Do you remember the days when everything related to human resources was kept in-house? While some companies have continued this trend, others are beginning to realize that another option may be better for them: outsourcing these duties to a third party provider.
According to a recent Forbes.com piece – 11 Hottest Industries For Start-Ups – a growing number of companies are beginning to outsource human resource duties so they can focus more time and energy on their “core business.”
In short, these companies don’t have to worry about most human resources related details. Instead, they can push these tasks onto a specialized provider, freeing up time and money for other more essential tasks.
Additionally, small businesses often times find that they don’t have the money required to hire an HR team. Subsequently, they outsource the tasks to an HR and benefits administration firm to ensure that everything is still taken care of in the appropriate manner – at a fraction of the cost.
Just how big has this industry become? According to the same piece by Forbes.com, it is estimated that more than 12,000 firms entered the industry in 2012 alone. As you can imagine, this number is remaining strong into 2013.
Here are some of the most important statistics, as provided by the Forbes.com:
Annual Revenue Growth (2011-2016): 4.2%
Annual Enterprise Growth (2011-2016): 4.1%
Capital Intensity: Low
2011 Profit Margin: 9.7%
In addition to strong growth expected through 2016, it is important to note that the “capital intensity” is low. This is why such a large number of providers have been able to make an impact in such a short period of time.
With more and more companies looking for a way to cut costs, while also focusing more on their core business, expect to see growth in the number that outsource HR tasks to a third party provider.
The HR and benefits administration industry is on the rise, and a slowdown is not in the cards.