Outsourcing has become commonplace when it comes to benefits administration. According to the most recent Guardian Workplace Benefits Study, more than 80 percent of employers said they used an external vendor to manage at least one benefits task in 2017, an increase of almost 20 percent in only three years. Nearly 40 percent of companies cited outsourcing as a top benefits administration strategy.
However, as the employee benefits landscape changes — including a wider range of offerings and the spread of new technologies — there remains plenty of opportunity in outsourcing benefits administration, even for companies that have already begun doing it.
Here are five key advantages to outsourcing benefits administration.
Reprioritizing HR Employees’ Workload
Dealing with administrative tasks can distract HR staff members from tackling their most important business functions. Outsourcing can help. With HR increasingly seen as playing an important part in managing employee satisfaction and ensuring strong hiring, outsourcing benefits administration can refocus the HR department’s energies on the strategic areas that will better help the firm and the workforce.
Access to Technology
Technology has become a key way for HR teams to reduce costs and improve efficiency while also giving employees the services they want when they want them. More and more companies are using HR technology for a range of benefits functions, including enrollment and administration. Outsourced providers often have the greatest access to the latest technologies and expertise on using them, and they can offer employers the chance to access those technologies without making big investments in their own IT infrastructure.
Outsourcing providers have a range of experience helping different companies solve their unique issues. Further, providers can often better manage the types of voluntary programs that have become important parts of companies’ benefits packages.
Outsourced benefits providers have larger teams covering a wider range of expertise, and their experience allows them to build those teams around more streamlined and integrated processes. Typically they perform more tasks more effectively than smaller internal HR teams can. These tasks range from record keeping and enrollment to adding new benefits and claims assistance. Outsourcing companies can also help businesses that expect to need increased benefits assistance because of anticipated employee headcount growth.
Compliance and Liability
The legal and regulatory environments are complex and ever-changing, and it can be particularly tough for companies to keep pace. At the same time that compliance is becoming more complicated, companies are also widening their benefits coverage into areas that require greater insights on both compliance and liability. Outsourced providers often know the most about how to help navigate these difficult areas.
Editor's note: This article was originally published in 2012, and updated substantially in February 2019.