Unloading your benefits administration seems like the simple solution to reduce costs in an otherwise expensive area. Healthcare costs continue to rise, and a recent study shows that spending by people on an employer-sponsored health plan has increased 18.8% from 2019 to 2023. These dismal numbers prove that employer health plans will only get more expensive as time goes on.
While you may have limited success shopping plans, the truth is that it will become increasingly difficult to find savings through the plan alone. This means focusing on other areas that may grant reprieve as you work to protect your company’s bottom line.
The choice to outsource benefits administration is increasingly becoming an easy decision, but finding the best value that supports your operations is another story. There are numerous choices to be made, and among those include outsourcing to a US-based company or offshoring your benefits administration.
What is Offshoring?
Offshoring operations means relocating certain business functions outside of the United States and into another country. As globalization increases, it is becoming more common for US-based companies to offshore certain functions in other countries for cost-savings or comparative advantage. In terms of offshoring benefits administration, there are two different ways this could be accomplished:
- Captive teams These are teams employed by the domestic company located in the offshore territory. This offers the employer greater management and culture integration, lower data security risks, and long-term scalability.
- Third party outsourcing This is an external company based in the offshoring country that manages your operations. It can be extremely cost-effective and quick to market, but your company lacks control over the culture and scalability is based on that third party’s ability to move at your pace.
Why Outsource to Begin With?
Whether you decide to outsource your benefits administration to a US-based HR outsourcing firm or offshore the HR function to another location, there are a handful of advantages no matter the route you take. These are some common reasons why a company would decide to remove workload from internal HR teams and trust somebody on the outside.
- Reduced costs Typically costs are the first major consideration when choosing to outsource benefits administration. You save costs by reducing headcount, removing licensing fees for software you no longer need, and decreasing investments in employee training.
- Improved efficiency Your HR leader and internal HR team have many responsibilities and projects that need time, attention, and focus. By removing some administrative burden, this internal team can work on the strategic initiatives that help move the business forward.
- Advisory support Dedicated benefit administrators build automated systems of checks and balances, keeping a keen eye on your resources and finding both errors and savings opportunities. Internal teams that are stretched too thin have a much higher probability of missing mistakes, resulting in fines and legal fees for the company.
Why Do Companies Offshore Benefits Administration?
Offshoring can sound like a dirty word, especially with such a large emphasis on American jobs and quality labor. It can carry a negative connotation because of what the US culture has built around work ethic, but there are some genuine positives to offshoring business functions. In the case of benefits administration, here are some reasons companies offshore this operation:
- Cost reduction Though the numbers may be difficult to cite, there are considerable cost reductions when offshoring benefits administration. Dotcode built a meta-analysis that shows offshoring savings from 15% to 70%, with data entry & admin offshoring measured at 50-70%. (Note: their measurement range for HR & payroll is for domestic outsourcing).
- Time zone coverage It is vital for a proper benefits administration function to offer support to your employees. For domestic organizations that have branches globally, offshoring can allow you to build functional teams within or close to the time zones of your other locations, allowing you to offer top end customer service.
- Multi-lingual support Depending on your locations, what types of employees you have, or other factors, you might need multi-lingual support to serve your employees. An offshore site may have the perfect mix of workers who can support broad access to all languages your employees speak.
- Disaster mitigation While it is difficult to predict, there is always the risk that a natural disaster, geo-political conflict, or localized outage can adversely affect business operations. By spreading operations into different territories, you help mitigate the potential damage that could be done.
The Risks of Offshoring Benefits Administration
Like the adage, you can pick two – cheap, fast, or good, but you cannot pick all three. The same is true with offshoring business functions. While there are several risks when it comes to outsourcing benefits administration, there are some particular drawbacks when it comes to offshoring these services.
- Data security Not all nations have infrastructure that supports capable data security. There is a risk that confidential employee information could be compromised if stored overseas. When dealing with privacy acts like HIPAA, this creates a major concern when offshoring benefits administration.
- Language barriers As much as multi-lingual support can support certain businesses, those language barriers may be a detriment to others. High ticket transactions can be lost in translation, and your employees may have a less-than-optimal experience during qualifying life events or open enrollment.
- Cultural differences The United States economy sets certain expectations for citizen employees in how benefits are rolled into compensation packages. On top of this, the laws that govern many plan options and administration are US-exclusive. When you offshore your benefits administration to a location in another country, it is likely that the staff helping your employees does not understand the benefits packages and can only offer limited support.
- Time zone differences If your employees are in the western hemisphere, it does not make much sense to offshore a customer service function to the other side of the globe. When your employees need questions, your customer service teams are sleeping, and vice versa.
Why You Should Outsource to US-Based Teams
For many companies, there are obvious reasons why they should outsource benefits administration to a US-based HR outsourcing firm.
- You get the option of choosing your own broker, and a senior level expert within the outsourcing firm will keep an open line of communication between the broker and your plan carrier.
- There are typically fewer compliance risks. Because US-based outsourcing firms are well-versed in American law, they create automated workflows and build contingencies for implementing new compliance guidance as soon as it is published.
- Employee confidential information is less likely to be compromised if it is stored in the USA because of stringent data storage procedures.
- There will be no language or cultural barriers that can lead to errors in benefits administration.
- The company and the benefits administrator will be in the same time zone, making it easier to resolve problems promptly and allowing your employees to reach customer support during waking hours.
Outsourcing Benefits Administration with Corban OneSource
Offshoring your benefits administration may seem like a cost-effective plan in the short run, but the gap in quality will likely add long-term stress. When you consider time-zone differences, cultural disparity, and open compliance risks, the move to a US-based HR outsourcing firm makes much more sense.
For 30 years, Corban OneSource has been handling benefits administration for operations based in the United States and Canada and has developed process workflows and efficient technology management to set your benefits program up for success. We work directly with the broker of your choosing, and our senior-level expertise has made recommendations and caught administrative errors that have saved time and money for our clients.
Our HEROES team is a human-first customer service team, based in the United States, that is standing by to help your employees with any and all benefits questions. Whether it is during open enrollment, submitting claims, or just finding out plan features, our team is happy to help. Schedule a consultation with us to see how we can elevate your benefits outsourcing experience.
FAQ
No. Our benefits administration and HEROES teams are based entirely in the United States. They offer senior level expertise, work with your broker, and provide human-level care to you and your entire organization.
Companies may not choose to offshore because of the need for deep compliance understanding, time zone and culture differences, language barriers, and data security, among other things.
A captive team is an offshore team employed by the company. They build this team from the ground up using their own capital, and they integrate the new team into their corporate culture. A third party offshore outsourcer is a an offshore team that contracts with the company looking for services.
Corban OneSource can serve employees based in the Eastern, Central, and Mountain time zones with available but reduced support in Pacific, Atlantic, Alaskan, and Hawaii-Aleutian time zones.
Connect with us to learn more about HR Outsourcing!
