HR Outsourcing FAQ

Updated: April 30, 2009

What kinds of processes can my business outsource?

The most common HR tasks to outsource are the management of employee benefit programs, including medical benefits , COBRA, employee assistance programs and retirement programs such as defined-contribution plans . Small to midsized businesses may also want to outsource other key processes such as payroll , recruiting, leave management, and learning and development.

What benefits are there to outsourcing?

As benefits and other HR functions become more legally complex and entangled with changing regulations, outsourcing is looking more attractive to many organizations.

Outsourcing companies can offer industry expertise and have the time and initiative to stay up-to-date on the latest standards and legislation. Outsourcing can give you access to skills and expertise you might not be able to supply in house. These experts might be better able to serve your employees efficiently and give them more comprehensive information about benefits or retirement plans, for example.

In addition, outsourcing will free up your staff's time, so that they can focus on other HR tasks and have the time to develop and improve other HR functions or programs. This added time can have the side benefit of allowing the HR department to provide better service and support to employees.

A third, important benefit is the cost savings your company may be able to realize.

Are there privacy or compliance problems with outsourcing?

Anytime you give personal or sensitive information to vendors , you add another security risk. You have to ensure that this is a safe endeavor by making sure vendors follow best practices for safeguarding the data:

  • Does the vendor have adequate network and data security devices, software and policies in place?
  • Has the vendor been involved in a data-compromise situation, and if so, have new processes been placed to ensure it doesn't happen again?
  • Does the vendor have an adequate backup system in place?
  • How many of the vendor's contractors will have access to the information, and do the contractors take effective security precautions when handling the information?
  • Are other companies who use the vendors service satisfied?

Should my company start slowly by outsourcing one process at a time, or go for a full outsource relationship that covers multiple disciplines, such as recruiting, payroll, benefits and so forth?

Finding a vendor that can serve all of your outsource needs can offer many benefits. The vendor will understand your business culture, processes and business strategy more clearly, and their greater involvement can make the processes more efficient. Having one vendor on a large account also allows both companies to collaborate and coordinate more easily. You may also reap a cost savings.

Will my business have to give up too much control?

It's important to develop a strong relationship with the vendor, so that you can explain your needs, customize the processes for your company and communicate if something is not done to your wishes. All stakeholders should be involved to some extent in this process so that everyone's needs are met — from senior managers who control the funding for the program, to end users who will benefit, as well as the HR staff who will be managing the vendor relationship.

How does my company find the right vendor?

Many companies turn to a sourcing adviser for assistance, one who is familiar with various vendors available and can identify the right vendor based on the company's needs. When you are comparing or evaluating vendors, you may want to consider a vendor's amount of experience and expertise, track record serving other companies and the service-level agreements in the contracts.

Featured Research
  • How to Buy an ERP Solution

    Congratulations on making the decision to beginning the process to research and ultimately purchase an ERP solution for your business. Studies have shown that through accurate information about daily operations, companies can make decisions that reduce operational costs by as much as 23% AND administrative costs by 22%. more

  • The Future of ERP

    Today's business decisions are data-driven and the difference between success and failure can be boiled down to utilizing the correct data. Now more than ever, companies have access to not only robust data but consumable data as well, through Enterprise Resource Planning (ERP) software. more

  • Top ERP Trends of 2017

    No matter the size, success or industry in which you do business, data is vital. Because of this, data-driven technologies such as Enterprise Resource Planning (ERP) systems are becoming more important for the streamlining of quantitative data and gaining/analyzing key insights. Even better, as of 2017, ERP tools aren’t only for enterprise companies in the manufacturing and distribution sectors—they’re for everyone. But that’s not the only keynote change that’s taken place this year … Download our latest guide to see what else is happening with ERP! more

  • Making a Business Case for ERP

    Are you in the market for an ERP solution but hesitant to purchase due to the potential financial risks associated with implementing such a tool? While costs may seem prohibitive, and make it difficult to get stakeholders on board, an ERP system can add SIGNIFICANT value to your organization, regardless of what industry you are in. more

  • CIO eGuide

    Data is becoming increasingly important in business. As a result, more and more organizations are becoming attractive targets for hackers. Data breaches caused by stolen credentials are on the rise. You need smarter tools to protect your organization against the monetary and reputational damage caused by a data breach. This guide will explain how Okta Adaptive Multifactor Authentication (MFA) provides the security that IT needs, while also providing the simplicity end users want. more