HR outsourcing: the ultimate guide for companies

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You’re thinking of outsourcing your human resources, but you’re asking yourself a thousand questions: is this the right solution for my company? Which functions should be outsourced? Are there any risks involved in outsourcing HR? How do I find the right service provider? This comprehensive guide gives you the keys to successful HR outsourcing.

Victory Orset
AUTEURE Victory Orset

HR outsourcing: definition

HR outsourcing involves delegating all or part of your human resources management to an external service provider. It can be a one-off assignment or long-term support.

Outsourcing can concern an HR function (payroll, recruitment, training, administrative management, etc.), an HR process, or even the total or partial management of human resources management software.

In most cases, HR outsourcing enables HR departments to free themselves from time-consuming or low-value-added tasks, and concentrate on their core business and essential, high-value missions. However, HR outsourcing can be used for more strategic issues where HR is looking for specific expertise that it does not have in-house. Whatever the reason for outsourcing, the aim is to increase productivity and competitiveness, and create value for the company.

What’s more, the digitalization of HR, making it possible to automate repetitive, time-consuming tasks with little added value, coupled with the rise of freelancing, is facilitating the use of HR outsourcing. Outsourcing thus appears to be a real underlying trend, already present and set to become even more pronounced in the years to come.

The benefits of HR outsourcing for companies

HR outsourcing offers a number of advantages for companies: time and efficiency savings, cost reduction and control, and access to specific expertise.

 

Save time and increase efficiency

A company’s needs are constantly evolving, and outsourcing offers great flexibility and efficiency.

Firstly, when HR outsources time-consuming, repetitive or low value-added tasks, it frees up time to focus on more strategic issues: employer brand, employee satisfaction…

In fact, some aspects of human resources management are time-consuming and unprofitable if carried out in-house, which is why it’s a good idea to outsource them. External service providers, well versed in the field and with a wide range of experience and customers, can provide rapid solutions that will make your company more efficient.

What’s more, when HR processes are outsourced, the company no longer has to worry about employee absenteeism and all that this may entail (delays, costs…), as this becomes the responsibility of the external service provider.

Cost reduction and budget control

Gaining efficiency in certain tasks or processes, as seen above, de facto reduces the costs associated with managing these tasks. External service providers enable their customers to benefit from economies of scale, automate certain tasks and thus reduce payroll costs.

In fact, outsourcing certain tasks enables us to optimize processes without having to recruit new skills internally. Sometimes these tasks don’t even require full-time staff. In this way, the company avoids the need for recruitment, which can be time-consuming and costly, and entails tedious post-recruitment management (payroll, vacations, etc.).

The automation of certain tasks or processes by external service providers also helps to avoid errors that can become costly. In fact, by automating tasks such as payroll, the company limits the risk of human error, which can have major repercussions.


In short, HR outsourcing allows you to adjust your resources to your company’s real needs, which may vary regularly depending on the context, seasonality or a one-off project. In this way, costs are perfectly controlled, optimizing productivity and supporting value creation within the company.

Access to specific skills and expertise

Finally, some projects or tasks require specific expertise that the company does not possess in-house. Here again, rather than recruiting or training an in-house employee, it may be in the company’s interest to outsource this skill.

Generally speaking, these are new skills or know-how, linked to digitalization, changes in regulations or a specific one-off project. By outsourcing the required skills, the company can be sure of benefiting from an expert in the field for the duration of the project.

 

Missing out on new regulations, legal or social compliance (
CSE elections
 for example) or failing to recruit on time are risks for the company. Entrusting your HR activities to an external expert limits the risk of a lack of expertise or technical or legal knowledge. By delegating, the company relies on the consultant’s know-how and expertise.

Outsourced resources also give the company an outside perspective. These resources are dedicated to the success of the projects or missions entrusted to them. This provides the company with an experienced resource, according to its needs, in situations where full-time hiring is not necessarily justified. HR outsourcing is a real source of value creation for the company.

