In this difficult economic climate firms are considering outsourcing most, if not all, of their HR functions as a way to save money and maximize internal resources. The decision to outsource HR administrative services is crucial for small companies who are feeling the impact of the economy. The Small Business Administration (SBA) estimates that the average small business owner spends between seven percent and 25 percent of his or her time handling employee-related paperwork. When the time spent on all the other HR tasks is factored in, this figure rises to 35 percent to 45 percent. Additionally, the SBA estimates that the average annual cost of regulation, paperwork and tax compliance for companies with fewer than 500 employees is about $5,000 per employee. For companies with more than 500 employees, the cost is about $3,400 an employee.

Outsourcing HR functions makes monetary sense on several fronts, beginning from the cost savings gained by reducing the HR labor force and concentrating on higher-level analytics and strategic services. By utilizing the expertise of HR administrators, companies achieve HR best practices, and can focus on growing their business.

By outsourcing these functions companies no longer have to deal with the overwhelming paperwork and do not need to learn new, specialized duties to perform this administration. For example, a company that outsources payroll doesn’t need to know about tax withholdings. In addition, companies experience such benefits as reduced risks and liability in their employee relations and have the power to provide a benefits package with excellent service at a lower cost. Shifting the burden to another firm means less work for in-house staff and a stronger focus on the internal business. For over 30 years Innovative Employee Solutions® has been providing payroll services and HR administration to companies nationwide. Please call us for a quote and see how you can start saving money by outsourcing your HR administrative services.