Key Drivers to Outsource HR

With 2009 coming to a close, many small businesses across Canada are starting to feel the effects of a turbulent year ease off, and they’re starting to look for ways to reign in costs and prepare for better days in 2010.  A hot trend in the small business market is Human Resources Outsourcing.  According to Hewitt Associations, a global provider of HR consulting services and research, the most common reason for outsourcing HR is to reduce overhead.  This is achieved by using the HRO firm’s economies-of-scale for things such as benefit products, HR infrastructure, or payroll systems.

Size Counts

Economies of scale are the primary method an HRO firm can reduce a business’ operational costs.  By pooling several businesses together, HRO firms aggregate needs for benefits, advice and legal expertise.  Additionally, they can manage routine HR tasks more efficiently as the talent and infrastructure is already in place.  When a small business joins the HRO firm, they simply access these existing programs at reduced rates and a minimal investment of time.  They can jump onto the HRO’s programs and platforms with little start-up time or expense, and can hit the ground running.

Other reason to outsource human resources include:

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  • Access to outside expertise
  • Improving service quality
  • Ability to focus on core expertise
  • High cost of remaining compliant with rapidly changing legislation
  • Eliminate high volume of low-value transactional activities
  • Reduce management distractions away from core business
  • Leverage existing staff to focus on key competencies
  • Reduce transaction costs

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Expanding into Canada

Outsourcing is also a strategic advantage for foreign companies entering the Canadian market.  An HRO firm can quickly adopt a business’ policies to be compliant with Canadian legislation to on-board staff and efficiently pay their Canadian employees without any headaches.

The H.R.O.I.

Studies show once HR operations are outsourced, many companies show a strong return on investment.  IDC, a global provider of market intelligence, conducted a survey of executives and reported almost 85 percent of respondents saved as much as they spent on outsourcing.  And the savings, according to 95 percent of the respondents, went toward operational performance and innovation.  Check out some of our testimonials.

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