Outsourced HR offers valuable support for business owners and plays a vital role in adding value and maintaining a business’s overall growth and profit. Over recent years there has been a growing trend of business owners outsourcing HR with a clear justification as to why; especially if you don’t have an in-house HR team. Outsourced HR is an effective and safe investment to support businesses in achieving their aims and ambitions whilst providing access to specialist expertise and advanced technology that would otherwise require significant capital investment.
What is Outsourced HR?
As an SME, you’re likely juggling numerous tasks daily to keep your business running smoothly. However, managing HR functions—such as recruitment, compliance, administration, engagement, retention and employee relations—can quickly become overwhelming. That’s where outsourced HR comes in. Partnering with a professional HR consultancy can provide a host of benefits, allowing you to focus on what you do best: growing your business.
Outsourced HR services offer SMEs access to expert knowledge without the need to employ a full-time HR team. This is particularly valuable for smaller businesses that may not have the resources or expertise to manage HR in-house. By outsourcing, you gain a dedicated team that understands the complexities of employment law, regulations, and best practices.
One of the key advantages of outsourced HR is cost efficiency. You only pay for the services you need, eliminating the overhead costs associated with hiring and training an internal HR team. In addition, an HR consultancy can ensure your business remains compliant with ever-changing laws and regulations, reducing the risk of costly legal mistakes.
Perhaps most importantly, outsourcing HR allows you to free up valuable time. With the administrative burden lifted, you can focus on growing your business while knowing that your HR functions are in capable hands. In today’s competitive business landscape, outsourcing HR is a smart, scalable solution for SMEs looking to thrive.
Why do business owners choose to outsource HR?
With salaries in the UK continuing to rise and the average HR Manager salary between £60,000- £75,000 per annum, outsourcing HR has become a popular choice for business owners looking to streamline operations and focus on core activities. By outsourcing, companies can tap into specialised expertise without the overhead of hiring an in-house HR team. This is particularly advantageous for small to medium-sized businesses that may not have the resources for a full HR department.
A professional HR consultancy offer services like recruitment, employee relations, HR software management, and compliance with ever-changing regulations. This helps businesses stay up to date with legal requirements and avoid costly penalties. Additionally, outsourcing HR can reduce administrative burden, allowing business owners to concentrate on growth and strategy.
Cost-effectiveness is another key factor; outsourcing HR often proves more affordable than maintaining a dedicated team. It also provides flexibility, as services can be scaled according to business needs. In the end, outsourcing HR can drive efficiency, mitigate risk, and enhance overall productivity.
1. Business owners spend more time on their area of expertise
By outsourcing HR, you will usually have a team of CIPD qualified experts who are dedicated to supporting your business as it grows. Outsourcing HR takes the strain away from business owners and others within your team who have found their attention moving to areas outside their remit. As such, it allows business owners more time to focus their energy on areas of their expertise without the need to worry about HR related matters.
2. Focus on Core Business Goals
When you’re not bogged down with employment contracts, disciplinary procedures, or compliance concerns, you can dedicate your energy to what really drives your business forward—innovation, customer relationships, and strategic planning. This focused approach often leads to improved productivity and can strengthen your company’s position in the marketplace. Many successful SMEs have found that outsourcing HR allows their leadership team to think more strategically about growth opportunities rather than getting caught up in day-to-day people management issues.
The beauty of this arrangement is that while you’re concentrating on revenue-generating activities, your outsourced HR partner is ensuring your workforce remains engaged, compliant, and well-managed. It’s a win-win situation that allows both you and your employees to thrive in your respective areas of expertise.
3. Cost effective compared to permanent employment
There’s no doubt that opting for an outsourced HR service is the most cost-effective option compared to hiring a permanent HR professional. According to Glassdoor, the average annual salary for a HR Manager is £47,000, whereas outsourced HR is great option for business owners who require dedicated support, advice and guidance but on a bespoke package basis and at a fraction of the cost of hiring an in-house professional.
4. Cost Efficiency Beyond Salaries
The true cost of employing an in-house HR professional extends far beyond their salary. When you factor in National Insurance contributions, pension contributions, holiday pay, sick pay, training costs, and the ongoing expenses of maintaining HR technology systems, the annual cost can easily exceed £80,000. Additionally, there’s the hidden cost of management time required to oversee and develop your HR team member.
