why top companies choose to outsource HR functions.

1. To Save On Costs By Streamlining HR Processes

The biggest reason most top companies are outsourcing HR services is to save money. When a company has an in-house conventional HR department, they pay for salaries and other hidden costs such as training HR staff. Companies also have to pay for infrastructure costs such as offices and utilities. However, engaging PEO services is a game changer because you only have to pay a flat fee. As a business, you don’t have to pay for fixed costs, which are the expenses that remain the same regardless of business productivity. You only pay for what you need.

2. Lower Legal Risks By Engaging Professional HR Management

In the past, top companies have forked millions in settlements because of lawsuits such as discrimination claims and wrongful termination. For instance, according to HRD America, Henry Turkey Service paid $240 million in 2013, while Novartis paid $175 million in 2000. A PEO company helps shield businesses by taking on most of the legal risk of hiring and managing employees. Since HR companies specialize in human resource management, they can get specialists, including legal experts, who are versed in employee law.

3. To Focus On Business Core Activities

Whether your business is a pharmacy, restaurant, or jewelry shop, your primary activity is responding to your clients. External activities such as finance and employee management are essential for keeping your business running but can take away your focus. Outsourcing services gives time back to your hands, enabling you to focus on what matters most – your clients. Not only do internal HR responsibilities divert attention and resources, but they can also delay decision-making. Outsourcing part or all HR roles delegates responsibilities and streamlines processes.

4. Access To The Best Talent At Affordable Rates

Suppose a company wants to work with the best HR professionals. In that case, they have two options: hiring and training HR professionals or hiring already trained ones at a higher cost. PEO services break the barriers by allowing companies to access well-trained HR professionals at a manageable flat fee. One report by Statista shows that small businesses are more likely to outsource payroll services. The best talent also comes with the latest technology and the resources to manage the software solutions.

5. Allow Economies Of Scale As Your Business Grows

One of the challenges of working with internal staff for non-core business activities is scaling when the business expands. For instance, if a business had one office for four HR workers, it would have to hire new office space and allocate resources for benefits and training. However, with a PEO, you can scale without a proportional increase in fixed costs. PEOs can handle your business in its infancy and gradually accommodate your growth with the right personnel. Even more, you can scale back to small without facing the consequences of firing permanent staff.

Take Away

Traditional in-house HR departments give businesses direct control over business decisions but could also increase the risk of legal exposure and lead to inefficiency. However, outsourcing to specialized HR firms is a game changer because it removes the stress of managing employees. Here are the five ways PEOs achieve this:

  • Saving you money and time
  • Protecting your business from legal risk
  • Availing the best HR talent
  • Allowing you to scale rapidly

Choosing the right HR partner is one of the steps to business success. Axcet HR has offered high-quality PEO services to businesses that want growth without sacrificing efficiency for over three decades. Take the first step towards success by contacting Axcet HR today.