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COVID-19 Is Driving The Need For Outsourced Human Resources

The year of 2020 promises to get recorded in the history books as one of the craziest years in the history of the United States. In February, business was booming, and the stock market was robust; economic indicators were firing on all cylinders, and the outlook for the country was bright.

Fast-forward two months, and we’re teetering on economic destruction.

What happened, and why? Well, COVID-19 struck and brought a juggernaut economy to its knees. We’re left with questions. How could something so powerful be so fragile? How could we go from boom to bust overnight? These are the million-dollar questions many are asking these days.

Let’s take a more in-depth look at what happened – and explore how we may be better prepared in the future.

The Global Economy: Good for the Country?

Let’s start with a question that Donald Trump ran on so successfully in his last campaign: is the global economy what’s best for America?

I’m sure many American CEOs drooled at the thought of jumping into large, global markets, having so many new customers to sell their wares too. Many years later, we’ve ended up with rigid barriers to entry for many American businesses, and the inability to compete fairly due to factors like currency manipulation and draconian tariffs. Additionally, the projections of vast sales have not presented themselves. Compounding that, many jobs have left American soil, going to developing countries for a fraction of the cost. In 1992, presidential candidate Ross Perot mentioned a giant “sucking sound” when he spoke about the North American Free Trade Agreement (NAFTA), referring to the noise of jobs leaving for Mexico and cheaper labor. He was spot on.

The problem with this reliance on cheaper labor from other countries is that America is thus at the mercy of logistic and supply chain nightmares. In this global pandemic, the problem has reared its ugly head many times over the past several months. The shortage of critical N95 masks for healthcare workers came about because the majority of these masks get made in China – which, naturally, took care of their personnel first. There is nothing wrong with the process and idea – fundamentally – but when we allow so many crucial goods to get made overseas, this is the natural result. In this case, it has threatened national security.

As a result, there will likely be some radical changes to how business gets done. With China being the epicenter of the pandemic (and with what looks to be obstructive practices from its leadership regime), many companies are already bringing operations out of their country. What does this mean for the future of American business?

Where America – and the World – Goes From Here

There is likely to be a fundamental change in how business gets done. Mexico looks primed to become a principal place of growth, due to its closer locale to the United States; even more American companies will bring operations back to the United States. The current administration has already eased taxes on many companies, and will likely continue to reward those that put American interests first.

The result? The chance of a resurgence of manufacturing in the United States, creating a more positive growth of our ever-shrinking middle class. This may also bolster national security, as the country can independently supply front-line workers with the protection they truly deserve. This should be inherently understood after the pandemic subsides.

 

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The Next Step for Business

So, how will business move forward post COVID-19?

In the days following government directives regarding social distancing, businesses and industries earned the title of either “essential” or “non-essential.” That left many owners and leaders asking, “Why us?” or “Why not us?” In reality, all business is essential – they’re feeding someone, or feeding many people. On a basic level, nothing could be considered non-essential. How could many of these businesses stay in operation? What does their current business model lack that caused this current paralysis?

This is also a “forced experiment” that gives business owners a litmus test for remote workers, providing valuable metadata regarding how well an organization operates with the majority of its employees working remotely. The days of telecommuting and the virtual office are fast approaching (if they’re not here already).

The New Business Culture Normal

Millennials will push the new business culture normal as baby boomers segue out of the business world and into retirement. This generation has an innate ability to go against the grain and create a new normal. Other generations may consider them “lazy” or “unapplied” – but that seems to be just a natural disconnect. There has always been a “they don’t get it’ attitude from prior generations towards their descendants. Beware of blanket statements like “they don’t have the same work ethic” or “they’re just more efficient with technology” or “they have a better grip on work vs. life balance.” Sweeping brushstrokes over an entire generation has always been a distinctly American weakness.

Once business owners see that this forced experiment showed that their business survived – or even thrived – in the pandemic, there will be another move towards a new normal. Working from home will create a vast opportunity for change. Think of the dollar impact of freeing a brick and mortar fixed cost, along with the charges from rent, mortgages, utilities, and other associated expenses. Employees would be happier, and it would certainly help from an environmental standpoint – less pollution, less traffic, fewer expenses, and more time with family will result in more considerable upsides. It will take time to adjust, and some may flounder without people lording over them in an office.

This new normal will shake several foundational things of the American workplace culture; the repercussions and impact is something that all owners should be thinking about.

Above and Beyond: Technology and Outsourcing

Technology will drive business in the new normal. Many companies already utilize services like Zoom, the cloud, and VPNs for remote work, and even more opportunities and innovations in technology are on their way. Going along in lockstep with this growth in technology? A move to outsource many business processes.

In this new world, traditional roles will disappear, and many of these processes will morph to outsourced positions. These outsourced models permeated the landscape before the COVID-19 crisis, with many forward-thinking companies already outsourcing many of their vital processes. This trend will likely grow in popularity after the crisis, especially with the increase in remote workforces.

Most companies in the United States already outsource elements like their payroll, accounting, legal representation, medical, and ancillary benefits to third parties; there’s even a growing “CFO for hire” movement to drive the financial processes of many companies. One longstanding industry integral to the success of many organizations is the PEO or Professional Employer Organization. This industry will continue to flourish as business as we know it changes.

The PEO had massive value for many companies before the COVID-19 pandemic; it will likely become the way of the future in business. With no offices to report to, there is no need for an onsite Human Resources Director or manager. Likely, this role will be handled by a PEO that offers HR expertise, benefits administration, workers’ compensation and risk management, governmental compliance, and payroll and tax administration.

The value of the PEO is that it offers one trusted professional advisor under one roof that carries out Fortune 500-level service at a fraction of the cost of building an internal HR department. This industry will continue to help companies grow and prosper long into the future.

How a PEO Can Help Your Company

Interested to see how a PEO can help your company to move forward post COVID-19? Contact Americas Back Office at 586-997-3377 or email at sales@abopeo.com.

For over 22 years, Americas Back Office has been a leader in this industry, helping over 600 companies and 15,000 employees around the United States with all their human resource needs. Our directors have over 150 years of combined experience in the areas of human resources, workers’ compensation, risk management, employee benefits, governmental compliance, and tax administration.

As the only Professional Employer Organization domiciled in the state of Michigan, you can trust Americas Back Office to stand by your side in any economic climate. Call today to change your tomorrow forever in this ever-changing world.

To learn more about the rules for work compensation your business, see our article on “The Definitive Guide to Workers Compensation”.

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