Benefits of HR Outsourcing: How Small Businesses Can Ace their HR Functions

For most small businesses, HR services are like a seatbelt. You only realize its worth after catastrophe strikes. Indeed, most present-day cars have seatbelts installed, and it is mandatory by law for occupants to fasten themselves when the vehicle is in motion. But of course, it wasn’t always this way! It took years of road accidents and mishaps for the general population to make it a conscious routine to buckle up.

Likewise, as an SMB, HR services and functions are the least of your priorities. You want to develop your product and concentrate on your core functions while HR takes a backseat. But what if the ride gets bumpy? However good your foresight and analytical skills, the road is full of pedestrians and automobiles you have no control over. Likewise, there are many external variables in business: the market, the economy, and competitors. For instance, nobody could have predicted COVID-19! Is your business equipped with the right HR solutions to combat a crisis? Or will it crumble when the waves of adversities emerge?

What could ever go wrong with simple HR functions, you ask? Well, there is a long list.

  • Tight-fisted budgets may lead entrepreneurs to delegate HR functions to managers who do not have training or experience in the field.
  • The wrong recruitment could place your SMB in a precarious position.
  • You may not even be on the radar of good talent if your Recruitment Process is not updated.
  • What about your employees being in the dark about your company's policies?

This list goes on. Undoubtedly, cutting corners and compromising can help SMBs. But, some functions work out cheaper when you outsource them. HRO does not just help save pennies but also saves person-hours that can be dedicated towards crucial roles that cannot be allocated to external sources. But why hire external assistance when you can just about manage and get away with it? Well, the idiom jack-of-all may be able to convey the reason. You simply cannot afford to underestimate how vital HR services are for small businesses! So, let's delve into specific HR services and functionalities to comprehend the significance of these HR services and how small companies can still provide great HR services.

1. Staffing:

HR will always be synonymous with talent, namely - acquisition, development, alignment, and retention. Staffing is an HR function that includes integral roles such as HR planning, recruitment process, onboarding, placements, transfer management, promotions, team bonding, and employee engagement. Here are a few tips on how you can improve your HR staffing functions:

  • A single lawsuit holds the potential to annihilate even the most promising small business. Therefore, you must consider a state's employment regulations while formulating HR policies. A general manager without a background in HR solutions may not get it right or may look over something critical. Therefore, it is vital to assign HR service functions to employees who have the proper training and experience to drive the company forward.
  • Legal hassles can drain a company's resources if not handled efficiently. Ensure the employees handling recruitment roles familiarize themselves with the fundamentals in this sphere to indemnify your company and all associated assets.
  • Diversity laws become applicable as you expand and cross the prescribed employee strength threshold. These vary by location. As a rule of thumb, ensure your workplace embraces diversity and has representatives across demographics.
  • Make it a habit to reward performance in an unbiased work environment that promotes mutual respect.
  • Your business cannot thrive on a great concept and product alone. You need equally great people to propel your vision. If you begin by hiring right in the first place, maintaining and further developing a proficient workforce is far easier than attempting to align mismatched employees with your goals. It takes experienced HR staff to determine where and how to source competent professionals.
  • Avoid open-ended JDs (job descriptions) and list the primary functions of a role in its entirety while scouting for talent.
  • Pressure to fill vacant slots quickly may persuade indifferent HR service providers to hire substandard quality talent. How reliable is your HR? Ensure that your Recruitment Team only gets the best talent through thorough research and interviews.
  • Bear in mind that a vast list of qualifications or experience does not guarantee exceptional results. Your focus should be on acquiring suitable talent for the vacant roles. Over-qualified talent may burn a hole in your coffers or join you as a stop-gap and leave when they find appropriate placements.
  • Conduct applicant screening thoroughly and determine a candidate's suitability during the interview process. Skilled and experienced HR personnel are essential for this task. As an SMB, you may be tempted to neglect background checks, but RPO (recruitment process outsourcing) can empower you in this regard.
  • Even after hiring competent staff, you still have to get them oriented with your company's work ethics. Remember what they say about first impressions? Efficient onboarding is a game-changer!
  • If a new entrant's joining formalities are conducted haphazardly, they are almost certain to emulate those ideals, which will result in shoddy work. That is why it is crucial to set the tone right from the very beginning. On the other hand, professional staff may be repulsed by shoddy onboarding and begin looking for better prospects.


