ASO Trends: 5 Changes in HR Outsourcing to Track

Many small and medium-sized businesses struggle to carry out their human resources (HR) functions. Some lack the budget for HR staff. Some find that their organizational needs go beyond what their HR team can handle.

To solve these and many other problems, businesses often turn to an administrative services organization, or ASO. An ASO is a business that provides HR outsourcing options for other businesses. ASOs typically can help with most of a client's HR administrative work, like:

• Payroll processing.
• Employee benefits administration.
• HR software solutions, support and consulting.
• Payroll tax compliance.
• Performance management.
• Onboarding and offboarding tools.

Companies that work with an ASO may choose to outsource a single HR task or almost all of them. A company can maintain full control of their HR and their status as the employer of record status, but just need a little help with administrative tasks. This is in contrast with a professional employer organization. A PEO provides comprehensive HR services and is the co-employer, or the employer of record for the client's employees for payroll tax purposes. The client company remains in control of day-to-day activities and the direction of the company and its workforce.

As with many facets of business, ASO trends evolve with the market, technology, innovation and client needs. This article will help you stay up to date with the latest trends in this valuable business strategy.

ASO Trends

Agile ASOs can implement new ways of streamlining processes and managing organizational tasks. These trends can have a significant impact on the companies that employ their services.

Here are top five ASO trends that are helping to shape the industry:

1. Hybrid HR operational models over complete HR outsourcing

One new HR outsourcing trend involves the way organizations choose to work with an ASO. Years ago, many small and medium-sized businesses opted to outsource their entire HR department. Companies typically used PEOs for this all-encompassing approach.

Today, however, more organizations are opting for a hybrid HR operational model. In a hybrid model, their in-house HR outsource select HR administrative tasks.

A perspective on this ASO trend: A hybrid model can benefit organizations by keeping integral HR functions (like culture-building and fostering employee engagement) in-house. This approach focuses on the company's core values and keeps the fabric of the company intact.

Hybrid HR models provide specialized administrative expertise while the organization continues to retain control of the culture. Management staff and HR leaders see the hybrid model as offering the best of both worlds.

2. Advancement of digital transformation and automation

Technologies like applicant tracking software and employee management software are revolutionizing HR and reshaping how organizations manage HR administrative functions. These platforms streamline administrative processes and make administrative work more efficient.

A perspective on this ASO trend: ASOs are embracing digital transformation and automation including the use of artificial intelligence (AI) and machine learning. This strategy helps to automate repetitive, routine HR administrative tasks like data entry, freeing up manual time and decreasing human errors.

It also provides more personalized HR support. AI-driven analytics can help provide insight to things like employee benefit trends, which managers can use to make more informed decisions.

For ASOs, digital transformation results in more streamlined administrative processes, useful organization data and greater cost efficiency.

3. Focus returns to employee experience

Opinion is shifting and more focus with employee satisfaction and engagement moving front and center.

As the focus shifts, ASOs can support activities that helps to increase employee engagement and reduce employee turnover. An ASO may also capitalize on this trend to implement new technology like administration software, so employees can review and manage their benefits more easily.

A perspective on this ASO trend: Building and maintaining a positive workplace culture is important. Employees want to feel included, valued and seen. Work-life balance, skills development and diversity, equity, and inclusion initiatives will be increasingly part of this shift to employee experience.

4. Assistance with globalization and international expansion

When it comes to business, the world is getting smaller. As organizations expand operations across countries or continents, their needs may change. ASOs are increasingly equipping themselves to provide services that help clients meet these unique demands.

By using technology, an ASO may be able to help with smooth integrations of other global HR services providers.

A perspective on this ASO trend: A senior manager dealing with business expansion needs a centralized way to manage employee systems, data, payroll processing and benefits administration across countries of operation. Some ASOs can help deliver that while the business focuses on its operations.

The specialized experience and advanced technology offered by some ASOs become even more necessary as companies scale internationally.

5. The use of AI in ASO functions

Not surprisingly, AI is becoming more prevalent in ASO. Its ability to quickly analyze large amounts of data can greatly help streamline HR projects. It may be able to identify and provide insight into trends, helping you make more informed decisions.

A perspective on this ASO trend: Human resources information systems (HRIS) are becoming more and more sophisticated. Software are including more automated functions including reporting. It can help reduce the time, increases accuracy and mitigate organizational risks. We expect to see continued advancements in AI as it evolves.

Stay on Top of HR Trends with TriNet

HR has become a vital part of business growth and strategic planning, rather than a department for policies and paperwork. An ASO can provide a cost-effective way to tap into specialized HR experience while streamlining administrative tasks.

This communication is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance.