Human resource outsourcing (HRO) is when businesses hire external companies to manage their HR functions. Most businesses rarely outsource everything, they usually keep HR staff on site to communicate with employees in core business areas.
Functions covered by HRO
HR outsourcing can perform the following functions on behalf of the business:
Hiring employees
employee training
legal expertise
administration of health benefits plans, retirement plans, and workers’ compensation insurance.Â
payroll administration
employment tax handling and payment
HR risk management
Advantages of an HRO
HR outsourcing reduces the fixed cost of managing employees
human resource outsourcing firms are more efficient than hiring new workers as they already have the experience and are required to perform the full HR function on board
talent and infrastructure are already in place
businesses save money and time by hiring HR firms to manage their personnel functions
Studies have shown that on average, companies that make use of HRO have lower employee turnover and considerably lower administrative and hiring costs.
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