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The Best HR Outsourcing Services of 2020

By Skye Schooley,
business.com Writer
| Updated
Aug 14, 2020

Human resource outsourcing services can simplify your human resource responsibilities. Learn about the best HROs available for your small business.
Benefits Administration
Premium service and support
Custom contract terms
Plans tailored to your industry
Best HRO for Small Businesses
Scalable HR outsourcing plans
No minimum requirements
Advanced help center
Employee Development
Custom HR outsourcing plans
Safety, skills and HR training
In-person and web-based training
Human resource outsourcing services can simplify your human resource responsibilities. Learn about the best HROs available for your small business.
 

Due to limited resources, budget or know-how, it can be difficult for a small business to create and sustain a human resources department. As a solution, many small businesses turn to experienced HR outsourcing (HRO) services to help with HR responsibilities like recruiting, employee training and development, payroll and taxes, benefits administration, risk and compliance, and general HR administrative tasks. To determine our best picks, we researched nearly two dozen agencies and services, looking at each one's specific services, cost structure, contract requirements, employee minimums and standout features. In the end, we selected three HRO services as the best for various types of businesses and specific needs.

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How We Decided
Our team spends weeks evaluating dozens of business solutions to identify the best options. To stay current, our research is regularly updated.
20
Considered
11
Researched
3
Selected

Compare Our Best Picks

  Paychex ADP TotalSource G&A Partners
Employee minimum 1 25 1
Employee training Virtual Virtual and onsite Virtual and onsite
Mobile app Yes Yes No
Live chat Yes No No
Customer support A dedicated HR professional An HR business partner or relationship manager; designated account representatives for items like payroll, benefits and HR A client advocate and a large team of certified HR specialists

Our Reviews

ADP TotalSource: Best Benefits Administrator

ADP is a national company that has major bargaining power with healthcare companies.
It has intuitive and simple dashboards where you can view and modify your benefits.
ADP does not list its HRO pricing online, so you must contact a representative for a quote.
As a major HR provider in the U.S., ADP provides excellent benefits options. The breadth of ADP's services means you're tapping into a national company with major bargaining power with healthcare companies. Because of the size and power behind ADP's offerings, it is our pick for the best benefits administrator. May 2020: Although ADP has been serving the Hawaiian market for several years, it has recently expanded its TotalSource services to help businesses in Hawaii streamline human capital management. Businesses in Hawaii can now sign up for ADP TotalSource's HR services and receive access to comprehensive employee benefits. Since so few competitors extend their HR outsourcing and PEO services to businesses in Hawaii, this expansion is a great benefit for those who operate there.
Read Review

Paychex: Best HRO for Small Businesses

Paychex offers tailored, contextual learning opportunities with the Help Center.
Paychex proactively monitors employment laws and regulations to help you stay compliant.
Online support communication can be delayed at times.
Paychex provides comprehensive services to small businesses. It offers employee training, benefits administration, payroll and other HR services. The size of Paychex and the quality of its services means all your HR needs can be met in one solution. It also makes it easy to scale between HRO and PEO services. It recently released several software enhancements to help its customers better manage operations and meet employee expectations. Two primary features that the rollout included are an advanced help center and a custom dashboard. Customers can now create unique dashboards to fit their preferences and take advantage of tailored, contextual learning opportunities with the Help Center. Its variety and quality of services makes Paychex our pick as the best HRO for small businesses. April 2020: As a response to the novel coronavirus pandemic, Paychex has announced it is partnering with PayActiv to provide clients with a $250 cash incentive for enrolling and leveraging Pay-on-Demand services. In addition to granting users immediate access to their earned wages, this incentive can ease the financial burden that business owners and their employees are currently facing.
Read Review

G&A Partners: Best HR Outsourcing Service for Employee Development

G&A Partners offers in-person and online training, as well as performance-boosting guidance.
G&A specializes in franchise services, healthcare, manufacturing, nonprofits and professional services.
It does not have a mobile app for on-the-go HR management.

G&A Partners offers comprehensive human resource services, modern payroll technology, competitive employee benefits, workplace safety measures, and risk and compliance management, but its impressive training programs and technology are what make it our choice as the best HR outsourcing company for employee development.

Pricing and Terms

G&A Partners offers a variety of scalable and flexible human resources plans. Small businesses have the choice of signing up with a co-employment model via professional employer organization (PEO) plan, or they can access traditional HR outsourcing features a la carte with an administrative services organization (ASO) plan. Like most PEOs, G&A requires businesses to enroll in its payroll offering to access the rest of its services. This is a standard practice that roots your business in the co-employment model. 

