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5 Things to Know When Outsourcing for the First Time

November 9th, 2023 | 4 min. read

By Kristi Feist

For many businesses, managing HR, benefits, and payroll in-house is rooted in a desire for control. However, this control often comes at a cost: regulatory compliance, benefits administration, and payroll can quickly become overwhelming. As your business grows, these tasks demand more time and resources than they can provide, leading to inefficiencies and potential risks.


This is where the expertise of outsourcing firms becomes invaluable. Companies like ours —  Payday HCM — specialize in turning the tangled web of business responsibilities into a streamlined process. Our team of professionals brings a depth of knowledge and experience to the table, ensuring every aspect of HR, from payroll to employee benefits, is managed precisely and carefully.


HCM outsourcing is not just about offloading tasks; it's about partnering with experts who can transform a significant area of your business operations. It's a move promising to alleviate the burden of these tasks and enhance your company's efficiency, compliance, and employee satisfaction. By entrusting these functions to a dedicated provider, you open up new avenues for growth and innovation within your core business areas. By the end of this article, you’ll understand our five main points:


  • Industry Experts and Modern Tech Will Help You
  • Understanding that Compliance Is Non-Negotiable
  • HCM Outsourcing Will Save Costs and Promote Growth
  • It Will Improve Employee Experience and Satisfaction
  • HCM Outsourcing Will Let You Prioritize Your Main Goals


1: Industry Experts and Modern Tech Will Help You

Harnessing Specialized Knowledge and Advanced Systems

Outsourcing HR, benefits, and payroll opens the door to a wealth of specialized knowledge and advanced technological systems. Firms like ours and many other HCMs bring a team of seasoned experts well-versed in the latest legal requirements and best practices. 


This expertise is invaluable in navigating the landscape of employment laws. Coupled with this knowledge is access to cutting-edge HR technology (such as our platform — isolved), offering integrated, efficient solutions handling everything from payroll processing to employee self-service, ensuring accuracy and compliance across the board.


Customization and Scalability for Your Business

The technology and services provided by HCM firms are not one-size-fits-all but are highly customizable to fit the unique needs of your business. Whether you're an agile startup or an expanding enterprise, these solutions are designed to scale with your growth. 


HCM partners invest in continuous system improvements and offer support, allowing your business to leverage the latest innovations in HR management without the overhead of developing in-house expertise.


2: Understanding that Compliance Is Non-Negotiable

Staying on Top of Legal Requirements

When you outsource HR functions, you gain a partner whose primary responsibility is to keep your business in line with the latest employment laws and regulations. This is a critical advantage, as non-compliance can lead to severe penalties. 


HCM firms are equipped to handle the complexities of tax codes, labor laws, and healthcare regulations, ensuring that your business adheres to all legal requirements. Their expertise becomes your shield against potential legal challenges and financial liabilities.


Proactive Risk Management

A reputable HCM partner actively manages risks by staying ahead of legislative changes and adjusting policies accordingly. This proactive approach to compliance goes beyond mere adherence to laws — it involves developing strategies to mitigate risks before they become issues


By doing so, HCM firms help maintain your business's integrity and protect its reputation, which is essential in today's market, where consumers and employees alike value corporate responsibility highly.


3: HCM Outsourcing Will Save Costs and Promote Growth

Streamlining Your Budget with HCM Outsourcing

Outsourcing HR, benefits, and payroll can lead to substantial cost savings — a vital consideration for any business. By transferring these functions to an external provider, you can reduce or eliminate the expenses of maintaining an in-house team, such as salaries, benefits, and ongoing training. 


Additionally, HCM firms can often provide these services cost-effectively due to their scale and efficiency, allowing for more predictable budgeting and financial planning.


Investing in Growth, Not Administrative Complexity

The financial efficiency gained from HCM outsourcing extends beyond direct cost savings. It allows businesses to reallocate resources towards growth-oriented initiatives rather than administrative complexity


With a predictable cost structure for HR services, companies can focus on investing in areas that directly contribute to their competitive advantage and bottom line, such as product development, customer service, and market expansion. This strategic reallocation can be a game-changer for businesses looking to innovate and grow.


4: It Will Improve Employee Experience and Satisfaction

Elevating the Employee Journey

Outsourcing HR services can significantly enhance the employee experience. A specialized firm brings streamlined processes and user-friendly platforms that make everything from onboarding to benefits management smoother for your staff. 


This professional handling can increase job satisfaction, as employees often appreciate the ease and efficiency of addressing their concerns and needs. A positive interaction with HR processes reflects well on your company's commitment to its workforce.


Focusing on What Matters Most to Employees

With the administrative burden of HR tasks lifted, your business can concentrate on fostering a positive work environment and engaging in meaningful employee development. HCM outsourcing allows your internal teams to prioritize strategic HR initiatives, such as talent management, leadership development, and employee engagement programs. 


These aspects of HR can genuinely influence company culture and employee retention, making them crucial for long-term business success.


5: HCM Outsourcing Will Let You Prioritize Your Main Goals

Prioritizing Core Business Goals

Outsourcing HR, benefits, and payroll enables businesses to stay agile by focusing on their core objectives. 


It removes the distraction of complex administrative tasks, allowing leaders to concentrate on strategic planning and core activities that drive business growth. This sharpened focus can lead to enhanced productivity, innovation, and a stronger competitive position in the market.


Adapting to Business Growth and Change

An effective HCM provides services that can adapt to your business's changing needs. As your company evolves, the scope of HR services can be scaled accordingly, ensuring that your business remains agile and responsive to market demands. 


This flexibility is a crucial advantage of HCM outsourcing, as it supports continuous improvement and helps businesses navigate growth phases more smoothly.


Outsource Your HCM with Confidence

HCM outsourcing is a journey redefining how your business operates. It's important to remember — this decision brings many advantages, from access to specialized expertise and technology to significant cost savings and enhanced employee satisfaction. The transition to HCM  outsourcing is pivotal in setting your business toward greater efficiency and focused growth.


The challenges of in-house HR management lie in the strategic partnership with a trusted HCM. The partner you choose will be the key to unlocking the full potential of your workforce and ensuring your business complies with complex regulations while remaining agile in a competitive landscape.

To embark on this transformative journey, the following steps involve thoroughly evaluating your current HR operations and clearly understanding your business needs. Identify potential HCM partners and engage in detailed discussions with our top ten consultants in HR, benefits, and payroll.

Kristi Feist

As a seasoned veteran in the industry and with Payday HCM, Kristi maintains a 1000+ client portfolio with a 98% retention rate. As Vice President of the DSO Division, Kristi works with hundreds of DSO-like companies to adopt best practices around the use of payroll technology, implementing processes and empowering employees of DSOs to use the technology.