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What to Look for in an HR Outsourcing Company

So, you have reached a point where you realize that you may be able to improve the efficiency and effectiveness of the human resources department by outsourcing various tasks to outside firms, such as payroll and benefit management. The myriad administrative tasks, while very important in their own right, can eat up time and energy that would be much better spent figuring out how to create a better company culture, hire top talent and keep them there and more successfully solve the various challenges in managing a workforce. But, this is not a decision to be entered into without doing your due diligence. There are no shortage of companies that provide these services, and you must do a bit of research to determine which ones will best meet your needs.

Determine Your Specific Needs

HR outsourcing companies handle all sorts of tasks, such as managing payroll, recruiting, taxes and benefits administration to name a few. Your first step in choosing the right firm is determining exactly what services you are interested in outsourcing to a third party. Once you have some companies in the running, gather more information on exactly how they go about administering these services. If you are interested in recruiting, for example, you want to find out what types of employees they are most experienced in recruiting—some may have more experience with higher level executives, while others primarily deal with finding temps for administrative jobs.

Industry Experience

While the overall functions of a human resources department are quite similar across industries, each has its own unique challenges and requirements. When deciding on an outsourcing management company, it is important to consider the level of experience it has in working with companies in your industry; besides the industry, you also want to take into account whether the company works with businesses similar in size to yours—the needs of large and small businesses differ significantly. Reach out to other companies similar to yours for recommendations. With that being said, however, it is also a good idea to look at firms that have a diverse range of clients, in terms of industry, geographic location and size.

Local Presence

One of the biggest benefits of working with outsourcing companies is that they are highly knowledgeable about complex laws, rules and regulations regarding taxes and labor at both the federal and state level. Because these matters differ significantly between states, it is important to consider whether the company is experienced in handling these matters for companies in the state where your business is located. There can be serious consequences, financial and otherwise, if your company does not file taxes correctly, violates local labor laws or commits any other infraction.


Companies have different needs based on a variety of factors, from the industry to budget. Some companies offer rigid service plans where you have to take every service offered, even if you do not necessarily need or want it. This translates to wasted money. Look for companies that are open to customizing product packages based on your needs and yours alone.

Kelli Cooper is a freelance writer who enjoys blogging about all things business.

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