Hiring new employees is a complex and costly process that requires careful consideration and can add up quickly. These expenses range from direct expenses like job ads and onboarding materials to more indirect costs, like lost productivity during the ramp-up period. Many business owners and HR departments find themselves weighing the benefits of outsourcing their hiring and onboarding processes to payrolling companies as a way to manage these costs.
In most cases, once a relationship is established, specialized industry-specific options will work efficiently and error free for all, satisfying the client, the agency, and the employees alike.
Let’s take a deep dive into the critical comparison of hiring in-house versus outsourcing the process to an experienced specialty staffing and payrolling agency like Semper.
Hiring In House
Higher upfront costs and risk of costly turnover
When a company manages its hiring in-house, the costs are often more than they anticipate. Some of these include:
- Recruitment Costs: Posting job ads, recruiting platforms, and potential agency fees.
- Time and Resources: Time spent by HR and managers reviewing resumes, interviewing, and running background checks.
- Onboarding Expenses: Training, materials, and administrative work to integrate employees into the company.
- Employee Benefits and Payroll Management: Handling benefits, payroll taxes, and compliance with labor laws.
- Lost Productivity: Until the new employee is fully ramped up, there is often a decrease in productivity.
In-house hiring comes with a higher risk if the candidate doesn’t work out. The investment in recruitment, training, and onboarding may be lost if the new hire leaves within the first few months, making it a costly endeavor for companies that experience high turnover.
Outsourcing Hiring to Payrolling Companies
A lower administrative burden, greater flexibility and reduced risk
Outsourcing to a payrolling company can significantly reduce administrative overhead. With a payrolling service:
- Recruitment and Hiring Costs are Managed: The company often pays a flat fee or a percentage of the employee’s salary, which can be more cost-effective than in-house recruiting.
- Employee Onboarding is Streamlined: The payroll company handles most of the paperwork, benefits, and compliance, which means fewer HR resources are needed in-house.
- Lower Risk of Compliance Errors: Payrolling companies are experts in handling tax filings, labor laws, and regulations, minimizing the risk of costly errors or legal issues.
Payrolling companies offer flexibility, particularly for temporary or project-based roles. If a hire doesn’t work out, the company can terminate the relationship with minimal hassle. The employee remains on the payroll company’s books, so the company avoids having to go through the complex offboarding process.
An expert payrolling company handles much of the day-to-day administrative work and will be committed to hiring in line with a company’s specific culture and processes. Key conversations upfront and clear expectations when working with a payrolling partner will ensure positive engagements and outcomes.
The math adds up
For many businesses, especially those with fluctuating staffing needs or limited HR capacity, outsourcing to an experienced payrolling agency offers significant advantages. It minimizes the administrative burden, ensures compliance with complex labor regulations, and reduces the risk associated with onboarding. While there may be less control over some aspects of the process, the cost savings, streamlined management, and flexibility in handling temporary or high-turnover positions make payrolling an attractive option. For companies looking to focus on core operations while keeping staffing efficient and compliant, partnering with a payrolling agency is often the smarter, more cost-effective solution.