Human Resource Outsourcing – 6 Tips on Selecting an HRO Firm

The Human Resource Outsourcing industry continues to grow as one of the fastest developing outsourcing sectors, just behind IT outsourcing. Following two of the most challenging economic years in recent history, businesses are looking for ways to reduce overhead and improve efficiencies. Human Resource Outsourcing can help cut operational costs, improve HR efficiencies, motivate staff and increase productivity. However, not all HR Outsourcing firms were created equal. If you are interested to outsource HR for your company, there are several important factors to take into consideration.

Flexibility in Service Offering

Many HRO firms take the “one size fits all” approach by requiring clients to take all the services offered, from payroll and insurance, to benefits and training. It is important to look for a vendor that is flexible in their offering and is able to customize an HR solution to match your company’s individual needs.

High-Touch Service Model

Many HRO firms follow a high-tech/low-touch approach with services provided primarily through on-line self-service platforms. While this is attractive to many employers, look for a firm that is also available for on-site appearances. It is crucial for the HRO firm to have a qualified team available to meet live with your staff, whether for benefits open enrollment, claims investigations, employee relations, or manager training seminars.

Financial Stability

HR Outsourcing companies are entrusted to submit the payment of payroll, payroll taxes and insurance premiums. Be certain that the firm you select has a minimum of 10 years of experience and strong financial and client references. They should also have audited financial statements from a reputable accountancy firm and long-term banking relationships.

Proven Service Track Record

Stable finances and longevity does not necessarily equate to good human resource practices or customer service. The HRO firm must have a strong team of licensed human resources professionals with a proven track record of assisting clients in all areas of regulatory compliance, safety and benefits.

Size and Diversity of Client Base

The ideal HRO firm will have a large and diverse client base, serving a wide range of industries. The diversification insulates the firm from fluctuations within a particular market and dilutes the risk over many industries. Diversification can take the form of industry, size of employee base, and geographic location. A large, diversified base of clients also adds to the depth of experience of the firm and their ability to service your particular business.

Local Market Presence

Many labor and tax laws vary from state to state. Look for a firm that has employment expertise in the state in which you do business, and has strong relationships with local vendors and insurance companies. In California, for example, many state laws and regulations differ greatly from federal guidelines. Additionally, a local corporate office will ensure quicker response time and on-site presence.

When considering options to outsourcing HR for your business, keep these six important factors in mind. Determine if your potential HR outsourcing provider fits the bills, and if not, move on to find the most qualified vendor for your business.

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