However large or small that they may be, all companies have substantial HR responsibilities that they must undertake in order to ensure the smooth running of their organisation and a streamlined growth. For many businesses who are beginning to grow, they must consider whether to expand their in-house HR function or outsource to a PEO in order to facilitate this growth.
But when should you outsource to a PEO provider?
A simple test is to look at the size of your organisation and ask whether the work requires face-to-face interaction, an understanding of employees, or whether the tasks are automated and can be taken on by an external organisation.
Many small organizations, whether starting-up or well established, will understandably try to save money and keep their HR responsibilities in-house. However, with only a few members of staff to carry out their day-to-day jobs and all HR tasks (such as salaries, absences, hiring, firing, managing benefits, and on-boarding new starters), there is an argument to say that they are better off sticking to the job they were hired to do.
Therefore, outsourcing certain functions to a PEO provider can be a cost-effective way of managing HR responsibilities correctly, especially with the workload that can come with rapid growth either domestically or into new countries.
With start-ups who are achieving investment and beginning to consider their expansion, a PEO is a great choice to cost-effectively take their business to the next level. After all, businesses who engage with a PEO can expect an average return on investment of 27.2%.
As an organisation grows and considers entering new global markets, compliance will become more important and much more challenging. Although companies of this size are likely to have employed an office or HR manager who can take on a lot of the HR responsibilities, businesses approaching the 40-50 employee mark may consider taking on additional staff to support the HR function – though there are substantial costs to consider here.
Alternatively, a much more cost-effective option would be to partner an existing HR person with a PEO provider to share these responsibilities and to ensure that valuable employees aren’t wasting time on things that can easily be outsourced, like payroll.
Employing up to 500 employees brings a large amount of new HR issues, especially when it comes to further expansion and compliance, so many organisations will consider growing their in-house HR departments to combat these problems. Companies of this size are more likely to undergo mass expansion, and this may involve many automated processes, which would be better managed by a PEO to deliver. Saving money by using a PEO will also free up budget to recruit people for strategic and compliance-based positions.
The Benefits of a PEO over Growing an In-House HR Department
Fewer Administrative Tasks
Individuals don’t have to spend time working on tasks such as payroll and employee benefits because the PEO handles them, and companies don’t have to pay high wages for specialists in areas that the PEO provider can manage.
Better Benefits Package
PEOs allow smaller organisations to offer a more robust benefits package than they might be able to offer with an in-house team. This, in turn, helps with talent acquisition, retention, and overall employee satisfaction.
PEO Providers can negotiate lower insurance costs on behalf of the organisations that they work with, helping the company to save money and share these savings with their staff
By freeing up time and having access to first-class in-country compliance knowledge, a PEO can expand their business and test new markets much more efficiently and cost-effectively than when taking on responsibilities in-house.
Understanding of Regulations
PEOs remove the burden for organisations of having to keep up with constantly changing HR regulatory laws and help them to remain compliant.
PEOs provide civil defence and employment liability insurance in case a former employee sues the company for any reason.
Want to open a discussion?
Wherever you are in your business’s growth journey, outsourcing certain functions to Procorre Global can prove to be a cost-effective, efficient way to grow your business, expand globally, and reduce the administrative tasks from your internal teams.