When people think of outsourcing, they often see it as a solution for a business that doesn’t already have an internal team to do the job. However, outsourcing, especially for human resources, is so much more. Companies use it to support growth, fill employee gaps, and meet compliance requirements.
But how do you know when outsourcing can support your internal team? This can be a tricky question. You don’t want to replace your current team, and you don’t want to invest in something you don’t need.
Luckily, at HRtoGO, we’ve seen many cases just like this, and we’ve helped businesses understand when they might want to outsource portions of their HR. So if you already have an internal HR team, here’s everything you need to know about HR outsourcing for midsized businesses—when it’s best for you and its benefits.
Isn’t HR Outsourcing Just for Small Businesses?
Many people mistakenly think HR outsourcing is only for small businesses without the resources to hire an internal team. But this couldn’t be further from the truth.
Recent reports show that 66% of C-suite leaders say traditional functions like HR need to change, while only 7% say they are making real progress. The gap is not a lack of will. It is a lack of capacity.
That gap is where HR outsourcing can help.
Midsized businesses often see the clearest benefit from outsourcing, because they have enough complexity to need real depth but not enough headcount to staff it internally. From expanding operations to addressing internal conflict, internal HR teams often find value in a neutral third-party resource that offers expert advice on the best path forward.
“But I Already Have an Internal Team.”
One of the biggest pushbacks to outsourcing is that the company already has an internal team. But outsourcing HR doesn’t mean replacing your current team. The goal is for both to work together to create a more seamless, robust HR strategy. You’ll have full control over which HR functions you don’t outsource, and in the end, everyone in your organization will benefit from the external support.
Your internal team will have the time to focus on their priorities, providing expertise in the areas they excel in while getting real-time support from an outsourced team. Deloitte found that workers spend 41% of their day on work that does not create value for their organization. Outsourcing the routine and the repeatable is one way to buy that time back for the people who should be doing higher-value work—all while also providing the following benefits:
- Continuity through staff changes
- Not needing to panic when your main HR person is out (also known as single-point-of-failure prevention)
- An objective, neutral perspective on internal conflicts
- Added bandwidth during busy seasons or personal vacations and leaves
- A deeper bench of HR experts supporting an internal team through whatever challenges may arise
Curious where your current HR strategy stands?
What HR Functions Should Not Be Outsourced?
Some parts of HR should stay in-house, and any outsourcing partner worth hiring will tell you which ones.
Culture is built by the people who live in it every day. Performance conversations, discipline decisions, and terminations belong to the managers and HR leaders who know the person and the history. The relationships that make an internal HR team trusted cannot be handed to an outside firm, and they should not be.
Outsourcing adds depth behind those decisions: research, documentation, precedent, and a second set of eyes before something becomes a problem. Your team still owns the call.
When Should You Outsource HR?
If you’re unsure when to consider outsourcing HR, we’ll walk you through seven real-world scenarios where adding external support would benefit your business and team.
1. You Face Seasonal Business Spikes
Many businesses tend to face seasonal peaks and valleys. While your internal team may be operating fine in a slow season, they can quickly become overwhelmed during a busy season. Rather than straining your HR resources, you can outsource to receive some external support. This extra support during a more demanding time has several benefits, including:
- Not letting tasks or compliance needs fall through the cracks
- Your team feeling supported during your busiest times
- No need to hire staff to fill in for a temporary strain
2. Recent Litigation Exposed Unknown Gaps
Litigation can expose gaps you didn’t know existed until it’s too late. If you’re facing this scenario, it can quickly become overwhelming for everyone involved, especially if this is the company’s first time facing litigation or a PAGA case.
An outsourced HR team, like the one at HRtoGO, works across a portfolio of employers in a range of industries and states. Your HR Director sees one company’s version of a problem. Our team sees how that same problem plays out across many of them, which is usually how you spot a second gap before it becomes a second claim.
3. You’re Dealing with Employee Turnover
People can quit unexpectedly. When that happens, especially on your HR team, you’ll want a plan in place to cover the gaps. An external team can help identify the issue driving increased turnover and step into the now-empty roles, covering temporary gaps and keeping the HR engine running smoothly. Plus, an external team can help ensure your business remains compliant with local, state, and federal regulations, so you’re not accidentally exposed to risk during the offboarding process.
4. Your Current HR Team Is Stretched Thin
Even with all hands on deck, your internal team may still face capacity issues—a common challenge for midsize businesses. Whether your team is struggling to complete tasks or finish them well, it may be time to consider extra support.
Sometimes, companies want to jump straight to hiring another team member, but an outsourced HR team often solves this challenge better. Instead of bringing on one person, you’ll get a whole team to help support tasks, freeing up your HR department’s bandwidth and getting the job done well.
5. You’re Waiting to Fill an HR Position
From retirement to parental leave to being promoted to a different position, someone leaving an HR role creates a gap in the company. This could be a long-term or short-term gap, but either way, you’ll need someone to take over tasks until the hiring process is complete or the leave ends.
With outsourced HR, that gap is filled in the interim. You don’t have to worry about continuity issues, and you gain the benefit of knowing the job will continue while the role is empty. This not only protects you, but also gives you the time to hire the right person for the position, rather than rushing to fill an urgent gap.
6. You Want Extra Support
Even if everything is working well in your company, it may be worth hiring an external HR team to add support. When you invest in outsourced HR before a problem arises, you already have the resources you need to guide your team through the issue and get support when you need it most.
This is also a great option for those who want to expand and grow their business. Growth can come with risks, and your internal team may not know what’s normal, what’s not, or what to watch for. With outsourced HR, you’ll have an external guide to support your team through the transition and provide guidance to keep the business compliant as you grow or expand to new locations.
7. You Became a Multistate Employer without Planning To
Many companies didn’t set out to hire across state lines. They hired the best candidate, who happened to live somewhere else, and did it again a few times. Now registrations, leave laws, pay transparency rules, and wage statement requirements vary by employee, and the internal HR team is learning them one surprise at a time. An outsourced partner who works across many employers has already navigated most of those states and can tell you what applies before it becomes a correction.
HRtoGO Supports Your Business & Your Internal HR Staff
No matter what situation you’re facing, the team at HRtoGO is here to support your company’s goals and your internal team. We’ve worked alongside midsized businesses to bring an expert, external voice into the conversation, providing peace of mind and smart growth without the guesswork. If you’re ready to support your current HR efforts and free up your team’s bandwidth, get in touch with HRtoGO to see how we can best serve you!
