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How Outsourcing HR Functions Can Boost the Bottom Line

All the departments of a business are important and each one is dependent on the other to achieve some common business goals. However, certain departments generate revenue and need more focus and effort from the business owner.

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Outsourcing HR functions to a reputed HR consultant is a cost-effective, time-efficient, and expertise-effective solution to upgrade the organisation’s core competencies.  Some important HR functions that can be outsourced include recruiting, employee training, performance review, succession planning, leadership development, and competency mapping.  

Here are 6 key areas where HR outsourcing can help companies optimize their human capital:    

1.   Improving Employee Efficiency

All the departments of a business are important and each one is dependent on the other to achieve some common business goals. However, certain departments generate revenue and need more focus and effort from the business owner. 

Outsourcing HR functions will enable the revenue-generating departments to function at peak efficiency and use advanced business systems so managers can shift their focus from paperwork and spend more time on performance review, core business activities, and develop strategies for increasing employee efficiency and profits. 

2.    Increasing Talent Retention Rate

The overall development of a company eventually supports the growth of every employee. The overall quality of work and the time to deliver, improve greatly when a company has an HR consultant compared to an in-house team that may not be qualified or trained to handle HR activities internally.

In addition, these experts have years of industry knowledge and experience to plan employee benefits and compensation strategies in a manner that provides fair market value with constructive feedback. This empowers organisations to retain the talent that takes their business to the next level.  

3.    Reducing the Risk of Non-Compliance 

Outsourcing HR functions to a professional HR consultant greatly minimizes the risk of violating HR compliance regulations and labour laws. When a small business is growing and building on revenue, it may not have a dedicated HR team that is updated on HR rules and regulations. 

Outsourcing HR activities to a professional HR consultant brings you the peace of mind that all your company policies and procedures are compliant with the applicable laws and the possibility of any legal complication between the employer and the employees is eliminated. 

4.    Saving Cost on Overhead Expenses

Outsourcing HR functions can help companies save a considerable amount of their overhead expenses by eliminating the need for additional equipment, infrastructure, and renovations that otherwise send expenses skyrocketing.  

HR outsourcing also enables companies to maximize on their team’s resource potential through leadership development and skill upgradation. It is a brilliant way of ensuring that the core functions of the company don’t suffer even if talented employees are leaving at a short notice.   

5.    Streamlining Recruitment and Employee Training  

When hiring is outsourced, not only does it cost less but it also means you bring a better team onboard. The average cost of replacing a high-performing employee is at least 12 week’s productivity and its impact on revenue cannot be quantified. 

Outsourcing recruitment and employee training can help with hiring the right fit for any role and also facilitate the onboarding and training process to ensure a smooth transition for new hires.  

6.    Achieving Business Growth with Leadership Development

Every company is responsible for helping its employees develop a meaningful career ladder within the organisation. This is only possible with periodic employee performance evaluation and regular employee trainings. All of this calls for a lot of effort and time.   

By outsourcing employee performance management, leadership development and employee counselling to a reputed HR consultant, all the plans are easily developed, implemented, and managed to achieve the overall goals of the company. 

Outsourcing HR functions frees up your valuable time to focus on business functions that matter and eliminates mistakes that happen due to lack of experience. The only few things that business owners need to keep in mind when selecting an HR consultant are their expertise, pricing, reputation, and testimonials.    



Liliana Chitnis is a former HR professional who now works as a content marketing executive at Naman, an organization that offers end-to-end HR solutions to help companies build a strong human capital base. She strongly believes in the power of consistent training in the workplace. Liliana writes about various topics related to human resources and shares trends, techniques, and tips with her readers. She loves to read and practice yoga regularly, and occasionally binge on Netflix.