There are many small to mid-size companies that have times of fast growth and turn to human resources, or HR, outsourcing, rather than hiring new HR staff members internally to deal with their growth spurt. HR outsourcing can be a very effective way of meeting the demands of strategic growth and expansion of a business and can cut the overall costs by allowing the current and experienced staff to focus their expertise on the things that they are best and most productive at doing.

In this way, the permanent human resources staff, and other management members who are often drawn into the hiring process when the HR department is understaffed, are able to pursue and accomplish those tasks that will result in the best profitability for the business overall. A business that takes advantage of human resources outsourcing assigns the critical management of all functions related to HR requirements of the company to a third-party provider that is a specialist in the field of human resources management.

The idea of using outsourced services was first introduced, or at least popularized during the 1980's, when many companies experienced an economic boom as a result of a healthy economy. Outsourcing services gave these companies a good way to meet increased demands on their internal infrastructure when experiencing growth, as these companies experienced the growth and had to change and adapt. HR outsourcing was often one of the main types of services that was easily contracted to an outside company.

Outsourced projects and services present the opportunity for a business to delegate specific tasks or functions that are associated with a particular department within the organization. These functions are assigned to an external entity that has a proven track-record of being able to competently manage those particular functions. When it comes to human resources outsourcing, the primary function relates to the hiring and firing of employees, as well as managing payroll-related issues, benefits management, tracking vacation and sick time accrual and usage, and other common HR functions.

However, there are some companies that take particular pride in their human resources department and prefer to have on-site HR staff that knows and interacts with the employees. In these kinds of corporate environments, HR outsourcing can still be utilized but is generally only used for outsourcing services that do not involve direct employee contact. This still allows the human resources department to be very "connected" to the employees, while also providing additional support when there are periods of increased recruitment.

In many instances, companies that need to hire large numbers of seasonal employees with also turn to human resources outsourcing to help fill the gap and to keep the regular HR staff from becoming overwhelmed. After the seasonal rush is over, the HR outsourced projects for the company can be canceled and business can simply return to normal operating procedures.

Anytime that a business experiences significant growth, especially fast growth, the HR department is on the front lines and can become overwhelmed fairly quickly. Because HR plays such a pivotal role as a company grows, using HR outsourcing for a portion of the human resources requirements of the business makes a lot of sense from a management standpoint.