Why do companies choose to outsource their HR?

outsource HR - MP&O

Outsourcing companies are third-party service provider for your business and outsourcing is hiring another company or firm or could be a freelance platform to handle segments of your business. We will focus on HR related outsourcing in today’s blog. There are many reasons why companies choose to outsource their HR, but I would like to share the three main reasons companies tell us they want to outsource.

To reduce costs

This is one of the reasons an organization chooses to outsource. So why? You may be concerned about this point. How can this reduce your costs even if you have to use extra money for using an outsourcing service. Using an outsourcing service can reduce costs such as employee hiring, training costs for your employees and office facilities costs, transportation costs, it can also reduce the burden on managers time as their team size will be reduced. For example, if there is a decrease number of employees of working in the operation means one less computer you need to purchase and maintain, and also save on the costs for that employee such as training and hiring.  

To focus on the most beneficial function

Outsourcing some of your HR department’s work will help you to focus on the most important and beneficial functions of your business. Outsourcing is a smart way to help your company grow. For example, if you outsource some of your HR operation, you can reduce the time spent on calculation payroll and paying tax to government office. This will enable you to spend more time on employee relations or training, things that will directly benefit the top line and bottom line revenue of your business.

Increase compliance with employment law

There are often small or large changes to the laws and regulations related to tax, SSB, labour law etc, as well as important information that the departments release but not everyone gets these updates. A dedicate professional HR outsourcing companies is in constant communication with the various ministries and is on top of changes and updated information related to laws and regulation. This allows organizations to comply with the ever changing laws and regulations and keep up with the latest information. Also, you don’t have to worry about non-compliance problems that often result in costly fines and headaches.   

Because of these facts, companies decide to use outsourcing companies for their business. If you want to know more about outsourcing, you can read our blogs such as “What is outsourcing?” “When is the best time to outsource?” etc.., at our Knowledge Center.

Hsu Yee Lin

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