In startups and small businesses, we often find HR teams managing talent acquisition, payroll processing, and employee development beyond their scope of responsibilities. However, they're often drowned in administrative tasks in the race to hire the best talent first. 

In this article, we’ll discuss outsourcing of employees, how it helps companies, its advantages and downsides. So, if you believe HR professionals should prioritize big-picture strategy and evaluate employee performances over profiles, this article introduces a way to make it possible: Employee Outsourcing.

Decoding employee outsourcing: A tailored approach for HR excellence

Employee outsourcing is all about handing over employee services to a third party. Unlike the broader strokes of general outsourcing, employee outsourcing reduces HR workload, enables flexibility and frees up your team to focus on what truly matters.

Let's break down the key components of labor outsourcing that make it a lifeline for HR professionals:

• Recruitment and staffing - From candidate sourcing to the final hire, the outsourcing experts handle the heavy lifting of recruitment.
• Payroll Processing: Employee outsourcing services cover meticulous salary calculations and tax nuances.
• Benefits Administration: Your outsourcing partners ensure your team's well-being with exceptional employee benefits.
• Training and Development- Labor outsourcing companies elevate your workforce's skills with tailored training programs.
• Compliance and Legal Support - With the right outsourcing experts, you stay on the right side of the law, managing the legal intricacies of employment effortlessly.
• Performance Management - Your workforce outsourcing partners streamline performance appraisals and improvement plans.
• Risk Management - Mitigate HR risks effectively, focusing on compliance and safeguarding your team.

Read more: Employer of Record software

Why do companies outsource employees? 

Recent studies by Deloitte reveal that HRO is the most common form of outsourcing. Let’s understand the primary reasons behind staff outsourcing - 

Access expertise without the in-house hassle

As a small or midsize business, having all the necessary HR expertise in one person is impractical. Outsourcing to the right partner provides you with a team of experts focused on compliance, technology, HR, payroll, benefits, and more. 

Cost-effective benefits for competitive hiring

Hiring multiple HR professionals for each task is costly and doesn't make sense for non-revenue-generating functions. Outsourcing all HR functions is more cost-effective than hiring a single person. 

Small and midsize businesses often struggle to find affordable options, leading to DIY attempts that increase costs for the business and its employees. Outsourcing HR, especially to platforms like Gloroots, helps businesses access affordable benefits. 

These partnerships assist in selecting benefits and manage them efficiently, saving time and money. Gloroots provides access to country-specific, customized benefits and health insurance, leveling the playing field for small businesses and nonprofits.

Accelerate growth with HR support

Successful business growth requires effective hiring practices, from recruitment and onboarding to training and performance management. Many small businesses need the expertise of an HR partner to accomplish these functions. Outsourcing to an experienced HR partner like Gloroots supports businesses in growing faster by providing essential HR services like payroll management and faster onboarding.

Compliance with local laws and regulations

Companies expanding across state or national borders or opening multiple locations face complex state and local laws. Comprehending and complying with these laws without expert guidance is challenging. 

Gloroots, with its experienced team, established systems, and processes, helps businesses navigate these complexities. Whether dealing with remotely working contractors or adhering to regulations, Gloroots ensures businesses can grow while staying compliant, regardless of their location.

Employee relations

Dealing with challenging employee matters is inevitable. While most organizations don't need a full-time resource for these situations, having expertise when they arise is crucial. 

From performance management to chronic absences, employee relations matters are intricate. Gloroots addresses these issues for PEO clients, providing support in handling complex situations. 

Access to advanced HR technology

The difference between managing HR technology in-house and outsourcing lies in organization, redundancy, and efficiency. DIY efforts often result in disparate systems and duplicated programs. Outsourcing to a company with a proven technology platform simplifies processes, keeping data organized in a secure, accessible location. 

Gloroots offers PEO payroll service tools for streamlined payroll, including single-click payroll, customized frequency of bonuses, variable payouts and access to local statutory deductions.

Insurance management

Handling multiple insurance partners and administration tasks is time-consuming. Managing bills for medical, dental, and life insurance individually, reconciling numbers, and addressing back-office administration takes valuable time. 