Outsourcing transforms these fixed costs into flexible, variable expenses that can be scaled according to your business needs. During quieter periods, you’re not paying for unused capacity, while during busy times or periods of growth, you can easily increase your level of support without the lengthy recruitment process.
Your outsourced HR consultancy acts as an extension of your team, as such they get to understand your values, goals, ambitions and help support those vital HR functions. This relationship often proves more cost-effective than trying to find, hire, and retain the right calibre of HR professional internally.
5. Peace of mind for employment compliance
Outsourced HR is a crucial service for business owners who want peace of mind that they are HR compliant and are following best employment practices. Outsourcing your HR function will ensure you are compliant with HR documentation such as policies and procedures, employment contracts, disciplinaries and grievances, performance and employee absence management, redundancies and restructuring.
By outsourcing to a team of HR professionals you will have peace of mind that you have invested in the expertise to reduce any legal risks further down the line.
6. Improved Compliance in a Complex Legal Landscape
Employment law in the UK is constantly evolving, with new regulations, tribunal decisions, and legislative changes happening regularly. Staying on top of these changes while running your business can be virtually impossible. Non-compliance with employment law can cost businesses thousands of pounds in tribunal awards and legal fees
Professional HR consultancies invest heavily in keeping their teams updated with the latest legal developments through continuous professional development and training. This means you benefit from current expertise without having to dedicate time and resources to staying informed about every legislative change.
7. Risk Mitigation Through Expert Support
Beyond compliance, outsourced HR providers excel at identifying and mitigating workplace risks before they become serious problems. Whether it’s addressing potential discrimination issues, managing difficult employee relations situations, or ensuring proper documentation of performance concerns, having expert support can prevent small issues from escalating into costly legal disputes.
8. Improved Workplace Policies
Your outsourced HR team will work with you to develop comprehensive, legally compliant policies that are tailored to your specific business needs. These aren’t just template documents, they’re carefully crafted policies that reflect your company culture while ensuring you’re protected from potential legal challenges. This includes everything from disciplinary procedures to social media policies, ensuring every aspect of your employee relations is properly governed.
By outsourcing to a team of HR professionals you will have peace of mind that you have invested in the expertise to reduce any legal risks further down the line.
9. Access to a HR team as and when needed
An outsourced HR team brings expertise and knowledge to your business from multiple sectors, supporting your business effectively to develop and grow. Typically, HR consultancies provide either flexible or retained HR support. This gives business owners flexibility when it comes to an outsourced HR solution.
10. Access to Diverse Expertise
When you outsource your HR, you’re not just getting one person’s knowledge and experience; you’re accessing an entire team of specialists. This might include recruitment experts, employment law specialists, training and development professionals, and strategic HR leaders. This breadth of expertise would be impossible to replicate with a single in-house hire, regardless of their experience level.
11. Scalability and Flexibility for Growing Businesses
One of the most significant advantages of outsourced HR is its ability to scale with your business. Whether you’re planning rapid expansion, dealing with seasonal fluctuations, or going through a restructuring process, your HR support can be adjusted accordingly. This flexibility is particularly valuable for SMEs who may experience unpredictable growth patterns or varying HR needs throughout the year.
During periods of high recruitment activity, you can access additional support for candidate sourcing, interviewing, and onboarding. Conversely, during quieter periods, you can scale back to essential compliance and advisory services. This scalability ensures you’re always getting value for money while having the support you need when you need it.
12. Faster Response Times
With a dedicated outsourced HR team, you’ll often find that HR issues are resolved more quickly than if you were handling them internally. Professional HR consultancies prioritise responsive service, understanding that HR issues can significantly impact your business if left unaddressed. Many providers offer same-day response times for urgent matters, giving you peace of mind that critical situations will be handled promptly.
13. Reduced time spent on HR admin
HR administration can be a time-consuming task for any organisation. Outsourcing HR can be both time and cost-effective when it comes to onboarding, compliance, payroll, annual leave management, performance management….and the list goes on!
14. Advanced HR Technology Without the Investment
Your outsourced HR team can help to implement and maintain HR software that can streamline all heavy HR administration by automating tasks such as onboarding new starters, annual leave requests, performance management monitoring, storing all employee documents safely and securely and giving access to your company handbook. Many business owners choose to outsource HR to reduce the HR ‘headache’ and to implement a HR system to increase overall productivity.
