5 Ways HR Services Outsourcing helps Small Businesses Save Money

HR handles many functions. Some of these are rather complex, while some are merely administrative. Nonetheless, all businesses need an efficient HR system that will neither crumble in a crisis nor be overburdened with monotonous daily operations. While the product or service you provide may be your USP and operations, finances, legal, & technology may be the CNS; HR is still the heart of any company. And, as essential as all other departments may be, the heart pumps life into them all!

So, it is essential to have an HR grid that is experienced, adept, and capable of handling all HR tasks with ease, thereby balancing the pathways that breathe life into all other departments. Hence, one cannot afford to have amateur HR staff. Errors in this space can ruin organizational foundations and lead to the collapse of an entire business.

However, not all organizations may have the budget to hire and retain the best talent. Especially with small-sized businesses, hiring and maintaining experienced, efficient HR staff to handle the rest of your employees can be a bit of a challenge. Nevertheless, there is a solution. It is pretty straightforward: outsource your HR functions to an appropriate service provider. If you aren't already familiar with this concept, yes, organizations of all sizes, especially the smaller ones, find it immensely convenient and pocket-friendly to outsource HR functions.


Because it's not about how much money your company makes; it's about how much you're able to save!


Most small businesses cannot afford big budgets. Saving money is crucial. As the economy yo-yos on a delicate string in markets that are so volatile and vulnerable, any expenditure must be justified. Additionally, all expenses must be reviewed periodically to ensure sustainability through these times. The top reason why smaller enterprises must opt to outsource such an essential department or at least certain functions within this department is the cost-effectiveness of such a move. Of course, there are several other benefits, but let us focus on the cost factor for now.

Listed below are some of the main ways outsourcing HR services can save your company a lot of money:

1. Salaries: The most obvious CTC (cost to company) is an HR employee's salary. And, despite the size of a company, no matter how small or local, there is usually more than one HR person handling the processes. So that's multiple salaries that need to be paid. These aren't one-time investments. They are monthly or weekly reimbursements that a company must disburse on time. Remember, your HR staffs are the ones processing everyone's salaries. So, if you do not pay your HR on time, everyone else will subsequently have a problem soon. Outsourcing HR services allows you to be untroubled about paying additional salaries. You don't have to pay extra, individual, HR staff. Your investment in HR ends once you've purchased an HR services outsourcing plan or appoint a good HR service vendor. Linked Blog

Also Read: The HR in Human Resources

2. Benefits: Apart from salaries, HR team personnel have additional associated benefits and perks. The average benefits package is well over 30% of an employee's compensation. That's still just an average; it could be a whole lot more depending on contracts and functions. All of those increase the expense value of the cost heads in your accounts sheets. By doing away with an in-house HR team and hiring HR outsourcing services, you eliminate the need to pay any additional benefits to non-existing staff.

3. Training: When you hire your own HR staff, you must train them appropriately. Right from their onboarding, induction and mandatory compliance courses to getting them familiar with the company procedures is a time-consuming, highly cost-intensive process. On average, most companies spend an additional 1/4th of the amount spent on acquiring new HR staff to get them oriented. This unnecessary training and the associated costs burden company resources that can be utilized for other productive purposes instead. By opting for HR outsourcing services, company policies and guidelines can be conveyed to expert handlers who are already proficient with the remainder of the essentials. So, you can direct saved funds towards better causes.

4. Penalties: Nobody anticipates a lawsuit. But, if you get entangled in such a web, it can drain all of your company's resources and completely uproot firmly established enterprises too. Moreover, non-compliance with regulations and improperly handled crises can result in penalties and fines that small companies may find challenging to bear. On the other hand, HR services outsourcing absolves companies of many such liabilities as competent HR staff always ensure compliance with state laws and regulatory authorities. Also, by professionally addressing sensitive issues, you can avoid possible incident-induced bankruptcies.

5. Time-related perceived Productivity Loss: It may be challenging to forecast absolute losses based on lost person-hours. However, it is undeniable that when you outsource certain HR functions, your HR staff spends lesser time on administrative duties. Many HR functions fall under the routine procedure category. An outsourced agency or vendor can easily perform these duties. Smaller companies have limited staff and resources, and they must use both optimally. Instead of burdening an in-house team with simple tasks, you can reduce a minimum of 30% of their duties up to a limit you deem comfortable. So, depending on the amount of functions you outsource, your HR staff can get more time for productive work. Engrossing employees in more significant jobs is a huge motivational factor that further enhances productivity among your HR team members.

As you can see, there are several cost benefits to outsourcing HR services. The cost involved in engaging a good HR service provider is far lesser than the monetary savings you can accrue. While big enterprises may thrive better with an in-house HR, smaller companies and startups cannot afford to ignore the cost benefits of external HR outsourcing services in this economy.


A simple fact that is hard to learn is that the time to save money is when you have some. – James Moore

Don't wait until it's late! Make the switch today!


Exela HR Solutions offer end-to-end HR outsourcing services. So you can choose to outsource as much of the HR functions as you deem fit. Exela is a NASDAQ-listed market leader in BPA. Serving 60% of the Fortune® 100 companies with decades of expertise, Exela is a trusted name globally. Exela’s HR Solution allow you to focus on your business and scale up while your HR functions are managed on time with precision and consistency. Despite its ubiquitous market presence and experience, regular feedback and a responsive customer service team ensure no loopholes or discrepancies arise between anticipated outcomes and service delivery. Exela understands that every entrepreneur and small business owner has future expansion goals. So, partner with the right team that will help propel your vision through simplified processes in a cost-effective manner! Find out more here

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.