Outsourcing HR relieves this burden, with experts handling reconciliation and payments on behalf of the business. This allows the internal team to focus on business growth activities, ensuring details, like missed payroll deductions or billing errors, are not overlooked.

Read more: How to Pay Remote Employees

The pros & cons of employee outsourcing 

The decision to outsource employee functions is a critical strategic choice that organizations must carefully weigh. Here are the key considerations surrounding employee outsourcing, examining both the advantages and potential drawbacks.

Pros of employee outsourcing 

1. Cost savings

• Outsourcing can lead to significant cost savings, as businesses can avoid recruitment, training, and maintaining in-house staff expenses.
• External providers often operate more efficiently, reducing overall labor costs.

2. Access to specialized skills:

• Outsourcing allows access to a pool of specialized skills and expertise that may not be available in-house.
• External providers often stay updated with industry best practices, enhancing the quality of services.

3. Focus on core business functions:

• Outsourcing non-core functions like HR or IT enables businesses to concentrate on their core competencies and strategic objectives.
• It allows for better resource allocation and overall business focus.

4. Flexibility and scalability:

• Outsourcing provides flexibility in adjusting workforce size according to business needs.
• It allows for easy scalability, accommodating growth without the challenges of hiring and training additional staff.

Cons of Employee Outsourcing

1. Loss of direct control:

• Outsourcing means relinquishing direct control over certain business functions.
• Businesses may face challenges in monitoring and managing the performance of external teams.

2. Potential communication barriers:

• Distance and different time zones can lead to communication challenges.
• Miscommunication may impact the quality and timeliness of deliverables.

HRO or PEO - Which employee outsourcing option should you choose? 

Managing human resources is crucial for organizations with employees. Yet, some businesses question the need for an HR manager or department. 

The main options for those considering outsourcing HR tasks are a PEO (Professional Employer Organization) or an HRO. Let’s clarify the distinctions between PEO and HRO for better understanding.

HR Outsourcing - HR Outsourcing (HRO) encompasses delegating various human resources functions to external service providers. Companies can choose to outsource specific HR tasks, such as payroll processing, benefits administration, or recruitment, to access expertise in specific HR areas without managing the entire spectrum of HR functions externally. 

Professional Employer Organization (PEO) - A Professional Employer Organization (PEO) is a specific type of HR outsourcing service. PEOs go beyond handling individual HR tasks; they act as co-employers with client businesses. 

PEOs take on a more comprehensive role, managing various HR functions such as payroll, benefits, compliance, and risk management. PEOs often share employer responsibilities, including legal liabilities and employee relations, making them deeply integrated partners in the client's HR operations.

Partner with Gloroots for employee outsourcing

Gloroots, the premier global PEO, is your key to streamlined international employment outsourcing. We specialize in onboarding, multi-currency payments, tax compliance, and more, providing unparalleled expertise for small and mid-size companies like yours.

Why Gloroots?

1. Global expertise: Benefit from our robust knowledge to navigate the complexities of international expansion effortlessly.
2. Data security assurance: Trust Gloroots to prioritize the security of your sensitive information.
3. Comprehensive service suite: Our wide range of services ensures that every aspect of your global HR needs is expertly handled.
4. Proven excellence: Join a list of satisfied clients who have experienced outstanding service and successful expansions with Gloroots.

Experience the Gloroots Advantage:

Accelerate onboarding: Utilize our fully automated employee contract generation to fast-track your onboarding process.

Get clear insights with Excel Reports: Receive detailed reports providing a transparent view of employer liabilities, including tax deductions, social security, FX rates, and more.

Seamless multi-currency payments: Make timely payments to employees across multiple countries effortlessly.

Choosing Gloroots means more than outsourcing HR tasks; it's collaborating with a strategic partner committed to propelling your organization's success in the international marketplace. 

Focus on your core business, confident that your HR operations are in the capable hands of Gloroots. 

Ready to embark on a journey of global growth? Partner with Gloroots today!