 

The different forms of HR outsourcing

There are several ways for companies to outsource their HR functions. The company chooses the formula best suited to the type of business to be outsourced, the duration or even the duration of the need.

Outsourcing can be partial (a few functions) or total (the entire HR function), on a one-off or ongoing basis.

The human resources consulting firm is the perfect solution for managing a mission, circumscribed in time with precise specifications: HR audit, opening of a new country, a new site…

Time-sharing is ideal for recurring, long-term assignments. Time-sharing gives you access to an expert resource, depending on your needs (from a few days to a few weeks a month), who comes to know your organization inside out. The
shared-time HR consultant
 can work at your company and/or from home, supported by other time-share consultants if required.

Finally, some companies allow you to outsource a specific job over time, such as payroll management, which is very time-consuming and offers little added value. This is called subcontracting.

Identify HR functions to outsource

All HR functions can be outsourced. This is even largely the case in companies with fewer than 50 employees, where hiring a full-time resource is not necessarily justified.

When companies reach a critical size, they can also outsource certain functions. These are generally the least strategic or most time-consuming functions, such as payroll, personnel administration, recruitment or training. Tasks considered strategic or complex remain the responsibility of the company’s existing HR staff, who can then concentrate on their core business.

Payroll and personnel administration

Payroll management and personnel administration are the most outsourced missions. These tasks are considered time-consuming, repetitive and of little added value.

Outsourcing your payroll ensures that you are always in compliance, and avoids errors. Exemptions, withholding tax, changes in contribution rates, annual adjustments, URSSAF contributions – all these specific business issues may require the intervention of an outsourced HR or HRD specialist. The external consultant can therefore take charge of :

  • Perform a payroll and social security audit;
  • Check the consistency of payroll data and counters;
  • Provide technical payroll expertise in complex situations;
  • Train payroll managers within the companies in which they work;
  • Temporary replacement for a payroll manager ;
  • Prepare queries and extract payroll data;
  • Migration to a new payroll system;
  • Prepare and support your company in the event of an URSSAF audit.

Companies can also outsource the organization of professional elections.

Recruitment and selection

Recruiting involves many tasks, some of which can be very time-consuming. While recruiting a senior profile is obviously a strategic issue, the final decision rests with the company, even if the task has been outsourced. In this way, the entire upstream process is often delegated: sourcing, setting up a CV database, publishing advertisements, drafting job descriptions, pre-selecting candidates and organizing interviews.

For certain specific, strategic or high-pressure positions, companies can also turn to recruitment agencies.
recruitment agencies
. Rather than risk spending too much time and effort on recruitment, which could be both unsuccessful and time-consuming, companies are often better off outsourcing.

Training and development / Talent and career management


Managing skills within a company helps to attract and retain employees. Successful skills management is therefore an important issue, but certain administrative aspects, such as putting together funding applications, can prove complex. Other areas are particularly time-consuming, which is why HR outsourcing is common in talent management and training. The HR consultant can take charge of :

  • Identify existing skills within the company;
  • Validating the proper use of existing in-house skills;
  • Assessing and prioritizing employee skills needs;
  • Preparing a skills development plan based on identified needs;
  • Training organization search and administrative management: registration, funding, OPCO, etc.
  • Organization of training sessions;
  • Evaluation of training courses and training organizations;
  • Implementation of skills management tools and processes;
  • Deployment of the annual skills development plan;
  • Managing internal mobility and promotions.

Key steps to successful HR outsourcing

Needs analysis and definition of objectives

As we have seen, all HR functions can be outsourced. However, before you take the plunge, there are a few steps you need to take to ensure your HR outsourcing is a success:

  • Defining specifications: what expertise is needed to carry out this mission? Is this expertise available in-house? Do we need full-time staff for this mission? What is the available budget?
  • Define the scope of the assignment: how long will the project last? Does the project have a set deadline or end date? So how many resources do we need to complete the project on time?
  • Defining the managerial framework: who should the HR consultant report to? What are the objectives? What are the KPIs to track?

If you can answer all these questions, then the next step is to select the service provider.

