Recent economic challenges have reinforced businesses’ decision to outsource their Human Resource functions. The need to create additional efficiencies, reduce costs and focus on revenue generation has motivated businesses of all sizes to use outside providers to manage some or all of their human resource functions. Additionally, significant legislative changes have made compliance and administration more difficult for employers to handle on their own.
According to a 2009 survey conducted by Hewitt Associates, a global human resource consulting company, businesses look to HR service providers for the following top 5 reasons:
- Opportunity for cost savings
- Access to outside expertise
- Improved service quality
- Focus on strategic priorities
- Relief from regulatory and administrative burdens
These results have remained consistent over the past three years, with the most significant change being the increased demands on employers and HR departments to keep up with regulatory requirements (46% reported as a reason to outsource in 2006 and 70% in 2009).
Professional Employer Organization (PEO) and Human Resource service providers such as Xenium partner with businesses for the same reasons. PEOs provide an economy of scale for comprehensive HR programs and services. This allows businesses to focus on developing core competencies, as opposed to dedicating resources to manage the regulatory and administrative employer functions. Businesses gain access to expertise for employer best practices and comprehensive benefit programs, resulting in improved efficiencies and employee satisfaction.
As reported by the National Association of Professional Employer Organizations, the PEO industry generates approximately $68 billion in gross revenues annually. PEOs have an 88 percent client retention rate due to strong client satisfaction. While many clients range in size from 10-200 employees, any business can find value in a PEO relationship. As the PEO industry continues to expand, larger businesses are able to offload transactional and administrative functions and provide technical HR support to their internal human resource staff.
Regardless of the size and industry, businesses can deliver greater value by partnering with a successful HR service provider. Legislative and regulatory changes will continue to compel business owners to use comprehensive HR service providers. Through this relationship, businesses have more flexibility to manage costs, employment risk and concentrate on the strategic and operational side of growing their business.
Source: HR Outsourcing Trends and Insights 2009, Hewitt Associates
NAPEO 2009