Baker Tilly’s Insights on the Top 7 Factors To Consider When Outsourcing HR and Payroll Services

When considering outsourcing your human resources (HR) and payroll functions for your growing business or organization, there are several key factors you should evaluate to ensure you make the best decision for your company. Here are the top seven factors to consider:

1. Provider type evaluation

When evaluating the types of providers, it's essential to understand the differences between professional employer organizations (PEOs) and traditional HR consulting firms. PEOs offer comprehensive benefit plans and take on responsibilities like payroll, taxes and compliance. However, they also involve co-employment, meaning that the PEO jointly employs your staff. On the other hand, traditional HR consulting firms, like Baker Tilly Vantagen, provide similar HR and payroll services without co-employing any of your workers. This means that you retain all ownership of your employees with the added benefits of trusted advisors and outsourced HR and payroll services.

2. Technology provided

The technology offered by a provider can significantly impact the efficiency of your HR functions. Evaluate the technology offered by the outsourced service and determine which outsourced tasks might best align with the vendor’s service level agreements (SLAs). Ideally, the providers offer the necessary tools to streamline and automate your systems and manage your HR and payroll functions efficiently.

3. Depth of knowledge and experience

An outsourced service provider can bring a wealth of knowledge and experience to your organization at a fraction of the cost of maintaining an in-house team. They can act as a neutral party when resolving employee-related conflicts and issues, provide specialized knowledge in HR and payroll, and ensure compliance with employment laws and regulations.

4. Risk mitigation and data management

Outsourcing HR can help mitigate risks by developing a comprehensive risk management plan and protecting employee data. With a dedicated team, there is always someone available to step in when needed, ensuring continuity and compliance. Providers often have specialized skills and tools to manage risks associated with managing and retaining your workforce, as well as hiring and training new talent.

5. Communication and reporting

Effective communication is essential to the success of any plan. Communication and reporting are pivotal in maintaining a healthy work environment for everyone involved. Assess how the outsourced service provider handles communication and reporting. Regular reporting, transparent communication with employees and the ability to collect unbiased feedback are crucial for maintaining a healthy work environment.

6. Customization and scalability

Ensure that the outsourced HR and payroll services are customizable to your company's needs and can scale as your business grows. Tailored services allow you to define the scope of services needed and maintain control over changes being made at your company. Ensure that the provider has flexible options to accommodate different payroll schedules and integrates with other HR systems to ensure a smooth transition.

7. Time and cost reduction

Outsourcing HR and payroll services can often be more cost-effective than maintaining an in-house HR and/or payroll department. It reduces overhead costs associated with salaries, benefits, office space and technology, allowing you to allocate resources more strategically toward core business functions and growth initiatives. By leveraging the services of an outsourced HR and payroll provider, businesses can remain compliant and keep their HR and payroll departments running smoothly, while focusing on their strategic goals.

Outsourcing or co-sourcing your HR and payroll functions can provide numerous benefits, including cost savings, access to specialized knowledge and improved risk management. By carefully evaluating the provider options at your disposal, companies can enhance their HR operations while focusing on core business activities. Effective risk management, data management and clear communication and reporting are essential to maintaining a healthy work environment. Providers that offer customizable and scalable solutions ensure that the services can grow with the business or organization. Ultimately, outsourced HR and payroll services provide significant benefits to growth, enabling the business to thrive in a competitive landscape.

If you're considering outsourcing your HR and payroll services, connect with an experienced Baker Tilly Vantagen practitioner to learn more about how our services can be tailored to your company's needs.