Human Resource Outsourcing

Reasons to outsource employee benefits administration?

Employee benefits management is a subset of HR. In 2020, the global human resource outsourcing (HRO) market was at $32.8 bn. Estimates show that this figure will be close to $45.8 bn by 2027. This is primarily because of recruitment analytics and technology adoption in the industry.

According to an HRO trends report, employee benefits outsourcing, which is at 36%, is among the top 5 HR services that businesses outsource. From global quality talent to lower expenses on wages, businesses have multiple reasons to outsource employee benefits management from the recruitment-to-retirement.

This article will explain the important reasons to outsource your company’s employee benefits management.


8 Reasons and Benefits of Administration Outsourcing

What used to be an activity of filling out and sorting a stack of documents and entering each employee’s information manually has turned into technology with real-time visibility and control. Here are the reasons to outsource employee benefits management –

  • Specialisation and expertise

    Outsourcing to an HR expert agency gives you access to global talent that may not be available in your location. They bring the necessary expertise and experience to handle different aspects such as enrolment, compliance, claims, reimbursements, and regulatory requirements effectively.

  • Cost savings

    HR outsourcing can save your business up to 70% on salaries and other overhead costs. These overheads include expenditure on training, benefits-administration software, infrastructure, and supporting technology.

    The cost of hiring a team in a developing country is much lower than doing it in the US. You can reinvest these cost savings into growing business and innovation.

  • Custom solutions

    As the business grows, it may require custom solutions. They may operate out of multiple locations and on numerous employment models. Employees could work full-time on salaries, as contractors, freelancers, and on various other models.

    An experienced outsourcing benefits administration provider should work with you to scale up the systems and operations as you grow.

  • Employee satisfaction and privacy

    Employees may feel uncomfortable talking about their salaries and benefits at the workplace. There could be privacy concerns about discussing health insurance benefits in the office. By outsourcing, you remove the possible discomfort employees could feel by speaking to someone within the organisation.

    Outsourcing benefits administration encourages employees to freely talk about their benefits and compensation with a third-party agency that may be more professional at handling a wide spectrum of questions.

  • Better work efficiency

    Employee benefits portals give direct access to the third-party platform with a unique login ID and password. This helps employees fill any claims or applications directly and quickly.

    Technology also helps the company find ways to reduce premiums, customise better benefits packages, and track any voluntary contributions by the employee. This takes away substantial manual work of researching and negotiating with multiple carriers.
    An outsourcing partner can continuously monitor your benefits packages and propose and design new ones that are mutually beneficial for both the company and the employees.

  • Technology transformation and integration

    Employee benefits systems can integrate with other services to greatly increase workplace efficiency. For example, the system can integrate with finance and accounting and expense management systems to directly track and manage the cost savings and expenses for annual returns.

    The outsourcing partner will provide cutting-edge hardware and software that is easy to scale up. Your business does not have to worry about managing expensive hardware, software licenses, and data security.

  • Protection from lawsuits

    By outsourcing the employee benefits management, you shift the legal liability and compliances to the third party. With years of experience and expertise in HRO, the outsourced company knows and keeps up-to-date with the laws surrounding employee benefits.

    This gives you a wall or a layer of protection between the employee benefits administrator and the decision-makers, thus protecting you from lawsuits. It reduces the risk of reputation or financial losses due to disputes.

  • Focus on your core business

    Your HR department spends significant time improving and nurturing employee experience. You do not want to burden them with payroll and benefits management, headhunting, conducting interviews, reviewing candidates, and managing onboarding.

    By outsourcing these activities, your HR team can focus on employee well-being initiatives, conflict resolution, and fostering a highly productive environment.

For organisations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed on organisational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive, yet modular suite of services is doing exactly that. Equipping organisations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organisations that are innovating collaboratively for the future.


How can Infosys BPM help?

Businesses can either outsource employee benefits management as a bundle or as a standalone service. Some of the benefits administration outsourcing at Infosys BPM are –

  • Employee and retiree savings.
  • Retirement plans.
  • Salary change letters.
  • Compensation reviews.
  • Claims filing management.
  • Compensation data management.

Read more about the benefits admin outsourcing services at Infosys BPM.


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