Benefits of outsourcing HR services to manage remote teams
                     Benefits of outsourcing HR services to 
 manage remote teams
Why is outsourcing HR functions for  
remote employees needed more than  
ever?
One key aspect of why businesses outsource human resources (HR) 
functions is  due to the experience of a good return on investment. By 
outsourcing HR functions,  companies can save time and resources, 
which allows them to focus entirely on  their core business activities.
This blog explains several benefits of human resource outsourcing (HRO) 
for your  remote teams. It’s obvious that HR services are needed more 
than ever due to the
emerging challenges and developments in business environments after 
the  COVID-19 pandemic.
Handling remote resources in post-pandemic business environments is 
challenging  for businesses, especially for small enterprises. With the 
increasing acceptance of  remote working as the “new normal”, 
businesses need to find different types of  approaches to handle their 
remote teams effectively.
One major challenge of remote working is the time zone difference 
between the  employer and employees. As the internal employees are 
scattered across different  parts of the globe, setting a common time for 
meeting and discussion for a  business becomes difficult.
It is also more challenging for an in-house HR department to manage the  
administration of a remote team as well as those employees working from 
the office  in case of the hybrid working mode. It would be an ambitious 
task for an in-house  HR team to handle talent management and 
employee engagement if companies  need to recruit more remote 
employees.
The blog suggests that it is crucial for companies to segregate the HR 
services for  overseas employees and manage them separately. This 
approach can be more  suitable for those businesses with a large pool of 
remote employees across  different countries.
What is human resource outsourcing and why do businesses  
outsource HR functions?
Human resource outsourcing (HRO) refers to hiring an external agency or  
third-party organization to administer human resources on behalf of an 
overseas  company. It also means the transfer of the HR responsibilities of 
the in-house team  to a third-party agency or expert. By outsourcing HR 
functions, a business can  improve its strategic planning in addition to 
efficient day-to-day administrative  support.
HRO includes a range of services from employee recruitment to payroll to 
risk  management. An overseas company can easily access a large pool of 
talent by  outsourcing HR services and extracting the maximum benefits 
of these resources.  With the right HR outsourcing partner, a company can 
manage the remote team  effectively, which can help employee increase 
their work efficiency.
There are multiple reasons why businesses consider HR outsourcing 
services.  Although the cost-saving factor remains a major goal, many 
businesses outsource  human resources for other motives.
● Availability of talented resources and the benefits of adding new 
experiences  to the existing team
● Access to new technologies and making the best use of 
technology to  enhance time efficiency, expertise, and 
resource management
● Ensuring risk management from economic uncertainty as 
locating some  operations in another country may reduce 
greater risk exposure
● Consultative service to leverage market intelligence and 
business strategy
● Compliance with local laws and regulations
What are the different types of HR outsourcing providers?
A handful of service providers offer human resources outsourcing to 
overseas  companies. Some of the major service providers offering HR 
outsourcing are  Professional Employer Organizations (PEO), 
Administrative Services Organizations  (ASO), Software-as-a-Service 
(SaaS), Business Process Outsourcing (BPO), and  Employer of Record 
(EOR).
Although there are differences in the way that these organizations offer 
services to  their clients, their services normally come under three 
categories – a  single/individual HR service, group/selective HR services, 
and all-in-one HR  services. The requirement of HR functions in an 
organization may vary depending  on the size of the existing remote 
workers and its business nature.
Some HR outsourcing companies provide customized services as per the 
client’s  requirements, especially those dealing with selective HR services. 
Some may  specialize only in one HR service. Let’s briefly understand the 
difference in their  service offerings.
For instance, ASO provides services such as tax and insurance fillings but 
doesn’t  offer co-employment like PEO. SaaS companies offer only 
software and  technologies that can help effectively manage HR activities. 
BPO offers selective  services and some HR outsourcing companies offer a 
single service such as
payroll service providers. EOR, on the other hand, offers services such as 
payroll,  taxation, and legal compliance in addition to HR functions.
Origin and evolution of HRO: a brief history
Studying the origin of HRO service is complex as the events around the 
HR  industry have changed remarkably due to new business environments 
and  government regulations. However, many studies delineated the 
origin of the service  back to the 1970s when the concept of “employee 
leasing” came into practice in  the US.
Over the following years, the terminology and concepts associated with 
employee  leasing or staffing changed due to various policy reforms 
related to the industry.  These series of developments helped in the 
massive growth of human resource  outsourcing globally.
● Globalization & economic liberalization: The beginning of the 20th 
century  was a vital opportunity for many HR outsourced firms due 
to the new  economic structure and business environments 
worldwide. The forces of  globalization and economic liberalization 
ultimately led to open doors for  cross-border trade and increasing 
economic cooperation among countries  across the globe.
● Payroll service automation: The rising popularity of payroll service 
and the  wide acceptance of payroll automation in the late 1990s 
was a significant  development for HR outsourcing. With 
technological advancements, payroll  automation enables human 
error in payroll processing, employee benefits,  and taxes 
withholdings.
● Third-party payroll services: With the increasing demand for 
inclusive HR  services and external resource management 
systems, third-party payroll  services gained wide popularity. 
Gradually, businesses started shifting from  domestic or local to 
offshore outsourcing companies for payroll processing  and 
management. Payroll outsourcing became a popular aspect for  
businesses across industries.
