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Home | Blog | HR Outsourcing Is Cost Effective For SMEs

HR Outsourcing Is Cost Effective For SMEs

By Magellan Solutions

Updated on May 31, 2024

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Why getting your HR outsourcing services from the Philippines is cost-effective for SMEs

Hiring executives passionate about repetitive and tedious human resources tasks is often difficult to find, especially for startups and SMEs. Not to mention, it takes a lot of resources and is thus costly for this business demographic.

That is why there is a growing traction of small business owners getting HR outsourcing services from the Philippines. This is because the country is a great place for anything outsourcing, especially if your goal is to get quality, cost-effective services. 


What You Should Know About Human Resource Outsource Solution

HR outsourcing involves many processes, namely acquiring services and utilizing the expertise of an outsourced team to handle your company’s HR functions. This department often deals with complex and time-consuming processes; thus, outsourcing some or all of its operations is often a strategic initiative for SMEs.

Two subtypes of HR outsourcing:

  1. Outsourcing provider that manages employees along with clients and provides critical HR and administrative services
  2. Outsourcing provider that only offers essential HR administrative services

Typical HR functions you can outsource from the PH:


The True Cost of HR Outsourcing Service Provider for SMEs

HR outsourcing is integral for startups and small businesses with limited financial and human capital. Through this effective yet cost-saving strategy, your business can enjoy quality HR services without investing too much in hiring an in-house HR team.

Cost is the reason why a lot of SMEs choose to outsource. For HR outsourcing, the straightforward answer is you have to spend a cost margin that reflects the following:

  • Size of your business
  • Number of your employees
  • Scope of HR services you want to get or as commission-based
  • The volume of information to handle
  • Deal Type
  • Industry where your business belongs, as this also dictates the total cost you must spend (e.g., different prices for IT, finance, telecommunication, manufacturing)

In addition to that, there are two existing payment schemes when it comes to this type of outsourcing. These are the following:

  1. Fixed fee basis
  2. Paid per employee basis


Outsourcing HR support services You Can Get From the Philippines.

As mentioned, there are different functions that an outsourcing provider can offer you. Mainly, businesses select what HR functions they outsource from the Philippines. While others choose to outsource their entire HR department. These functions are the following:

1. Compensation

This function involves payroll, job evaluation systems, salary surveys, executive compensation design, and expatriate compensation. Outsourcing payroll and tax-related processes can help your business meet filing deadlines and deposit requirements on time.

Aside from cost savings, it helps you improve customer service, utilize available tools and software, and allow your internal HR department to work on business-related tasks and strategies.

2. Employee Administration

This is where the outsourced HR team will do these tasks, such as developing, maintaining, and operating HR information systems. This also involves employee and manager policy and process support, self-service and customer service, and management and retention of employee data and records.

3. Employee Rewards and Recognition

Recognition programs can take up a lot more time than you can imagine. A simple employee of the year often involves multiple tasks that are time-consuming. An outsourced specialist can better handle such studies to ensure better incentives and rewards programs for your in-house employees.

They can cover productivity, sales, workplace safety, and years of service. This results in better administrative tasks than routine tasks and frees them from other necessary responsibilities.

4. Benefits Administration

Effective employee benefits management ensures high employee satisfaction. At the same time, it protects your business’ bottom line. Outsourcing this function will help you to handle better negotiated contracts, volume buying, and economies of scale. 

You can also get call center support, eligibility management, and audits. As well as compliance and carrier oversight. 


Benefits of HR Outsourcing for SMEs

Getting reliable HR services from an outsourcing provider in the Philippines will give you the following business benefits.


Especially for SMEs. as you can get an HR partner armed with the necessary skills and in-depth knowledge in human resource management to do the work for you. This may include payroll, recruitment, training, and many more.

This helps you focus on your core activities without sacrificing the efficiency of the overall operations. 

Cost Reduction

SMEs often focus on directing their finances in areas that contribute to the overall ROI and profit. An outsourcing provider’s HR experts are dedicated to ensuring smooth and streamlined human resource processes. 

Save time and money on training.

Training is a must when you have employees; HR outsourcing can help you with that at a fraction of the price. Here, you can get training requirements such as diversity training, sexual harassment training, and ethics training, 

Practical training will help you shape your employees to become competitive for their jobs. Also, they can help with your business growth with proper training.

Business Growth

HR outsourcing ensures an efficient and effective human resource process for startups and small businesses. They can provide the necessary expertise and support your company may require. 

Also, the financial benefits of outsourcing HR functions regarding accounting, IT services, and digital marketing responsibilities are undeniable. 


Magellan Solutions is a Premier HR Outsourcing Service provider for SMEs

We provide the best outsourced HR team that possesses the necessary skills and knowledge to provide the HR services that your business requires. We strive to offer top-quality human resource services and provide you with the best practices in the industry.

Magellan Solutions commits itself to providing excellent HR services customized for the needs of startups and SMEs.

Additionally, we are an ISO 27001-certified and HIPAA-compliant BPO company in the Philippines. We pledge to provide the best services while ensuring your data and information are safe with us.

Contact us today and let our Business Success Managers help you create the best HR solutions custom-fit to your needs. Fill out the form below!

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      HR Outsourcing Is Cost Effective For SMEs

      Magellan Solutions

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