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Many small and midsized businesses are just beginning to learn about HR outsourcing. This type of managed service model is becoming increasingly popular and valuable to organizations in today’s shifting world of work. Let’s take a moment to understand how outsourcing services can work in the HR space and what it can do for an organization.

HR outsourcing is when an organization uses the expertise of an external provider to increase operational efficiency by managing everyday HR tasks like payroll and taxes. An HR outsourcing provider should also offer built-in access to a team of professionals with specific proficiencies who consult with you, freeing up your time to focus on strategic issues that can help support and grow your business.

 

Why Now?

Three key workplace shifts are driving increased interest and adoption of HR outsourcing. They are the following:

  1. Talent crunch. There is a huge need for HR expertise and knowledge, but many HR practitioners and payroll specialists are retiring and often not being replaced.
  2. There are more than 20,000 tax laws that change every year and workers span the globe. Keeping compliant in all these places is a huge challenge for HR today.
  3. Employee experience and satisfaction. In an evolving labor market, workers have a lot of options. Attracting and retaining good people is a high priority. Today’s workers want more than fair pay but a variety of benefits beyond the basics, as well as growth opportunities. They also want sophisticated, user-friendly technology, quick answers to their HR questions, and high-touch, personalized attention.

 

Choosing the Right Outsourcing Partner

Outsourcing HR is much more than a technology solution. It's about how the partner's team of experts works with you to help you unlock time and value. The relationship should serve your business’s needs. Anyone considering working with an outsourcing provider should delve into how this partnership works. Here are some questions to ask of any potential HR outsourcing provider:

  • Does the outsourcing provider support employees in a timely and personal manner? Self-service shouldn’t mean just chatbots and FAQs.
  • Can they scale and adapt to your business as you grow – and continue to be personal and high touch?
  • Do they offer deep benefits choices for your employees?
  • How can they help you do more strategic and impactful HR-related initiatives that support the business?

HR outsourcing can benefit any size company at any stage of their business. Certainly, organizations experiencing rapid growth can benefit because HR outsourcing allows leadership to keep their focus on the expansion. If HR is under-staffed, HR outsourcing can alleviate many of the everyday mundane tasks providing greater accuracy and better services for employees.

Enhancing HR capabilities elevates businesses. Organizations with a solid people strategy in place consistently outperform those without. HR outsourcing should be a part of that strategy because it drives efficiency, helps protect organizations, keeps them compliant and empowers HR professionals to contribute to the overall success of the business.

To learn more about HR outsourcing and how real businesses are utilizing this approach, watch this Nasdaq Talks roundtable.

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Muhammad Fahmy is the Senior Vice President & General Manager at ADP.