The advantages of outsourcing HR functions are usually listed as though they applied equally to all of them, which is how buyers end up moving work that was better where it was. Weighed function by function against what moving it costs internally, the picture is uneven in a useful way.
Where the advantage is large and the cost small
Payroll processing and tax filing. The advantage is reliability at volume and the transfer of a penalty risk; the internal cost of moving it is a data migration and a monthly reconciliation. That is the best trade available in this market and it is why almost everybody starts there.
Where both are moderate
Documents, policies and the compliance calendar. The advantage is currency, which is real, and the internal cost is that you inherit templates written for a general case and have to read them properly once. Worth doing for most employers above about twenty people, and easy to over-buy by adding an advice tier nobody uses.
Where the advantage is small and the cost high
First-line employee questions and anything touching judgement. The advantage is a few hours a month; the cost is that your staff now ask a stranger, and that is felt immediately. This is the most commonly reversed decision in this market, and reversing it is more disruptive than never making it.
Questions people ask about advantages of outsourcing hr functions
Which HR functions give the biggest advantage when outsourced?
Payroll processing and tax filing: high reliability gain, transferable penalty risk, and a low internal cost to move beyond migration and a monthly reconciliation.
What is the internal cost of outsourcing?
Data migration, a reconciliation somebody must own, inherited templates you have to read properly, and, where you move employee-facing work, the distance your staff feel.
Which decision gets reversed most often?
Routing first-line employee questions to an external line. The saving is a few hours a month and the cost is felt immediately, and reversing it is more disruptive than never doing it.