Leave administration outsourcing: A lucrative revenue generation strategy for PEOs and ASOs

Changes in leave legislation offer new opportunities for HR providers to meet the needs of their clients. We are living in a time of significant shift in the landscape of paid leave. As the scope of paid leave expands, so do the complexities making leave administration outsourcing a smart and lucrative option for HR consulting firms, third-party administrations, administration services organizations (ASOs), and professional employer organizations (PEOs). Consider the following reasons employers are finding it attractive to outsource leave management:

  • Leave laws are complicated.
    In addition to the federal Family and Medical Leave Act, many states and cities have adopted or are considering their own protected or paid leave laws. As of June 2023, 13 states have some form of paid family leave, and legislation is pending in at least ten more. Large cities, including New York, Los Angeles, and San Francisco, have their own laws. As a result, internal HR teams are struggling to keep up with these regulations and how they intersect, and failure to comply can be costly.
  • Leave rights are expanding.
    Employees are increasingly aware of their rights to leave under the law and are taking advantage of this in greater numbers. As of December 2021, about two-thirds of non-self-employed workers reported having access to paid leave due to illness, while 54% said they could take paid family leave for the birth or adoption of a child or to care for an ill family member. As a result, companies are administering greater numbers of leave cases with increasing complexity, taxing their capacity and expertise.
  • Hybrid and remote work are becoming the norm.
    Employers that once had employees in just one city or state may now have workers spread across the country. Two-thirds of employees work remotely at least some of the time, and one in four are fully remote. In fact, 16% of U.S. companies now operate with a 100% distributed workforce model. This creates a complex web of regulations that requires specialized expertise to manage compliantly and address in company policies and procedures.

Employers are finding it challenging to keep up with complex leave laws.

Many employers do not have the time or expertise to address these leave requirements internally and are looking to outsource leave administration to reputable third-party administrators. Outsourcing leave management to a specialized provider brings in expertise and knowledge that ensures compliance and efficient handling of employee leaves. It is a cost-effective option compared to hiring and training in-house staff to handle this function.

Leave administration outsourcing offers a growing revenue stream.

These factors make offering leave administration outsourcing a profitable enterprise for HR consulting firms and third-party administrators specializing in HR outsourcing. One of Stiira’s clients experienced an increase in leads of 17.4% within the first year after adding a leave administration outsourcing option, providing a consistent and sizable revenue stream.

Leave management outsourcing requires a unique software solution.

Providers adding leave management outsourcing will require an appropriate technology solution to support the service. While HR professionals specializing in leave have the expertise to juggle the changing factors in the world of leave, managing leave for multiple companies and keeping procedures up to date with the latest compliance requirements requires an integrated software application.

Leave specialists have created Stiira for leave professionals.

When developing their cloud-based leave management software solution, Stiira’s engineers started by asking leave administrators what they wanted most and built it to their needs:

  • An intuitive, modern user interface
  • A leave management dashboard for viewing, downloading, and managing cases
  • Dynamic reporting capabilities
  • Case management features, including a stage timeline, action items list with leave type logic, and automated deadline reminders
  • Administrative control over employer access settings, administrator and key contact assignment, and configuration of employee leave policy details
  • Automatic hour calculations, leave year logic, and calendar views

Stiira is a multi-tenancy software solution designed for scalability.

Most importantly for a third-party administrator: The Stiira system is scalable and designed to support multiple clients. Most other leave administration software is designed for in-house use and is therefore not equipped to handle leave administration for more than one entity. The Stiira system is ideal for managing leave administration for several companies simultaneously in locations with different rules and requirements.

Stiira provides unique dashboards for each client managed by the third-party administrator, making it a cinch to monitor and manage client leave. Independent portals enable client employees to submit leave requests into the system and to the third-party provider, saving work for the client and ensuring prompt action. Stiira automatically tracks the progress of each leave request and provides status updates on leaves in progress. This data can easily be downloaded and assembled into custom reports for key stakeholders.

Provide the leave services your clients need.

Leave administration outsourcing is a compelling solution for employers who lack the time and expertise to handle the complexities of managing leaves internally. Companies can ensure compliance and efficiency and keep costs contained and predictable by partnering with specialized third-party providers. For HR consulting firms, PEOs, and ASOs to succeed in this space, they must adopt the right technology, such as the Stiira, designed specifically for leave professionals.