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Tools for Outsourcing Your HR Department

Subhan Saeed

From recruitment and retention to payroll processing and policy development, your HR department is tasked with plenty of mission-critical tasks.

However, the administrative burden of juggling these various activities can quickly take its toll. Lately, these challenges have been exacerbated by the COVID-19 pandemic, which continues to make workplace management more complicated than ever before. In fact, one study found that 70% of HR professionals cite 2021 as one of their most challenging years to date.

Thankfully, there are many HR functions that can be outsourced to third parties, alleviating some of that stress. Today, we’ll explore tools to help you with this endeavor.

What Is HR Outsourcing?

In the simplest terms, HR outsourcing means establishing a contractual agreement between your HR department and a third-party provider. Depending on the setup, you may choose to outsource a portion of your HR functions to this provider or allow them to take the reins completely.

These tools can achieve two benefits. First, they free up your internal HR employees to focus primarily on core tasks, such as hiring employees and mitigating conflict. At the same time, they can also save your company money. 

When your HR employees aren’t spending hours each day focused on menial, manual processes, you can reduce the overall time and money spent on those functions. Consider how much your organization could save if you handed off administrative tasks like payroll management and benefits procurement to an outside provider.

HR leaders looking to build a business case for outsourced services often point to these savings as a major advantage, along with increases in overall team performance and productivity.

Different Types of HR Outsourcing Solutions

If your company decides to outsource its HR functions, then there are plenty of solutions to choose from. These vary in the degree of organizational involvement, so it’s important to understand how they work.

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Let’s take a look at a few of the most common ones. 

Business Process Outsourcing

In business process outsourcing, or BPO, a company will only outsource a specific task to an outside provider. For instance, you may decide that your many onboarding processes are becoming too complicated and time-consuming to handle in-house.

In this case, the provider will gain full control over that process. This includes providing any type of software that’s needed to perform the task.


In some cases, HR managers don’t mind the actual work involved with a specific task, but the software costs are prohibitive. If this happens, then they may choose to leverage an outsourcing model called software-as-a-service, or SaaS.

In short, this is a software licensing and delivery function. The provider will host the software remotely on their devices, but allow employees to access and use it via a dedicated Web browser. This arrangement can save a company money on software costs while allowing employees to access advanced tools that would have been cost-prohibitive to implement in-house.

Human Capital Management Software

Have you ever wondered what it would be like if there were one overarching solution that could help you manage every aspect of the HR job cycle? With a human capital management (HCM) platform, this can be a reality. 

Also called single sourcing, this is the process of investing in one software solution designed to cover every core HR function. This includes tasks such as:

  • Talent management and acquisition
  • Turnover management
  • Administrative activities (payroll, onboarding, benefits, etc.)
  • Employee training and development
  • Employee time and attendance tracking
  • Data and analytics management 

There aren’t multiple tools to access or data points to consolidate. Rather, everything is accessible via one centralized dashboard, where users can find all of the answers they need. 

Professional Employer Organization

A professional employer organization, or PEO, is a company set up specifically to handle the administrative aspects of an HR department. As these can be some of the most laborious tasks for HR managers, it can help to outsource just those functions.

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In most cases, this doesn’t mean fully giving up control to the PEO. Rather, in-house HR managers will still oversee employees and their workplace activities. However, the PEO will be responsible for routine tasks like benefits and payroll.

The only caveat with this arrangement?

In theory and on paper, the PEO is considered a co-employer. This means they retain the right to handle and manage certain managerial activities. They’ll be more hands-on than many third-party providers, and it’s important to understand their unique role. 

Most PEOs will pay wages and employment taxes out of their own accounts. They will also meet your employees and maintain professional relationships with them. Often, they will also be directly involved in processes such as hiring and terminating workers, too.

In some cases, this can expand your workforce to an unprecedented level. Some companies work with PEOs to globally expand and hire remote employees in foreign countries. If a PEO setup sounds like the ideal option, then learn more about how it works and the benefits you can expect to receive.

Shared Services

There are two ways to share HR services within your organization. First, you can designate a group of highly skilled internal employees who can take over certain functions. Or, you can outsource those functions to a third-party group.

In either case, the services shared will usually encompass a broader umbrella than HR alone. For instance, HR-specific administration and support services may also be wrapped up with other, similar tasks across your organization. This might mean combining those duties with the following processes:

  • Accounts payable and accounts receivable
  • Payroll processing
  • Travel management
  • Pension management 

These functions may be completed in-house, using HCM software or a SaaS setup. Or, they may be handled fully off-site by an external provider. 

Explore Tools to Simplify the HR Function

Increasingly, HR managers are feeling stretched thin. To avoid burnout and keep performance levels high, it can help to explore tools that allow you to outsource certain functions, or all of them.

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While the setups above are some of the most common, they aren’t the only ones. Take the time to research the third-party providers in your area to learn more about the services and options that they offer.

In the meantime, we’re proud to be your go-to source for everything business and lifestyle-related. Check back often for more informative guides you can use!

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