Why outsource HR?
A guide to getting the best HR outsourcing services
If the last 20 years have seen the HR function gradually becoming more strategic, recent events have put human resources at the very centre of workplace change. For many companies the pandemic created unforeseen challenges, as well as highlighting problems with existing HR systems. Outsourcing HR could be the answer to your particular challenges, but whether your concerns are future resilience or preparing for growth, you need to consider your outsourcing options and make sure the time is right.
This guide is intended to give you some of the information you need as well as acting as a checklist to help you find the right outsourcing partner for your HR needs.
Why outsource HR?
Outsourcing your HR can save you time and money, helping to reduce your workload, minimise payroll errors, reduce your compliance risk and increase security. An HR provider should supply everything you need across the different HR functions — payroll, time management, recruiting and onboarding, and HR admin. They should also provide capabilities for data reporting and analytics to help with statutory reporting and ensure that your HR team has all the back-up necessary to help inform company strategy.
An HR services provider can also take over everyday admin tasks — such as leave requests and pay queries — that would otherwise tie up your HR team and prevent them from getting involved in higher-value strategic work. Not only does this make life more interesting for those in HR but it also helps improve staff retention and benefits your whole workforce, as your HR team has more time to look after their development and wellbeing.
An HR services provider should ensure that you have the right expertise, with guidance on best practices and support wherever and whenever you need it – so that you don’t have to invest in a bigger in-house HR team. Discover more about HR outsourcing and its benefits.
When should you outsource HR?
This depends on your current circumstances, but the pandemic has made many HR leaders consider what’s best for their future. Faced with a flood of new payroll legislation and with workers being put on short time or furloughed, many companies found it difficult to cope. Problems may have existed even before 2020, with an ADP survey of over 33,471 workers in 17 countries finding that over 60 percent had been underpaid at some time, and 20 percent saying it happens often.2 The potential of payroll survey of payroll and finance leaders found that 47 percent couldn’t supply the payroll information required to support strategic decision-making – at a time when the pandemic made this more important than ever.1
But companies shouldn’t only outsource HR because things are going wrong. You may choose to outsource for positive reasons: as part of your company’s digital transformation journey, to develop your workforce, identify skills gaps and link them to training, or to give greater visibility of costs and increase process efficiency.
What to look for in an HR services provider –global payroll with HR
Choose a provider who offers cloud-based integrated payroll and HR and you’ll benefit from streamlined processes, fewer errors, greater flexibility and a huge increase in accurate, usable workforce data for better decision-making.
A truly unified cloud solution with global payroll and HR together will allow you to manage your entire employee lifecycle — from hire to retire — in one place, with the mobile anytime, anywhere access that you need for today’s workforce. ADP Research Institute’s The potential of payroll report found that only two percent of companies using a cloud solution had payroll difficulties during COVID-19, compared with 19 percent using in-house solutions.1 With payroll and HR working together, you’ll have greater workforce visibility and better data. Bringing payroll data, which is checked more often and therefore likely to be more accurate, together with HR data will help to ensure that’s more accurate too. And with one source of information and one log-in your information is more accessible, more secure, as you know who has access, and easier to manage.
Your payroll options
Outsourced payroll and HR services should include as much support as you need with your payroll. You could choose to process your payroll using an HR services provider’s software and expertise. You could opt for managed payroll services and ask a provider to run your entire payroll process for you. Or you could ask a provider for a comprehensive outsourced payroll service, which means that they run your entire process and act as the face of your payroll team for your employees — answering their questions and resolving any payroll issues.
Another benefit of cloud-based integrated payroll is that your employees can use self-service capabilities to view their pay details, which is good for them, as they don’t have to wait for HR to respond, and it’s good for HR as it can reduce time-consuming queries. Companies with self-service in place have seen calls to their HR departments fall by as much as 35 percent.3 Self-service can also make it easier for remote workers to log hours, including from mobile devices, making it extremely useful for a flexible or hybrid workforce.
