Financial Benefits of HRO
A closer look at a typical TriNet client reveals how a small business accrues time and cost savings. Discover the financial benefits that an organization can reap from outsourcing its HR function.
Company Profile: XYZ Company |
|||||
| Employees: | 30 | ||||
| Average Salary | $90,000 | ||||
| Annual Payroll | $2,700,000 ($90,000 x 3) | ||||
| Total Payroll Hours | 62,400 (30 x 2080 hrs/yr) | ||||
| Average Hourly Pay Rate: | $43/hr ($2.7 million/62,400) | ||||
| Annual Revenue: | $5 million | ||||
| Average Revenue Per Payroll Hour: | $80 per payroll hour ($5 million/62,400) | ||||
Time Saved: |
|||||
| In-house HR Administration Before HRO: | 1,872 hrs/yr (62,450 x 3%) | ||||
| After HRO: | 468 hrs/yr (or 75% reduction) | ||||
| Hours Saved: | 1,404 hrs/yr | ||||
Financial Opportunity in Dollars and Days: |
|||||
| Bottom line: | +$60,372 (1,404 hrs x $43/hr) | ||||
| Top Line: | +$112,320 (1,404 hrs x $80/hr) | ||||
This chart represents a conceptual financial opportunity that a TriNet client, fitting specific salary and workforce requirements, may encounter as a result of its outsourcing arrangement. It demonstrates that HR outsourcing presents small businesses with the opportunity to realize bottom-line savings, resulting in a reduction of administrative headcount, or top-line savings, in which current staff are redeployed to revenue-generating activities.
The chart is only intended as a conceptual illustration; factors unique to a particular business may affect the outcome of its outsourcing arrangement. You should consult with legal, financial, and HR professionals regarding the potential benefits of HR outsourcing for your own firm.
For more information on the ROI of HR outsourcing, download the white paper:
Financial Opportunities of HR Outsourcing.