Part 4: To Outsource HR and Payroll or Not?

July 22, 2016 Zuman

In the last post, we examined how finance's perspectives can affect the role of HR. Now, we can look into the future of HR outsourcing.

Understanding HR outsourcing
In short, many finance leaders have already made the decision to outsource HR functions. The true question, though, is to what degree should HR be outsourced? Much of that answer boils down to what HR functions are going to generate the best results and develop a sense of cohesion between HR and finance. In our research, most CFOs opted for outsource because of three essential reasons:

•    Mitigate risk, especially when it comes to regulatory compliance and maintaining effective data security.
•    Outsourcing is also an effective way to better manage operating costs, and HR can help cut the fat around total benefits costs.
•    Finally, outsourcing is a way to utilize better customer service and support, as these vendors are keyed into what goes into HR in the here and now. 

Understanding these reasons is essential to gaining a more nuanced and comprehensive insight into the needs of finance and their expectations for HR and other departments. 

•    Over 80 percent of HR leaders want to outsource at least some HR functions.

Sharing similar values
The importance of outsourcing HR goes much deeper than those reasons. There is a wide-scale effect that occurs after HR is outsourced: Not only does it help to streamline many HR-centered responsibilities, but it makes sure strategic imperatives are properly aligned at all levels. That alignment is vital, and what we've found is companies often provide the same core reasons for outsourcing HR as finance departments have in the past. A 2016 Forbes article highlighted several reasons why companies are outsourcing.

As a rule, compliance specialists are hugely instrumental in preventing workplace concerns like lawsuits and wrongful termination. Outsourcing a company's HR just means they have a great range of compliance as it pertains to benefits. Better compliance means more time, and with that, HR staff can focus on issues like core competency. That renewed focus is vital for HR to think more like finance and make decisions to push the company into new directions. Part of that is hiring more A-list employees. Companies can hire firms who recruit only the best and brightest, and that's only going to do wonders for the bottom line.

The ins and outs of outsourced HR
Attitudes are one thing, but now the question begs: How does a group go about outsourcing HR functions in a safe and effective manner? The old model used to be BPO, or Business Process Outsourcing, and while it was efficient, it did have its inherent issues. That's why a number of outlets have turned to the BPaaS, or Business-Process-as-a-Service approach. BPaaS won't just help cut costs, it will also lead to more pronounced financial alignment. It's also going to help spread the wealth and give HR outsourcing opportunities to many midsize or small businesses.

Perhaps the biggest benefit of this BPO to BPaaS transition is that now cloud applications and services are more readily available. This is going to help achieve many of the cost-centric goals, and that's hugely important to bolstering productivity. Cloud services mean better accuracy, increased speed and time to value. It's those fundamentals that help to empower HR and give finance the kind of depth it clearly desires.

•    Some 87 percent of finance leaders were impressed by the BPaaS Value Proposition.

Stay tuned each week as we discuss a different segment of the report.

 

About the Author

Zuman

Zuman is the premium solution for HR, payroll, benefits administration delivering superior control, lower risk, and enhanced employee engagement for growing companies.

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