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How much can you really save from outsourcing your HR functions?

Posted On: 28/12/2016

In these times of political and economic uncertainty, all businesses are looking to cut costs and be more efficient. One way you can achieve these goals is to outsource your HR functions. If you run an SME or a start-up, controlling your company’s finances will be your priority. It’s vital that your business is run efficiently in order to minimise costs and maximise profits. Outsourcing HR functions can help you in both tangible and intangible ways, some of which you may not have considered.

 

Practicalities

Office space: By not having a full-scale HR team on your premises, you’ll be able to save money on office space. With the average cost of office space in the UK running at around £20 per square foot, that can mount up to a considerable saving over a year.

Technology: It goes without saying that every team member needs a decent, reliable computer, a monitor, printer and access to the latest versions of appropriate software. Professional, licensed Windows software, for example, costs up to £200 per installation and some highly specialist applications, such as payroll systems, run to much more than that. By partnering with a dedicated HR outsourcing team, you’ll save money by not having to purchase the software licence in the first place and will be able to use the latest versions and get upgrades as part of the deal. Plus there will be tech support available at the end of a phone, should anything go awry.

Personnel: Probably the largest outlay for any organisation is its payroll. If you’re new in business, perhaps running a start-up, or you need to cut costs from your SME, a HR department can be an expenditure too far. A HR officer typically earns between £20,000 and £40,000 per annum, depending on experience, and a manager can earn much more. If this is something your company can’t afford, you should consider outsourcing to save money.

 

Intangibles

Of course, there are also things which you simply can’t put a price on.

Recruitment and training: Having the right personnel in your company and training them well so they can function to the best of their abilities costs not only money but time. Do you, personally, have the time to go through the recruitment process, without it impacting on the efficient day-to-day running of your business? Do you have the time to run a successful training programme? Are you even up-to-date with current HR legislation? If the answer is ‘no’ then your organisation will undoubtedly benefit from outsourcing these functions to professionals.

Building quality: Perhaps your company is growing rapidly (which is fantastic) but your HR department is struggling to cope. Partnering with a HR outsourcing organisation is a great way to bring in specialist help to implement the change you need and build-in quality systems which will stand your team in good stead in the future.

Outsourcing your HR functions can certainly save you money on technology, salaries and office space, but it’s the less-considered things such as the skill sets, business support and knowledge gained through years of direct experience that your HR partners will bring to the relationship which are invaluable.

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