Economics of the industry:
From the small to mid-sized company client’s perspective, outsourcing increases parts of the HR function and is an attractive proposition. The burden of regulations has increased the employer’s costs and risks of compliance. Outsourced HR can offer the client and their employees a more sophisticated employee resource at a lower, fixed cost. The dynamics of insurance means that large service firms can negotiate better rates (often 25% to 50% less) for health and workers’ compensation insurance and withstand larger claims without adverse effects on future cost. Outsourcing HR allows the client to move their HR cost center to an outside supplier at a known cost.
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