Professional HR consultancies invest in cutting-edge HR technology platforms that would be difficult for most SMEs to find the time to scope and maintain independently. These systems often include applicant tracking systems, performance management tools, learning management systems, and comprehensive HR information systems (HRIS). By outsourcing, you gain access to these advanced tools without the significant capital investment or ongoing maintenance costs.
15. Streamlined Recruitment Processes
Recruitment can be one of the most time-consuming HR activities, particularly when done without proper systems and expertise. Outsourced HR providers bring sophisticated recruitment processes that can significantly reduce time-to-hire while improving the quality of candidates. From writing compelling job descriptions and managing multi-platform job postings to conducting initial screening interviews and coordinating assessment processes, professional recruitment support ensures you attract and secure the best talent efficiently.
The onboarding process is equally important—studies show that employees who experience a structured onboarding process are 58% more likely to remain with the company after three years. Your outsourced HR team can design and implement comprehensive onboarding programmes that ensure new hires feel welcomed, informed, and ready to contribute from day one.
16. Reduced Administrative Burden for Strategic Focus
By eliminating time-consuming tasks like employee records management, annual leave tracking, and routine compliance reporting, outsourced HR frees up significant time for business leaders to focus on innovation and growth. This administrative relief often translates into improved business performance as leadership teams can dedicate more time to strategic planning, business development, and customer relationships.
17. Employee Retention Through Expert Engagement Strategies
Outsourced HR providers bring sophisticated employee engagement and retention strategies that can significantly reduce turnover rates. This includes designing career development programmes, implementing recognition schemes, conducting stay interviews, and creating positive workplace cultures that encourage long-term commitment.
Professional HR consultancies understand that employee retention isn’t just about salary—it’s about creating an environment where people feel valued, challenged, and supported. They can help implement performance management systems that focus on development rather than just evaluation, ensuring your employees see a clear path for growth within your organisation.
18. Training and Development Programs for Workforce Growth
Investing in employee development is crucial for business growth, but designing effective training programmes requires specialist knowledge. Outsourced HR providers can assess your training needs, design bespoke development programmes, and coordinate delivery through their networks of professional trainers and development specialists. This ensures your workforce continues to grow and develop in line with your business objectives while improving employee satisfaction and retention.
Whether you need compliance training, leadership development, technical skills training, or soft skills enhancement, your outsourced HR team can source and coordinate the right programmes for your needs. This approach is often more cost-effective than trying to develop training capabilities internally and ensures access to current best practices and methodologies.
19. Focus on Employee Well-being for Enhanced Productivity
Employee well-being has become increasingly important in the modern workplace, with research showing that well-being initiatives can significantly improve productivity and reduce absence rates. However, developing effective well-being strategies requires expertise in areas such as mental health, work-life balance, and occupational health.
Outsourced HR providers can help implement comprehensive well-being programmes that address both physical and mental health needs. This might include employee assistance programmes, mental health first aid training, flexible working arrangements, and stress management initiatives. By taking a proactive approach to employee well-being, businesses can create more engaged, productive workforces while reducing the costs associated with stress-related absence and turnover.
Final Thoughts
The strategic benefits of outsourcing HR extend far beyond simple cost savings. While the financial advantages are compelling; particularly for SMEs working with limited budgets, the real value lies in accessing professional expertise, advanced technology, and strategic support that enables business growth.
By partnering with a professional HR consultancy, businesses can ensure compliance with complex employment law, reduce operational risks, and create positive workplace cultures that attract and retain top talent. The flexibility and scalability of outsourced HR services make them particularly valuable for growing businesses that need to adapt their HR support as they expand.
Perhaps most importantly, outsourcing HR allows business owners and leadership teams to focus on what they do best—driving business growth, innovation, and customer satisfaction. In today’s competitive marketplace, this strategic focus can be the difference between businesses that thrive and those that merely survive.
Are you looking for outsourced HR support in Yorkshire or further afield?
At Norton Loxley we are a HR and recruitment consultancy who offer bespoke outsourced HR support to help businesses flourish across Yorkshire and the UK. We are passionate about working as an extension of your team, giving you peace of mind to manage all aspects of HR without the need to employ an in-house HR Manager.
Our team includes fully CIPD qualified HR professionals that can provide HR support and advice to growing and established businesses, bringing value to businesses to achieve their goals and ambitions. You can see for yourself in our outsourced HR case study.
As experts in our fields, there’s plenty of HR and recruitment services available that will bring a wide base of knowledge to support your businesses growth, goals and aspirations through your people. Get in touch to explore how we can support your business.
