For several reasons, including cost savings and the freeing of human resource professionals to focus on more strategic efforts, HR functions are among the services organizations are most likely to choose to outsource. As a result, HR professionals are being asked to identify outsourcing solutions for businesses and guide organizations through vendor selection and management of the outsourcing relationship. This service refers to a process in which the employer transfers the responsibilities and risks for HR functions to the identified external service provider which performs these tasks for the company. Since HR functions can be complex and time-consuming business opt for outsourcing either whole HR logistics or part of the HR responsibilities like payroll.
In a business-process outsourcing (BPO) arrangement, an employer contracts a single business task, such as payroll, to a third-party service provider. A common BPO arrangement is the outsourcing of benefits administration, which removes the administratively burdensome and specialized functions for benefits auditing, processing and reporting to a third-party.
Under this outsourcing arrangement, also called single sourcing, HR professionals access one solution to meet their needs, from welcoming new hires to managing turnover, and all the tracking in between; a single supplier covers the full employee life cycle. This type of human capital management technology starts at talent acquisition includes time and labor management and payroll, covers talent management, picks up benefits administration, and supports the separation-of-employment process.