● Rise of PEO and ASO: The rapid expansion of PEOs and ASOs in the 
late  1990s led to the development of various add-on services to 
transactional HR  activities. The era has witnessed the emergence 
of many outsourced firms
offering skill development, training, motivation, etc. as services 
to improve  the capabilities and talents of employees.
● Business process outsourcing: Offshore outsourcing gained wider  
popularity due to the successful running of BPO establishments, 
leading to  the rapid expansion of HR outsourcing services 
globally.
● Technology development: The rising technological advancements 
in the  2000s and later decades have expanded the information 
technology
(IT)-based outsourcing for HR functions. For instance, recruitment 
process  outsourcing (RPO) was the result of the massive growth of 
big tech  companies. Also, many outsourcing HR companies 
emerged as technology  and software service providers.
What are the key challenges and developments in HR functions in  
the post-pandemic?
Many hadn’t anticipated that the COVID-19 pandemic would wreak havoc 
on such  a large scale, affecting almost all businesses across industries. 
Several  businesses, especially SMEs were forced to shut down their entire 
operation and  some had to opt for furlough as a last resort for their 
survival.
For those that survived, there was only one concern – how to continue 
business  operations at a minimal cost. This led to the resetting of their 
existing policies and  strategies to cope with the new challenges in their 
business environment. They had  to consider every possible option to 
keep their business buoyant.
The post-pandemic business witnesses remote working as the “new 
normal” and  the surge in technology footprint across industries. For many 
companies, managing  a team remotely became a daunting task as they 
needed different approaches for  handling the teams. Let’s explore the 
major challenges and developments in the  post-pandemic business 
environments that cause significant impacts on the HR  functions 
landscape.
● Remote working: Working remotely becomes a new norm and a key 
aspect  of the company’s work culture in the post-pandemic. 
Companies across  industries have started accepting the fact that 
employees prefer working  remotely, especially from the comforts 
of their homes. The increasing  acceptance of remote working 
creates additional burdens for the HR
department as they need solutions to ensure effective 
communication and  engagement for their remote employees.
● Gig workers: Financial shortage of companies and massive layoffs of 
 employees across industries during the pandemic led to the 
increasing  demand for gig workers. As a result, the hiring of 
independent contractors,  freelancers, part-time hires, and project-
based workers gained prominent  attention from overseas 
companies. Although having a remote team can be  economically 
beneficial, many companies are facing challenges in managing  
their remote workers.
● Technology and digitalization: Technology innovation assisted 
businesses  in handling new challenges in the post-pandemic. As 
companies rapidly shift  their business operations online, they are 
expanding their digital footprint.  This leads to the rising growth of 
cloud services and SaaS HR models. With  the help of these IT 
service providers, companies can organize HR services  virtually and 
manage their daily administrative tasks effectively. Technological  
advancements facilitate HR outsourcing companies to conduct e-
recruitment  and e-training of resources located in different places.
● Employee engagement and motivation: Restructuring HR practices to  
ensure better employee engagement and motivation of the remote 
workforce  was a significant challenge for many businesses in the 
post-pandemic.  Businesses handling remote teams are required to 
ensure the mental  wellness of their employees besides providing 
their physical health benefits.
How is HRO beneficial for managing remote teams?
HRO services can be highly beneficial in managing remote teams in 
several ways.  Some major ways in which human resource outsourcing 
services can help in  remote team management are
● Recruitment and hiring: HRO services can help in identifying and 
hiring  remote employees who are a good fit for the company 
culture and have the  necessary skills and experience to work 
remotely.
● Payroll and benefits: HRO services can handle payroll and benefits 
 administration for remote employees, ensuring compliance with 
local laws  and regulations.
● Performance management: HRO services can help set up 
performance  metrics and goals for remote employees and track 
their progress toward  achieving those goals.
● Training and development: HRO services can provide online training 
and  development programs to help remote employees improve 
their skills and  knowledge.
● Communication and coordination: HRO services can help in 
establishing  clear communication channels and protocols for 
remote teams, ensuring that  everyone is on the same page and 
working towards the same goals.
● Compliance: HRO services can ensure compliance with local 
laws and  regulations regarding remote work, such as tax laws 
and data protection  regulations.
Overall, HRO services can help companies to effectively manage remote 
teams by  providing the necessary support and infrastructure to ensure 
that remote  employees are productive, engaged, and aligned with the 
company’s goals and  values.
EOR way of outsourcing HR services for remote teams
You may also like to explore the way EORs offer HR services to overseas  
companies. In some ways, both HRO and EOR services can be highly 
beneficial  for managing remote teams. While there are some similarities 
between HRO and  EOR services, EOR services provide a more 
comprehensive HR solution for  remote employees.
One key aspect of EOR services is that they also provide legal and 
regulatory  compliance services in addition to the HR functions covered by 
HRO services.
Here, EOR is the legal employer of record for remote employees working 
for  foreign companies. It means that EORs take on responsibility for 
compliance with  local laws and regulations, such as tax and labor laws 
apart from offering services  to help improve core HR practices for foreign 
companies.
The EOR model can be useful for companies looking to expand their 
operations  into new markets and unfamiliar with local laws and 
regulations of such new  territories. With an EOR partner, you don’t need 
to worry about hampering the  regular tasks of your remote employees 
due to time zone differences and the legal  obligations of your employees.
If you have a remote team in another country and need a third-party 
agency to  handle the HR functions of your resources, EOR can be one of 
the most lucrative  options. With EOR services, companies can ensure 
that their remote employees  are effectively managed and supported, 
regardless of where they are located in  different parts of the world.