It is recommended that you have at least five employees before working with G&A, and it charges a flat rate on a per-employee basis. The company does not list pricing on its website, so you will have to contact a representative for a custom quote. 

G&A doesn't require long-term contracts. Instead of locking your business in for a year or longer, it provides its services on an ongoing basis. You can cancel services at any time with a 30-day advance notice. 

G&A Partners HR Outsourcing Services

G&A offers a number of convenient HR services to help hire, train and manage your employees. Small businesses that need comprehensive HR assistance are better suited for G&A's PEO services, whereas those that only need to outsource a few HR responsibilities are better off with creating an ASO plan. Although each plan offers many of the same features, the contract structure for these will be different – so work closely with your G&A representative to find the right service type for your business. Both plan structures allow you to scale services to match your business needs. 

HR Services

G&A can handle all of your HR needs. Noteworthy services include development and implementation of HR policies and procedures. Most PEOs offer this, but if you're a small business with a nonexistent HR department, G&A can help you start from scratch. It also provides HR audits and investigation, employee discipline and termination support, performance management and training, and unemployment insurance and claims administration. These are standard HR services, but G&A goes further by providing recruiting services, such as job sourcing, screening, job assessments, job description review and creation, applicant tracking, new-hire onboarding, and general recruitment services. Whether you use its PEO or HRO services, it provides robust HR support for small businesses.

Employee Benefits

G&A offers standard employee benefits, including health, dental and vision insurance. There are also flexible spending accounts, health savings accounts, health reimbursement accounts, employee assistance programs (EAP), short- and long-term disability, employee wellness and discount programs, and accident insurance. The fees for these plans may be separate from the monthly per-employee rate. Additionally, G&A handles employee questions regarding coverage and claims. This is a standout aspect of its service. Instead of your business wrestling with insurance carriers, G&A can assist with questions or disputes. It also takes care of healthcare reform matters with eligibility monitoring and annual IRS reporting.

Payroll and Taxes

G&A provides time and attendance software, time and overtime tracking, PTO accrual, vacation and sick leave tracking, and scheduling management. It offers a full suite of compliance and tax-related payroll services such as tax filings, wage garnishments, new-hire reporting and automated standard deductions. G&A provides a full-fledged payroll service on par with several of its competitors.

Risk and Compliance

G&A offers standard accident prevention services to help keep your team safe and secure. This is especially important for businesses in hazardous industries. G&A can help develop employee safety manuals, conduct safety audits and inspections, carry out post-audit safety reports and trainings, and provide onsite and online safety training materials. It also helps you comply with OSHA regulations and provides workers' compensation.

Training and Development

One standout aspect of G&A Partners' HRO offering is its employee development programs. In addition to great employee training programs, G&A can provide performance management assistance for workers who have fallen behind. It provides multiple forms of support, such as helping you meet industry regulations, building education programs for your employees and tracking each worker's progress. You can use advanced HR technology to find employee competency gaps, match jobs and goals with available courses, and assign employee courses. The performance management system allows you to set and measure employee goals, keep employee performance records, and conduct 360-degree reviews. 

Pros of G&A Partners

An advantage of partnering with G&A is the size of the company. Some HR outsourcing companies we reviewed are major companies that support tens of thousands of small businesses. There are advantages to partnering with a big company, but some small businesses look for more personalized service with one-on-one support, and we found that G&A can provide this level of attention. 

Another benefit of partnering with G&A Partners is the technology you'll have access to. The HR technology allows you to offer your employees several e-learning options. You can assign courses, and track employee results and improvement. This is great for growing teams and businesses that want their employees to continue learning and expanding their skill sets. 

Healthcare, franchise service, manufacturing, nonprofit and professional service companies can especially benefit from G&A Partners. G&A specializes in these industries, providing industry-specific human resource options. Since each industry has its own guidelines and laws that it must follow, it is helpful to have a PEO or HR outsourcing company that is knowledgeable on those regulations for your industry.  

Cons of G&A Partners

One drawback of G&A is the lack of mobile options. We could not find a mobile application to manage human resources tasks on the go. This would be a valuable tool for companies spread out over several locations, or for those whose HR personnel is constantly on the move. 

Another limitation is the lack of information on the company's website about the cost of its services. While this isn't a dealbreaker, many small business owners want a quick idea of how much each service costs, even if it's just a ballpark estimate. Since G&A Partners offers bundled and a la carte services, it is unclear what the cost may be from simply viewing the info on the website. When you get a price quote from a representative, ask about the cost of additional services you may need in the future. You don't want to be caught off guard with unexpected costs as your business expands. 