2. Training and Development: Most L&D (learning and development) functions such as training, upskilling, reskilling, performance evaluations, and transition planning can be placed under this category of HR services. Here are some HR solutions for productive L&D:

  • Compliance courses are looked upon as tasks that just need to be ticked off the list. But they allow you to convey your expectations and help new joinees transition and introduce them to your company's work culture. Be professional and set clear boundaries with harassment, intellectual property, working hours, etc.
  • It is essential to be in sync with market trends. Hence, to truly blossom, staff must be trained to maintain, update, and develop their skills and knowledge. Hiring the right talent is vital, but you must also maintain your talent pool.
  • Employees realize that upskilling is needed for their success, so consider offering training courses that simultaneously benefit them as well as the organization.

Also Read: 5 Ways HR Services Outsourcing helps Small Businesses Save Money

3. Compensation: Several critical functions such as payroll, salary remuneration, insurance and benefits, bonus, incentives, job market evaluation, and resource allocation fall under this heading. Follow these tips while computing and attending to compensation workflows.

  • Remuneration is one of the most significant determining factors when accepting a job. Therefore, your compensation offers must be at par with market standards not only to attract new hires but also to motivate loyal staff and prevent attrition.
  • It is not necessary to break the bank to hire quality talent. Skilled HR recruitment personnel will be able to scout for worthy talent at a reasonable budget. Hence, it would help if you had an efficient HR team to ensure that your staff is top-notch.
  • Likewise, perks and benefits must be carefully researched and structured to retain competent staff. For example, a manager who is multitasking roles at the workplace may close strategic business deals, but negotiating insurance cover and other benefits requires experience and skills only seasoned HR personnel have. In fact, HR outsourcing or partnering with a reputable HRO or RPO (recruitment process outsourcing) provider may allow you to entice job applicants with lucrative perks that are only possible with heavy business volumes.

4. Administration: Workplace safety, leave policies, office hygiene, welfare, labor & union relations, personnel record maintenance, audits, risk management, crisis management, and grievance handling are some of the many HR services that are administrative in nature. Let’s review some ways to reinforce these.

  • Create and maintain a fair, iron-clad HR policy, including all essential data such as company overview, vision, mission, code of conduct, agreements, and policies on non-disclosure, media, confidentiality, safety, T&E (travel & expense), L&D, safety, discipline, contracts, termination, probation, leave, appraisal & performance, discrimination, harassment, intoxication, etc.
  • Ensure you cover all aspects with due diligence from expert legal professionals.
  • Review and update these HR policies annually.
  • Your employees must have instant access to this handbook if they need clarification.
  • Conduct regular performance appraisals to classify and grade your employees periodically. Update the revised benefits by the effective transition date.
  • Maintain personnel files of all staff and keep these up-to-date.
  • Small companies are not exempt from the obligation to provide a safe workspace. The office premises must not pose a threat to the safety and dignity of any employee irrespective of the size and structure of your firm.
  • Instilling loyalty through engagement programs and team bonding should not be ignored. Staff is productive when they feel connected to the team.
  • Chalk out a conflict resolution strategy even if you do not anticipate any at this stage. Always consider your expansion plans and have HR policies inked on paper beforehand.
  • Some HR services can be pretty mundane in nature. HRO service providers with HR solutions software can automate these functions for you. Think about basic functions such as attendance regulation, time tracking, task allocation, and even employee lifecycle management, compliance, L&D, T&E, and salaries that can be managed better by an HRO company. This frees up your schedule to concentrate on your USP and core functions while gaining access to MNC and enterprise-level services and benefits.


Most SMBs are adept at multitasking roles, with all employees pitching in to constantly switch gears across a vast array of tasks. Initially, it may be possible to swap portfolios diligently; however, multitasking may hamper your productivity as your business expands. And increasing employee counts require dedicated HR services. Of course, you can use the above tips to streamline HR service responsibilities through your in-house HR team, but there is so much more that an HR team handles that can only be done with the help of dedicated HR personnel.

It’s time to switch seats!

No more unwarranted pit stops! With a dedicated HR task force backing you, you can get back to the driver’s seat, rev that engine, and drive your company to the zenith of success!

Exela HR Solutions is a world leader in HR solutions for businesses of all sizes. Exela understands that every entrepreneur has expansion goals and may not be backed by the infrastructure and resources to accomplish them. Partner with us and fuel your SMB with the horsepower required to steer your vision! Find out more about Exela HR Solutions today!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.