Skip to main content
The Future of Work: What Talent Wants. Learn more in our guide. >
Uncategorized

What is Human Capital Outsourcing?

By February 3, 2016August 30th, 2022No Comments
What is Human Capitol Outsourcing

The once-elusive cloud was simply an affordable storage option for small to mid-size businesses. Now it’s expanding thanks to the growing popularity of human capital outsourcing. The “human cloud” gives business owners a vast pool of talent to manage their day-to-day tasks allowing skilled employees to focus on expansion.

Human capital outsourcing distributes administrative tasks to outside entities. The outsourced company or contractor manages these commonly routine responsibilities. Thus creating more time for in-house employees to complete their strategic responsibilities.

UGGE-Small-CTA-HR

Common Human Capital Outsourcing Tasks for Small to Mid-Size Companies

It’s up to the business owner’s discretion when determining the best tasks to outsource. For example, if you’re a small firm with less than 25 employees, it may be more cost-effective to outsource payroll rather than keeping it in-house. If you’re operating a large firm and implementing SAP, it’s probably smart to hire a team housed in your IT department to manage this change. The reason – outsourcing a consultant for an ERP project may end up costing more than hiring an in-house, salaried team.

Business owners should perform a cost-to-benefit analysis to determine if human capital outsourcing is the best option for the following tasks.

Payroll Administration and Employee Benefits

Managing benefits and payroll is a full-time task. It costs a firm time and money and smaller companies may not have the necessary resources to manage this in-house. As a result, payroll administration is a commonly outsourced task. Firms can remove the burden of this responsibility by deploying its personnel actions, payroll distribution, benefits and bonuses to a specialized company for an affordable rate.

This form of human capital outsourcing is especially beneficial when managing international employees. Velocity Global assists firms with global expansion and one of our services is managing international payroll. We become your single point of contact and manage your overseas employees’ income and benefits in more than 185 countries.

Human Resource Management and Recruitment

In 2013, Inc. reported that the human resource outsourcing industry earned an annual $165 billion. Plus, 85 percent of firms deploy at least some of its HR tasks. Outsourcing HR allows smaller firms to compete with the big dogs by remaining compliant and offering competitive insurance options.

Thanks to its growing popularity, there are a number of HR outsourcing options for companies. Thus ultimately making the price more competitive. These companies manage tasks such as recruiting skilled in-house talent, service level agreements, training programs like Lean Six Sigma, customer service, client reports and annual evaluations.

If you decide to outsource HR, it’s important that you keep the human-value quality in-house. Do not forget that you’re operating a team of people that care about feedback and recognition. Outsourcing these tasks is not an option.

Temporary Employees

When businesses need to complete a one-and-done project, it’s much easier and cost-effective to outsource talent. In addition to monetary reasons, if companies begin to hire and fire, they will quickly earn a negative reputation that may stunt their recruiting efforts in the future.

Web-based services including Upwork and Freelancer give companies a diverse talent pool to hire independent contractors for projects. For example, if your firm needs an updated website, you can accept bids from developers via a web-based service. This will allow you to complete the project affordably without hiring a new employee.

We hope you enjoyed this information on human capital outsourcing. If you have questions about using this method for international payroll or how to begin your global expansion, give us a call!