Customer Service

We interacted with G&A sales representatives by email and phone, posing as a small business owner interested in outsourcing our human resources tasks. Its sales representatives were excellent. They gave us all the necessary info about its services, as well as helpful advice for our human resources outsourcing search, never pushing us for a sale. Instead, they were cordial and supportive of our inquiry. 

G&A Partners has several helpful online resources, including articles, guides, webinars, videos and whitepapers. It also provides personalized support. When you sign up with G&A Partners, you'll have a client advocate who coordinates your business's services; this person can answer many basic questions related to your service and refer complicated issues to a team of specialists for the coverage area in question.

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Pricing and Terms

HR outsourcing services typically follow one of two pricing models:

  • A fixed monthly per-employee fee
  • A percentage of each employee's monthly pretax salary

Regardless of which model an HRO uses, your total costs will depend on the number of employees you have, the state where your business operates and the specific HR services you need to administer. HROs sometimes have employee or payroll minimums you must meet before you can access their services. Since HR outsourcing is better for midsize and large companies anyway, this is typically not an issue. If you are a very small business seeking HR assistance, PEO services may be a better fit for you.

HRO pricing can be flexible, depending on your provider. Although you'll likely have to sign a contract, some agencies offer flexibility in length. HRO packages can come with a la carte features (best for those who only need a few select services), or in flexible bundles (best for those who want a more comprehensive set of services). Many HRO companies charge extra for features like employee benefits, recruiting and staffing, and performance management.

Buying Guide

What Do HR Departments Do?

Over the years, the role of human resource professionals has evolved from recordkeepers to an essential component of a business's executive team. Besides coordinating employee activities, HR departments provide conflict resolution and training, help with budget management, and ensure companies comply with employment laws and regulations. If you don't have an internal team to take care of these responsibilities, you can partner with an HRO company to meet your HR needs.

Benefits of HR Outsourcing

There are several benefits to partnering with an HRO company for both employers and employees. For example, HROs can help you maintain legal compliance. An HR department is responsible for maintaining the security and privacy of employee data, including compensation and personal matters. It must also ensure your company's compliance with federal regulations surrounding healthcare, 401(k) plans, workers' compensation, payroll processing and taxation, and the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). HROs can take care of these compliance measures for you.

Another critical HR function is to ensure your company complies with legal hiring practices, especially when hiring noncitizens. Immigration compliance at both the state and federal level is a complicated process that your HR staff may not have expertise in. If your company hires immigrants, you can benefit from an HR outsourcing service that is well versed in the law and has experience with the process. This helps protect your company and immigrant workers from unintended violations of immigration law, which can be extremely costly.

HROs can also prove beneficial for managing employees. Many companies forgo hiring HR staff during the early years of the business, but without a knowledgeable HR expert, your company is vulnerable to a host of potential legal issues. For example, employees do not have a neutral party to discuss issues with, nor is there a specialist to ensure that your hiring paperwork is appropriately completed. You can't afford not to invest in HR services. An HRO can help you meet all your company's human resources needs, even if you're on a budget.

Which HR Functions Can Be Outsourced?

If a human resources function exists, it can probably be outsourced. You can outsource a couple HR functions at a time, or all your HR functions together.

Here are some commonly outsourced HR functions: 

Although these are the most commonly outsourced HR functions, this is not a complete list of HR services that can be outsourced. Speak with an HR representative if you have questions about additional HR functions to outsource.

 

Which One Is Right for Me: Full-Service or Partial HR Outsourcing?

A full-service HRO is a good option if you own a small company and cannot yet afford to hire HR personnel. It provides the resources that an in-house HR staff can offer without the expenses of hiring a team. A full-service HRO is also advantageous if you have workers in different parts of the U.S. or world. HROs are knowledgeable about global, federal and state laws, so they will work with your company to ensure it is in compliance.

When companies skimp on HR, they put the business and their employees at risk. A full-service HRO helps you appropriately manage day-to-day HR tasks like reporting misconduct and ensuring workplace safety compliance. These services also work closely with your payroll team to handle compensation. In addition to day-to-day tasks, you can enroll in services like recruiting and employee training.

Partial outsourcing is recommended for companies that have an in-house HR staff but need extra help. For example, perhaps you have an HR representative who handles your recruiting strategy and ensures that your employment paperwork is correctly filed, but suppose you need help with employee development. Many HROs offer employee training programs. If you do not have the resources or desire to hire a full-time training specialist, you can outsource this service to an HR company.

The most common skill development training that HROs provide include software and processes training, though other options are available. The best HR outsourcing service will work with you one on one to determine the best training programs for your employees.

Other common partial outsourcing services are payroll outsourcing, employee screenings and background checks, employee recruitment, and immigration compliance.

