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Should Your Business Insource or Outsource Its Benefits Administration?

Even large companies who are successfully weathering the tough economic times are finding that it simply makes fiscal sense to outsource this important work and allow the experts to perform it

The question of whether to insource or outsource benefits administration is a pressing one at this time. Many companies are considering shifting to the outsourcing dynamic in light of recent healthcare reforms. The complexity of employee benefits has led many companies–large and small–to investigate their options. In order to avoid non-compliance and litigation, many companies are tapping benefits experts for help navigating this increasingly complex area of Human Resources. According to a recent article by, “The majority of both midsized (86 percent) and large (82 percent) employers rely on external advisors when choosing a third-party provider.” (1)

The Insource Platform

Many HR managers prefer to handle benefits administration in-house because it ultimately allows them and the business to retain control of this aspect of their benefits program and remain tuned into the issues that affect employee benefits programs. Moreover, it’s also the way many businesses have traditionally handled benefits administration. HR departments have become thorough and efficient at handling benefits. Up until recently, many companies simply haven’t felt the need to explore other options. However, that paradigm is changing drastically as more complex rules underscore this aspect of HR.

The Outsource Platform

One of the main reasons that companies are outsourcing their benefits administration is the sheer need for expertise. Outsourcing groups that specialize in benefits administration have the means and staff to focus entirely on this important area. Many organizations simply do not have staff members that have this expertise or the time to learn the ever-shifting aspects of employee benefit administration in light of new reforms. Just as many firms outsource their IT or advertising needs, they are now looking for benefits administration experts who can keep up with the changes and keep their company on track. Additionally, some companies opt for a hybrid approach as there are now benefits consultants offering guidance on “how to build out their Internal HR and Recruiting departments.” (2)

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Shifting Economic Times

Many HR departments are already taxed to perform a wide range of duties. Due to the recent economic crisis, many departments are also understaffed. It can be difficult for these staffs to adequately administer benefits with efficiency and accuracy. This can be a liability for companies. Consequently, many companies are moving toward the outsourcing model. Even large companies who are successfully weathering the tough economic times are finding that it simply makes fiscal sense to outsource this important work and allow the experts to perform it. This frees up their key staff to focus on other essential work and keeps staffing costs where they need to be.

Should You Make the Move to An Outsourced Model?

If you are uncertain about moving into the outsourcing paradigm, take time to investigate its many benefits. In fact, it can help to talk to a group of outsource experts to find out how they seamlessly integrate with your business to provide the level of support your company needs. Moreover, find out how they address issues like compliance and how they can provide your business with the service it needs to thrive in this area. You might be surprised at the cost savings and the level of protection your business will enjoy when it comes to benefits administration. The sooner you begin to research your options, the sooner you can find a solution that works best for your business.