 

Selecting the ideal service provider

Freelance independent consultant, HR consultancy, agency… There’s no shortage of options for outsourcing your HR function.

At Boost’RH, we believe that using a firm of HR consultants (HR or HRD on a timeshare basis) is a guarantee of successful outsourcing. Indeed, the advantages of a consulting firm are numerous compared to an independent consultant or an agency:

  • Ensuring continuity of the mission: in the event of absence, illness or leave of the consultant, the firm can quickly replace the absent resource. In this way, the continuity of the mission or project is never jeopardized;
  • Rapid adaptation: if the assignment calls for it, the consulting firm can quickly staff other consultants who can provide back-up or work on a technical part of the assignment requiring other specific expertise;
  • A guarantee of quality: the firm’s image and reputation are at stake when the consultant works for a company. So it’s up to us to carefully select the consultants we use, check their skills and provide them with ongoing training to ensure their expertise;
  • Non-dependence: HR consultants must ensure that they do not place the company in a situation of dependence on them. The consultant generally works within the company, blending in with the staff and immersing himself in the corporate culture, whereas an agency, for example, works externally and can create a situation of dependence.

Don’t neglect the selection and preparation stage, which is essential to the success of outsourcing. The preparation effort may seem considerable, but it’s the guarantee that outsourcing will be effective and successful. Once the service provider has been selected, he or she needs to be briefed and provided with the information required to ensure the success of the assignment. Don’t forget to communicate about your decision to outsource, not only to your stakeholders, but also to any employees who might take a dim view of outsourcing.

The challenges and risks of HR outsourcing

Even if they are minor, HR outsourcing involves risks that are best identified upstream to guard against: data confidentiality, maintenance of service quality, control of skills and knowledge within the company…

In effect, a company that outsources a function relinquishes its subordinate relationship with its employees, in favor of a third party. There is a risk of loss of control and loss of information, data and confidentiality.

The company may also find itself in a situation of dependence on the service provider. It can be difficult to change service providers if you are not satisfied, because they have the knowledge and track record for the job. That’s why choosing the right service provider is a crucial step in outsourcing.

A final risk is that of dissatisfied in-house staff. Some may find it difficult or incomprehensible to work with external service providers. Communication about the company’s decision to outsource should not be neglected.

Would you like to outsource your HR function?

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EXPERT OPINION - Christine M, HR Consultant at Boost'RH Groupe

According to our expert, all HR functions can be outsourced. For her, the important thing to remember is that the final decision always remains in the hands of the client company, whatever the subject: recruitment, training… The objective behind outsourcing is ultimately the company’s autonomy, should it decide to bring the skill in-house, create a specific position or take back control of the subject. The consultant must never place the company in a situation of dependence on him. The consultant can also intervene to set up a process at the outset, and then return on an ad hoc basis if necessary.

For Christine, the HR consultant brings serenity to the company. By outsourcing all or part of their HR function, managers are guaranteed compliance with legal and social obligations, while controlling costs and budgets and focusing on their business and corporate strategy. The consultant is a rapidly operational resource who, thanks to the wealth of his past assignments and experience, can quickly adapt to new environments. For our expert, operational responsiveness is the key to successful outsourcing.

To sum up

En 3 Questions

  • What are the advantages of HR outsourcing?

    HR outsourcing enables you to control your human resources costs and therefore your budget, to gain in efficiency and time, and to access specific, specialized skills not available in-house.

  • Which functions are most frequently outsourced?

    The most outsourced functions are the most time-consuming and have the least added value. Companies often outsource payroll, personnel management, recruitment, career management and training.

  • Which companies can benefit from HR outsourcing?

    HR outsourcing is for any company that doesn’t have the size, means or needs to recruit a full-time HR or HR Director. This could apply to a start-up looking to recruit its 1st employee, a small business with 10 employees needing to create an HR function, an SME with 30 employees outsourcing its HR function, or a company with over 50 employees looking for specific HR skills without having to hire a full-time employee.