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5 Reasons Small Businesses Should Outsource HR Functions

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Enable Group | May 15, 2022

For Employers ● 3 min read

During the Covid-19 pandemic, Singapore saw a growing number of aspiring entrepreneurs starting their own businesses. Whether it’s due to encouragement from the #supportlocal hashtag on social media or people simply taking this opportunity to pursue their passions, there’s no denying that the local business climate is open and innovative.

However, some individuals may hold the misconception that small businesses do not require an HR function. This is untrue, especially for companies with a team of individuals. If you’re a small business owner and not operating as a one-person team, it’s a worthy investment to outsource your HR functions in Singapore.

Listed below are some reasons you should consider hiring an HR outsourcing services.

1. Increase profit margin

All companies are looking to increase their profit margins. While most businesses would immediately think of increasing the price of their products and services or streamlining their operations to increase profit, one of the most effective ways is to outsource HR services.

In a small business, the owner may only depend on one person to handle all the tasks, such as employee benefits, payroll, and recruiting. This is unjust to the employees as it is inefficient and risky for the business owner, as the lack of a diverse team can cause HR expenses to increase. In addition, there may be a need for business owners to invest in external training spending to improve their internal HR functions in order to support more.

Therefore, by outsourcing your HR function, you can look forward to increasing a portion of your profits and savings in return for expertise advice.

2. Prevent legal issues

There are many laws and legal regulations for human resources in Singapore and globally. These mandates are enacted for many reasons, such as preventing workplace discrimination, protecting labour rights, and ensuring fair employment practices, to name a few.

Considering that these rules can be overwhelming for just one HR practitioner or inexperienced employees to oversee, business owners can get better peace of mind by outsourcing their HR department.

HR specialists or specialised HR providers have the knowledge and experience in dealing with these regulations to ensure that your business has minimal to no exposure to any legal risks. If the laws do change, HR specialists are also the first to know about them.

3. Improve regulatory compliance

Aside from adhering to HR legal policies, businesses must comply with specific laws and regulations in their industries. For example, if your business is in Singapore’s food and beverage industry, you must comply with food safety and hygiene standards. Other sectors such as finance and medicine have regulations for companies to follow as well.

If you outsource your HR functions, you acquire more time and space to improve your regulatory compliance and ensure that your business is up to date with all standards. This is important as failure to comply with the law can result in severe penalties for both the company and you as the business owner.

4. Focus more on business practices

Adding to the point mentioned above, outsourcing your HR also allows you and other employees to pay more attention to the core business practices. As you no longer carry the additional responsibility of carrying out HR tasks, you can afford to spend more time and effort improving your business’ products, services, and other internal organisational processes.

5. Employees will be more satisfied

When human resources are done efficiently and correctly, employees will be more productive and have higher morale at work. One of the biggest reasons for a high turnover rate and low morale among employees is an ineffective HR team, costing the company dearly.

HR specialists can reduce the likelihood of HR issues occurring and develop solutions to correct them. This, in turn, creates a more positive workplace culture in which employees feel treasured and more comfortable at work, which in turn improves their mental health at the workplace.

Conclusion 

Many small business owners may be tempted to cut costs by doing away with a proper HR department. This is especially so when finances are tight, and resources are limited. However, human resources are considered the heart of the organisation, as it manages most of the employee-centric needs, such as payroll, benefits, leave arrangements, and many more.

Therefore, if you’re planning to engage the help of consultants that outsource HR services in Singapore, look no further as Enable Consulting will get you covered. We offer personalised HR services for small and medium-sized enterprises with Heart-to-Employee Engagement initiatives. Our consulting team consists of highly experienced HR professionals who can assist in HR advisory, HR administrative functions, and HR Systems in Singapore.


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