By Elizabeth M. Rice, SPHR

A recent hiring surge in the biotechnology sector has more industry employers outsourcing certain HR administrative functions to improve the costs and efficiencies of bringing on new contract & project-based employees.

Gartner Dataquest reports that the human resources outsourcing market in North America will double to $58.5 billion by 2005. Biotech companies have emerged as a leading source of new jobs in the U.S., according to a recent survey by the U.S. Commerce Department. The biotech industry reported a 12% rate of job growth between 2000-02, more than any other major U.S. industry. Additionally, 80 percent of biotech companies plan to hire new employees within the next several months, according to Biotech 2003, a survey by Ernst & Young LLP.

The biotech industry continues to become project driven due to widespread globalization and the demand for time and cost-cutting business strategies. Biotech companies have found that they can bring new products to market faster, minimize their business costs, and maximize their profitability by assigning large research and development projects to outside contractors and consultants.

Consequently, administering employees’ payroll, benefits and other HR functions become increasingly costly, risky and time consuming. This is due to the transient nature of non-core employment. As a result, outsourcing is becoming a popular solution to HR administration among contingent staff.

Organizations that outsource their contingent staff’s payroll and HR administrative functions significantly reduce the time, costs, risks and labor involved with managing these back-office processes in-house. The management of payroll and benefits for non-core employees involves greater risk, complexities and overhead costs than for permanent staff, and it is therefore more efficient and profitable to outsource this function to a team of specialists.

Key benefits of payroll and HR outsourcing

Important benefits of outsourcing the payroll and HR administrative functions for contingent and other non-core workers include:

• Time and cost reductions: Outsourcing payroll and HR administrative services significantly reduces the time, costs and hassles involved with administering employees’ benefits and payroll in-house. This gives biotech companies the freedom to focus on the core, strategic areas of their business.
• Risk reduction: Outsourcing payroll and HR administrative services can significantly lower a company’s risk and liability of handling these functions in-house – such as worker’s compensation and general liability.
• Expanded benefits for employees: By outsourcing the payroll and benefits administration functions to a specialized provider, biotech firms can offer their project employees better and more extensive benefits than otherwise possible. This gives them more leverage for recruiting the best and most qualified staff.

What are the payroll and HR administrative services that an outsourcing partner offers?

Services offered by a payroll and HR administrative outsourcing specialist include:

• Benefits administration – management of medical, dental, vision, disability, and life insurance, COBRA, 401K, and other employee benefits plans.
• Risk management services – employee safety training, site evaluations, employee safety and injury reports, claims management, applicant screenings, and drug testing.
• Payroll administration – administration of employees’ payroll and taxes.
• Security clearance processing – conduct of secret level, DoD and DoE security clearances.