Compound Profit Blog

Discovering the PEO Outsourcing advantages

Let’s face it; we live in an age of outsourcing. Many of us are keenly aware of this when we call into a customer service number and it is evident that you are speaking to someone in another country. In fact, NBC has a new sitcom in its fall lineup called ‘Outsourced’ that is based on the outsourcing of jobs to India. We live in a global economy where profits and stock prices trump the unspoken rule of protectionism but let’s leave that for another blog. Today I want to speak about domestic outsourcing. 

Sometimes employers choose to outsource because it just makes economic sense. Other times employers choose to outsource aspects of their business that are non-revenue-producing or that aren’t one of their core competencies. The transfer of risk is also another common reason to outsource. In fact, while most people don’t think of it as outsourcing, purchasing group health insurance or workers’ compensation is actually outsourcing. 

Nearly all companies outsource some or all aspects of their accounting and payroll processing to third parties. The vast majority of small businesses have attorneys that they utilize routinely for advice on complex legal matters like contract reviews, employment law, and regulatory compliance. So if we try to encapsulate some of the most common reasons to outsource we might say that companies typically outsource areas of their businesses that are non-revenue producing, not part of their core competencies, and that involve risk. 

Many small businesses are unaware that there are vendors who specialize in turn-key, scalable solutions that allow small businesses to transfer many, if not all of the above-mentioned risks and processes. The companies that provide these turn-key solutions are called Professional Employer Organizations or PEOs. Through what is called co-employment, PEOs become the administrative employer of record and become the legally responsible party for group health insurance, workers’ compensation, payroll processing, and employment regulatory compliance. Speaking of regulatory compliance, the first wave of new health care regulations from the PPACA kick in on September 23rd of 2010.  PEOs can help employers navigate these choppy waters while also ensuring compliance and premium stability.

For more information on the benefits of partnering with a PEO, feel free to contact Chad Simpson at peo@cprofit.com or (866) 762-0001.

outsourcing, PEO, PEO outsourcing PEO, outsourcing, PEO outsourcing