Knowing When to Outsource Your HR Function

By 21st January 2019 Human Resources

If you’re business is growing, there’s a good chance you’re thinking about how to approach human resources to deal with the additional responsibilities that come with growth. If you don’t have the skills or funds to develop an in-house team, then outsourcing to an HR specialist or consultant, like HCHR, will give you access to skills, knowledge and support, and save you costs in the long run

Business owners know the frustration of spending more time than they want on non-revenue generating activities. From payroll and human resource management to benefits and compensation, managers and directors can spend a significant proportion of their day engaged in these necessary but time-consuming tasks.

The answer for many businesses may be to outsource part or all of their HR functions to third party providers so that they free up senior staff members to focus on their core business.

Top Three Reasons to Outsource Your HR Function

Generally speaking, the top three reasons cited for outsourcing HR are access to skills and knowledge, gaining better quality support than the business is able to deliver in-house and the costs saved in terms of employing and training a new team.

The most commonly outsourced HR activities tend to be recruitment, creating and updating employee handbooks and policy manuals, performance management and managing investigations, disputes and disciplinaries.

But when does it make sense for you to outsource the HR function? In assessing whether you should or not, there are several questions to consider before you make a final decision.

How big is your company?

In our experience, businesses with fewer than 100 employees rarely have an HR team. Instead they may have a manager or finance director who dabbles in HR because they have some relevant experience in their dim and distant past which seemingly qualifies them to deal with all the people issues that arise.

What services do you need?

The nature of the work undertaken by an outsourced HR consultant varies hugely depending on the nature of the business and the skills of the employees within the organisation. At HCHR, we work for a number or organisations with no HR department ensuring the business meets all necessary legal requirements in terms of policies and contracts. In addition, we deal with any employee relations issues as they arise including discrimination claims, redundancy, grievances and dismissals.

For larger organisations, we also provide support when it comes to recruitment and performance management, freeing up senior staff who would otherwise have to be involved in this aspect of business development.

We also work for businesses which do have an in house HR team, supporting the team when issues arise that require legal advice or specialist services such as workplace mediation.

How much does an outsourced service cost?

There is no one-fit suits all and all our HR services are bespoke to our individuals clients.

We always agree up front the way in which the outsourced service will be billed. By and large, the cost of the service varies depending on the level of outsourcing that is required. For example, we may be asked to assist on a specific well-defined project in which case we will estimate the cost involved, or at least offer a range of costs within which our work will fall.

Alternatively, we may work alongside the business dealing with day-to-day issues on a retained basis, or we are called in to sort an “emergency” for which we will charge an hourly rate.

What type of provider do you want?

Do you want a “face” who gets to know your business, staff and culture, who can be flexible in the service you offer and who, by virtue of being a phone call away, can operate as if you have your very own HR department?

Alternatively, you may sign up to a HR support line which is a less personal service offering set packages that are not developed specifically for your business.

We would advise, as a general rule, that when administrative processes begin slowing down the productivity of the company, then it’s time to consider outsourcing the management of your human resources function. Good employee relations are not simply “nice to have” but important to get right as they can directly affect the future performance of your business.

By prioritising employee engagement, you will ensure you are not burdened by high employee turnover, low morale or ineffective teamwork. Instead you will have employees who are productive, enthusiastic and effective, enabling you to maintain an edge in a today’s highly competitive environment.

The attraction and retention of talent is now such a business critical operation that for many businesses, outsourcing their HR function is the best way to ensure that what is arguably their most valuable asset is well managed, freeing them up to concentrate on their core business.


At HCHR we offer a range of outsourced HR services to a number of businesses, large and small, across a wide range of industry sectors.  To find out more and see what our clients say about us, check out the testimonial section on our website here.

To discuss your specific business’ HR needs, you can call us on the number below to book a free half hour HR consultation:

HR function


Author HCHR

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