Ensure your provider’s solution is secure and compliant
Although sensitive data is safer with one single system of record, make sure that your provider offers multi-layer security. A major benefit of outsourcing is that you have someone to monitor and identify legislative changes. This can be time-consuming and challenging for in-house teams, particularly if you’re operating in multiple countries. Outsourcing with the right service provider gives you local expertise and ensures that you can stay compliant with ever-changing labour and tax laws.
Can your HR services provider provide exactly what you need — now and in the future?
Think geography and scalability. Consider the countries in which you operate. It goes without saying that an HR services provider should have the solutions and expertise to serve every location. But what if you want to move into new markets? Or if you’re affected by mergers and acquisitions? Every company has its own unique HR services needs, so you need to ensure your HR services provider offers flexibility and scalability.
The solution that’s right for you today may not be the best solution in five years’ time. Make sure that your outsourcing services company offers solutions that can meet your changing needs — whatever they are. And check that any future solutions can be seamlessly integrated with those you start off with.
Can your HR services provider make data work for you?
It seems almost laughable now but as long ago as 2013, Personnel Today asked “Does HR run the risk of taking its eye off the basics by focusing too much on strategy?”3 Companies today expect more strategic input than ever from their HR teams. The skills shortage, gender pay issues and the so-called war for talent mean that decision-makers need advanced reporting and analytics capabilities. But that doesn’t mean that your HR people should all need to be data specialists. Look for an HR services provider with the tools to make data collection and analysis simpler, with easy-to-read dashboards and customisable reports designed to be shared.
Choose the right service plan
Make sure that you know exactly what your HR services cost before you sign a contract. Ensure that you have the service levels you need and that your chosen service can flex up or down to meet any changing requirements. One of the main benefits of outsourced HR services is that you have the right expertise on hand whenever you need it, unlike in-house HR services where you may have a problem if a key person leaves or retires.
Could HR shared services help?
If you have a number of offices in a certain geographical area you could consider HR shared services outsourcing, which uses a central hub for your HR services. This is cost-effective in that it avoids duplication of work, ensures a consistent level of support and allows you to concentrate on strategy. However, offering a consistent service across a region is not always the best possible solution. You should ask any potential HR services provider how they would meet your specific needs.
The cost of your HR services depends on factors such as the size of your organisation and the complexity of your solution, including the features required. Think carefully about the core features you need, then ask any potential services provider about the possibility of adding other features as and when you require them. There may be a temptation to purchase individual best-of-breed solutions for, say, time management and recruitment process outsourcing, but this could prove costly if you then find that there are problems with integration. In the case of HR software solutions, the whole really is greater than the sum of its parts.
Choosing ADP as your HR services provider
The right outsourced HR services provider can help ensure that you’re ready for whatever the future may bring. Outsourcing is an opportunity to build in resilience and prepare for growth. It can help you succeed in the new world of work in which recruiting the right talent and developing necessary skills will be vital.
ADP has been at the forefront of change for many years. Formed over 70 years ago, ADP pioneered the first global cloud human capital management (HCM) solution, the first HCM mobile solution and the first online HR marketplace for new, easily integrated HR solutions. We now provide the latest solutions to clients in over 140 countries and our HR outsourcing services support over two million employees.
If you’d like to talk to an ADP expert about the benefits of outsourcing HR services to ADP, please get in touch.
In short - questions to ask a potential HR services provider:
- Is your chosen HR software available in the cloud?
- How long will implementation take? What experience do they have? What support can they offer?
- Does your chosen HR services software:
- offer advanced security features?
- provide advanced functionality such as process automation?
- Does your chosen HR services provider:
- offer simple and seamless integration with future solutions?
- assist your digital transformation initiatives?
- enable your business continuity plans?
- ADP Research Institute, People at Work 2021: A Global Workforce View.
- ADP, The potential of payroll; Global payroll survey 2021
- ADP call volume data, 2018