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What is benefits administration outsourcing and is it right for my organization?

Before considering whether or not to outsource benefits administration, it’s important to define what outsourcing means. When deciding to outsource employee benefits, a company will partner with an outside firm to take on specific human resources responsibilities, such as payroll and/or benefits administration. The outside firm acts as an extension of your existing HR department, relieving them of  time-consuming responsibilities in order to focus on managing processes, meeting compliance requirements and improving the quality of the employee experience within the company.

What are the advantages of outsourcing benefits administration?

Selecting an outside firm to manage benefits administration means  bringing in HR experts willing to share their best practices with your employees, ensuring they understand and appreciate their own benefits package. With the right information, employees make more informed decisions regarding benefits options from the start. They’re also more likely to appreciate the benefits they’re able to get, as well as the employer providing them.

Additionally, outsourcing a certain set of tasks gives your existing HR department the ability to evolve into a more efficient and effective team, regardless of the resources available to them. They can focus on the tasks best handled internally while making the employee experience their top priority. Benefits outsourcing provides busy HR teams with the flexibility to turn their focus back to what matters—their people.

What can my organization expect as we transition to outsourcing?

Deciding to utilize a benefits administration outsourcing partner requires an initial transition period as the firm learns about your company and prepares a customized solution based on your existing operations. This cooperative period allows you to leverage the services offered by  them in the most effective way.

How does outsourcing vary from co-sourcing?

Outsourcing has become a popular option for companies with limited resources that are looking for an efficient and cost-effective solution for managing their benefits. While it’s rapidly growing, it isn’t the only option. For companies that wish to stay more involved with the benefits administration process, but still seek support, co-sourcing is worth consideration. Co-sourcing often means the company retains access to review and make changes to existing processes handled by the outsourcing firm, while the firm manages things like benefits enrollment, new hire onboarding and data transfers. Co-sourcing also allows for an existing HR employee to become an “internal expert” on the processes managed by the outsourcing firm, handling time-sensitive and high-priority issues directly.

What should I look for in a benefits outsourcing company?

There are a variety of outsourcing firms that offer customizable services based on the needs of your company. When researching firms, make sure you ask the right questions, such as:

  • What is your benefits strategy today? In the next three years?
  • Do you work directly with my employees or solely through my HR department?
  • What specific dynamics are most important to you across HR and your organization?

If your company has reached a point where you’re considering benefits administration outsourcing, be sure to do your research to find a partner that will not only educate and support your employees through the benefits process, but will improve the efficiency of your HR department to ensure a high-quality experience across the enterprise. 

At Alight, we leverage a variety of technology and service options to implement positive changes to a company’s delivery of benefits. To learn more, contact an expert today.

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