Outsourced HR is the future for SMEs Insight

The complex nature of the COVID-19 crisis poses a new set of challenges for small to medium-sized enterprises (SMEs). Many continue to claw their way toward recovery while facing reduced demand, new customer expectations, and operational challenges. Thriving in the ‘new norm’ will require significant changes in operating models for all businesses. Those that are most likely to survive today’s uncertain market conditions will be the ones that are quick to respond and willing to adopt a new mindset that is fit for our transformed work and marketplace. Businesses across the globe are looking to cut costs, adapt and develop new ways of working to achieve better business sustainability. With unpredictable changes within many workforces and trades, outsourced services are offering SMEs the flexibility they need to manage their costs, leading many to believe that outsourced HR is the future for SMEs.

Recovery will take time, with the 2008 recession seeing smaller companies recover to their pre-crisis contribution to GDP in an average of six years. Whether they do survive, and how long it takes, will depend mainly on the future health climate, and the agility of businesses that are impacted. With unpredictable times ahead, business owners should look carefully at the factors that are in their control.

A Change in Strategy

Today’s volatile situation means strategic planning needs to be a more agile activity. Even if businesses have certainty of revenue streams, if business activity isn’t interrupted or staff can continue to work remotely, there still could be implications for the supply chain. Therefore, it is crucial for business owners to manage the variables that are in their control, giving them the additional resilience and flexibility to best handle those that are not.

Typically, many small business owners starting out will assume the role of HR person, eventually appointing someone to take over the role as their business grows, building their overhead around that back-office function. By using a mixed resourcing model with an element of core staff carrying out these critical functions, and additional contractual or temporary staff which can be used if the resource is needed, businesses have the control to pare back their costs. However, what they can’t do with this model is pare back that, often more costly, office overhead. By applying the principle of growing a business, but turning it on its head so that the back-office services are the ones that offer flexibility with outsourcing, business owners can assume more control over their core costs – something which could be crucial in today’s changeable marketplace and global situation.


SMEs need certainty that the service providers they outsource to will be flexible. With constantly changing demands, the days of 3-5 year contracts are quickly becoming an outdated concept as businesses can’t afford to be tied down to long, inflexible contracts. In recent years, subscription-based models have emerged as key for businesses looking to ensure a stable revenue stream and for consumers to obtain products in a convenient, low-cost way. Understandably, the pandemic has seen a sharp rise in such models and back-office provisions are following suit with new agile pricing models that focus on flexibility, even offering payment breaks and ‘holidays’.

A good provider will acknowledge that with today’s unpredictable market, there could be a real chance that clients may need to ‘switch off’ individual services to manage their costs, or take a break. By having the opportunity to pause their cloud services, for instance, businesses can rest assured in the knowledge that they are able to flex their cost-base, should the need arise.

Harnessing Expertise

Outsourcing is no longer targeted towards large organisations and can be used by anyone. It is especially beneficial for smaller businesses as it allows them to compete with larger companies by offering the same expertise, resources, and services to their potential clients.

Maintaining internal departments can consume a lot of time and energy for an organisation, as well as requiring continual oversight and innovation. By outsourcing back-office services like HR and payroll, it frees the company to concentrate on their core business activity and maximise on the key competencies of their staff.

Furthermore, outsourcing key functions provides companies with the opportunity to hire people with unique skillsets and knowledge, who they would not usually be able to hire on a permanent basis. By leveraging the experience of a professional provider who is adept in delivering HR and payroll, the quality of the service function can be vastly improved, meaning a better employee experience.

The Remote Mindset

Part of the reason that organisations may be hesitant to outsource services is due to concerns over quality, transparency, and traceability. Historically, all business services would be delivered under one roof. The COVID-19 pandemic has shown that across several industries, a lot of activities can be delivered remotely, sometimes with more innovation or efficiency.

Today, communication between staff is often experienced online with a sharp rise in the use of platforms such as Microsoft Teams to enable digital collaboration. With the ability to collaborate and communicate effectively from any location in real-time, providers can quickly become an extension of your team, allowing you to work with them as you would your own colleagues. The opportunity to work closely with any team invites a new sense of ownership, with boundaries between face-to-face and digital teamwork disappearing as technology continues to evolve.

Partnership is Key

A good provider will partner with your organisation and work with you to develop a robust solution that is scalable and meets your specific business needs. With outsourcing, both the client and provider have a stake in the success of your service. Therefore, by choosing an experienced provider to help in guiding your decisions, you can be confident in your investment and that any risk to your business will be significantly reduced, a model which is fitting to the present challenges of today’s volatile market.

Not all services should be outsourced, which is why it’s crucial to work with a provider that can advise you on how best to manage your services. The right partner will work with your team to look at what should be provided in-house and what should be outsourced to create that optimal supply chain for the best user experience.

2020 has taught us that there is no certainty to how the pandemic will evolve. The future is an ever-changing picture, which means that businesses can’t afford to stand still. The volatility of the pandemic brings its own opportunities in terms of new ways of working and if you don’t take advantage of those, then your competitors will. Our business goals shouldn’t have to change – the destination still remains the same, but the route we take to reach them does.

Cantium are supporting SMEs with bespoke and flexible HR and payroll solutions via our comprehensive suite of HR services; HRSelect. By giving you the opportunity to make more of your cost base variable, we work to equip you to meet the changing demands of the current health crisis. If you would like to find out more about how a tailored HR and payroll solution could work for your organisation, contact us by email or speak to a member of the team on 03000 415555.

Interested in other outsourced services that can help you control business costs and improve resilience? Check out our insight, “IT’s Time to Get Smart“, which explores all the benefits that outsourced IT management can bring for growing businesses.