How Outsourcing HR Helps a Business Survive a Recession

The United States has entered an economic recession due to the effects of the 2020 coronavirus pandemic, and now businesses are trying to figure out how to stay lean to whether the storm. Recessions are defined as “a decline in economic activity that lasts more than a few months,” and this economic downturn caused by COVID-19 fits the bill.

The National Bureau of Economic Research has stated that this recession could be short-lived with recovery happening as early as the third quarter of this year, but at the time of writing the second surge of the virus is starting to hit the country and more closures are expected to happen.

So, what can a company do to increase their survivability during the pandemic and coming recession? It’s no secret that outsourcing helps a company save on money, and fortunately, HR is one of the departments where a business can end up saving the most in long after a recession has ended. This week we’ll be examining how human resource outsourcing works and how it helps a business recession-proof itself.

Outsourcing

Outsourcing can be one of those things that businesses become skeptical about during recessionary periods due to the unknown factor of cost, but outsourcing can be an effective tool to downsize large parts of your business to save money.

Knowing which parts of your business that can be outsourced are dependent on the operation that you run, but some of the departments that most businesses outsource are IT, HR, marketing, app development, customer service, etc. We’ve come up with a shortlist of benefits that HR can bring to a business:

• It’s cost-effective– outsourcing an inhouse team allows a business to reduce costs for activities and duties that don’t need full teams. By downsizing the teams that you don’t need, you can allocate more resources to the teams that you do.
• Can provide necessary benefits for employees– In the case of outsourcing HR, you can end up providing more benefits to your employees with the discounts provided from the group rates of PEOs. The money saved from the downsizing can also make an impact on the types of benefits packages that your business can afford for its employees.
• Improved efficiency– It may seem counterintuitive considering that the laying off of low-level employees would decrease resources causing your remaining employees to take on the extra work but outsourcing those lower-level tasks serves as the perfect solution to the problem.
• Helps reduce work stress for employees– by increasing the quality of the workplace through these cost-saving measures allows for businesses to reduce the overall work stress that can come from outsourcing the work or the bleak situation of the economy.

The biggest challenge of surviving a recession is trying to figure out where the bottom of it is and how much the business needs to cut back to save itself. With this idea, it’s understandable to think that every dollar that outsourcing saves will help the business survive into the next day.

HR Outsourcing

We’ve talked before about how small businesses can benefit from partnering with a professional employment organization (PEO), so we’re just going to summarize the keys points of the article.

As we discussed in the previous section, outsourcing divisions of your company is an easy way to downsize a business and make it recession-proof. Outsourcing HR is one of the ways to keep your in-house HR team small to still provide a point of contact for your employee but still provide great value to your employees through excellent benefits packages.

It also allows you to take full advantage of a fully staffed HR department to do some strategic HR projects that would not normally be doable during a recession. Projects like employee training, assessing organizational readiness, or reevaluating the direction of the business during the recession.

PEOs or ASOs are the way to go if you wanted to outsource your HR department, and the difference between the two is explained in this article we wrote a while back. Choosing which solution is right for you is dependent on your business needs, but we at solveHR do have a team of experts that can provide free consultations if requested.

SolveHR’s mission has always been to provide meaningful, yet simple HR solutions for our clients. In light of the spread of COVID-19, we will continue to make good on that mission, so you can continue to focus on your business and the communities you serve.

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Written by: Matthew Muriel

Meet Matthew! Matthew is our content writer and has been working with us for a year. He enjoys working for SolveHR because it allows him to practice his copywriting and allows him to build experience in his fledgling career. Matthew studied at the University of Texas at San Antonio and earned his degree in English with a concentration in Professional Writing. He values learning new processes in the HR industry and then conveying those ideas to the company’s clients. When he isn’t working, he enjoys reading nonfiction, with his favorite book that he recently read being The Gene by Siddhartha Mukherjee. If he could go anywhere in the world he would travel across the United States and visit all of the national parks.