The benefits of outsourcing background checks to third-party providers

As businesses expand and the job market becomes increasingly competitive, the importance of conducting thorough background checks on potential employees has never been greater. Outsourcing background checks to third-party providers has become a popular and effective solution for companies of all sizes. 

These providers offer various services, from basic criminal record checks to in-depth employment and education verifications. By outsourcing, companies can save time, money, and resources by relying on the expertise of these providers.

Additionally, outsourcing allows for seamless integration with existing HR systems, making the hiring process more efficient and streamlined. This article will explore the benefits of outsourcing background checks to third-party providers, from increased accuracy to cost savings.

Cost-effectiveness

The initial appeal of in-house background checks may lie in the perceived financial advantages. However, this view often needs to consider the long-term costs involved. In-house background checks require investment in staff training, time, and technology. These costs add up over time, making in-house checks more expensive than initially anticipated.

Staff training

In-house background checks require HR personnel to be trained in the process. This is an additional cost that companies may need to immediately account for when considering their options. Training is not a one-time event. As regulations change, ongoing training becomes necessary, adding to the overall cost.

Time and resources

When HR staff manage background checks, they spend time that could be used for other tasks. Time is a finite resource, and using it for background checks can detract from other HR activities. The time spent on background checks is an indirect cost that impacts the overall efficiency of the HR department.

Technological costs

Performing background checks in-house often involves subscribing to databases and maintaining secure data storage systems. These subscriptions and maintenance costs contribute to the overall expenditure of conducting background checks internally.

Predictable budgeting with third-party providers

By contrast, third-party providers offer a predictable pricing structure that can be planned for in the hiring budget. Since these providers specialise in background checks, they often have the advantage of scale, allowing them to offer services at competitive rates.

Speed and efficiency

One of the most compelling reasons to outsource background checks to third-party providers is the increase in speed and efficiency. In-house background checks, though manageable, require a commitment of time and human resources that can slow down the hiring process substantially.

Time spent on data gathering

Doing background checks in-house necessitates collecting criminal records, employment histories, and educational qualifications. Each task takes time, especially when HR personnel need to contact multiple agencies or institutions to collect information. This drawn-out process can delay hiring decisions and extend the time to fill vacancies.

Verification procedures

In-house checks require a process for verifying the information collected. This adds another layer of time to the background check process. It's not just about gathering information; that information needs to be confirmed, often involving further communications and waiting periods.

Use of technology by third-party providers

Third-party providers have the advantage of specialised software designed to manage the process of background checks efficiently. 

Expertise and compliance

Adhering to legal regulations is not just advisable—it's mandatory. Failing to comply can lead to legal consequences, including fines or legal action, which could be detrimental to a business.

Legal complexities

Background checks are often governed by intricate laws that may vary by jurisdiction. Understanding and complying with these laws is not straightforward and requires specialised knowledge. Incorrectly conducted background checks can lead to allegations of discrimination or invasion of privacy, putting the company at risk.

Up-to-date knowledge

Laws and regulations concerning background checks are subject to change. Staying updated with these changes is an ongoing task that requires vigilance and, often, legal consultation, adding another layer of complexity and cost to in-house background checks.

Third-party expertise

Third-party providers specialise in background checks and are well-versed in the legalities involved. They are responsible for keeping their methods and procedures updated with the latest laws and regulations, which is part of their service.

Compliance assurance

When you outsource to a third-party provider, you're also outsourcing the risk associated with legal compliance. These companies make it their business to understand the legal landscape, reducing the likelihood of non-compliance and its associated risks.

Making informed decisions

The thoroughness and legal compliance ensured by third-party providers enable companies to make more informed hiring decisions. A compliant background check is more than a procedural necessity; it is an essential tool for mitigating risks associated with new hires.

Quality and thoroughness

The calibre and meticulousness of background checks must be maintained when making recruitment decisions. The dependability of the data gathered during this procedure directly impacts the integrity of hiring choices.

Limitations of in-house checks

Carrying out background checks in-house presents several challenges that can affect the quality of the results. For instance, internal HR teams often have restricted access to essential databases. There's an increased risk of human error, leading to potential lapses.

Comprehensive checks by third-party providers

Third-party providers offer exhaustive background checks that include multiple layers of verification. They often have access to various databases covering criminal records, employment history, educational qualifications, and other pertinent information.

Accuracy and reliability

Third-party providers often have the ability to sift through vast quantities of data at speed whilst maintaining high levels of accuracy. The advanced tools and technologies they employ make the information they offer more dependable.

Data cross-verification

Third-party providers rely on more than single-source data. They cross-verify details across different databases to ensure their validity. This approach minimises the risk of incorrect information affecting recruitment decisions.

Manpower limits

Managing background checks in-house can often divert resources from core activities. Additionally, the technical complexities involved in developing and maintaining an in-house background check system can take time and effort.

Compatibility Issues

In-house background check systems may not readily integrate with existing Human Resource Information Systems (HRIS) or ATS. This lack of compatibility can create bottlenecks, requiring additional resources to manually transfer data and adapt existing processes, making the entire operation less efficient.

Resource-Intensive development

Developing an in-house background check system demands substantial time and resources. These internal systems require regular updates to adapt to regulatory changes and technological advancements, adding to the overall burden on the IT and HR departments.

Pre-Built APIs and integration from third-party providers

Contrastingly, third-party providers come with pre-built Application Programming Interfaces (APIs) that can seamlessly integrate with existing HRIS. This ensures that the workflow remains streamlined and that real-time updates and alerts are part and parcel of the system's capabilities.

Adaptation to regulatory changes

Third-party providers maintain their systems in line with the latest regulations, allowing quicker adaptation to legal updates. This saves the company time and resources that would otherwise be spent on constant system updates and compliance checks.

Focus on core business functions

The capacity to concentrate on core business functions is critical for any organisation aiming for long-term success. In-house background-checking activities can significantly drain internal resources and divert focus from other vital aspects of a business, leading to management challenges.

The HR and IT departments must allocate resources when background checks are carried out in-house. This detracts from the core responsibilities of these departments and can hinder their efficiency in executing more central roles within the organisation.

Management challenges

Conducting background checks internally requires a multi-disciplinary approach involving HR, legal, and IT teams. Coordinating these different departments can be a logistical challenge and affect the company's ability to operate smoothly in other areas.

Third-party expertise

Organisations can free up internal resources by outsourcing background checks to specialised third-party providers, allowing the team to focus on core competencies. Third-party providers have the expertise to manage background checks efficiently and are more proficient in delivering consistent and legally compliant results.

Streamlining operations

Outsourcing these tasks alleviates the load on internal resources and streamlines business operations. With a third-party provider handling the complex task of background checks, internal processes can be simplified, improving operational efficiency.

Strategic focus

Delegating background checks to external specialists lets a company focus on strategic initiatives crucial for business growth and competitiveness. Freed from the operational burdens associated with in-house background checking, the organisation can allocate resources more judiciously to areas that directly impact its success.

Final thoughts

Hiring the right people is critical for any business, and background checks are essential. While it might seem easier to handle these checks internally, the reality is different.

Outsourcing this task to specialised third-party providers gives your business several advantages. It's often more cost-effective and quicker, allowing you to stay within the law without becoming an expert on employment regulations. It also frees up your team to focus on what they're good at: sales, customer service, or product development.