Many HROs give you the option of selecting a full-service package or the specific services your business currently needs. The HRO you choose should, however, have expertise in employment compliance to insulate your company from penalties or lawsuits.

Each of the HRO services we evaluated offers comprehensive packages to assist your company with its HR needs so you can focus on other tasks pertinent to your business.

Human Resource Outsourcing vs. Professional Employer Organizations

During your research, you may have come across another term ‒ professional employer organizations. While many of the companies we reviewed offer both HR outsourcing and PEO services, they are not the same thing.

The main difference between an HRO and PEO service is the legal employment arrangement they operate under. When you outsource your HR functions, you are still the employer of record for your staff members, and you retain full control of your business operations and data. With a professional employer organization, the company you hire acts as a co-employer and is responsible for all HR tasks, including hiring and firing, employee training, and tax and compliance obligations.

Which option is best for my business?

Whether you should use an HRO or a PEO depends on your business's needs. If you need help with a few basic administrative tasks, like payroll and benefits management, an HRO might be your best option. If you'd rather have an expert company shoulder the full legal and financial responsibilities of employing your staff members, hire a PEO.

If you are interested in learning more about PEOs and the companies we recommend, visit our best picks page.

HR Outsourcing FAQs

Does HR outsourcing save money?

Yes. Outsourcing HR functions is one of the best ways to maintain legal compliance while saving money. Instead of paying salaries for an in-house HR department, you can limit your team to one HR manager and outsource any functions they need assistance with. Many HRO companies can bundle your HR functions to save you even more money. Additionally, outsourcing functions like risk and compliance management can help your company stay atop current regulations, potentially saving you thousands in legal fees.

When should you outsource HR?

Unless you have an entire in-house HR department, you will likely need to outsource at least some of your HR responsibilities as soon as your start your business. A company's human resources is more than one HR professional can manage alone, and having no HR expertise at all leaves you at an even greater risk for legal ramifications. The specific functions you outsource – and when – will completely depend on your needs. For example, if you are hiring your first employees, you may want to outsource your employee benefits administration. You should outsource HR functions as soon as you need them (if you don't have someone in-house to do the job).

What are the disadvantages to HR outsourcing?

Although HR outsourcing has many advantages, it can have a few drawbacks as well. For example, an external company managing your human resources can cause a disconnect with your staff. An external organization will not be an expert on your company culture, and it likely won't focus on team building and personal development as much as an in-house HR expert could.

Additionally, outsourced HR is less flexible than in-house HR staff – an external HR company or software provider is less likely to make special arrangements when a loyal employee has a unique request. It may also take longer than an in-house HR department would to perform functions like settling employee disputes or hiring new recruits.

Outsourcing any business process always comes with a security risk. Most HRO companies use web-based software, leaving your business and employee information potentially vulnerable to security threats. Always check an HRO's security measures before hiring it, especially if your business is in a highly regulated industry.

What business needs are met by outsourcing HR services?

HR outsourcing services can meet all your human resources needs. Whether you want to recruit and train new employees, administer employee benefits, track time and attendance, or process payroll and tax filings, an HR outsourcing company can help. An HRO can ensure you meet compliance requirements as well. As federal, state, local and industry regulations are constantly changing, it can be hard to stay up to date. Find an HRO company that is experienced in your region and industry to maintain legal compliance.

You could also outsource tedious administrative HR tasks, giving your in-house representative(s) more time to focus on important things like recruiting the right employees and fostering team growth and development.  

Methodology

Business.com strives to research and review companies fairly and objectively. For our review of HR outsourcing services, we began with 20 companies. We found these companies based on extensive HRO research, key industry players and recommendations from other review sites.

After analyzing each company, we pared our list down to the top 11 services. From this list, we researched various aspects of the services each company offers, including administrative HR tasks, benefits administration, employee recruiting, payroll management, employee training and development, risk and compliance, HR technology, and additional services. We also established the type of accreditations and customer reviews each company had.

From these 11 companies, we chose the three that stood out as the best for small businesses, benefits administration, and employee development. We then reviewed their pricing structures, contract requirements, employee minimums, mobile access and standout features. 

We looked even further into these three best picks, evaluating the customer support and features that each plan offers. We contacted support representatives by phone, online chat and email, posing as small business owners. We inquired about each HRO's plan structure, pricing and contract requirements. The three companies withstood each round of our testing and stood out in all of our interactions with them.

Community Expert Insight

As part of our research into HR outsourcing, we reached out to small businesses in our community to see what HRO services they use and what features their teams find most valuable. This helped us to identify the most important HRO features, which include customization, payroll, employee benefits, and training and development. 

Dan Bailey, president of Wikilawn, said his team of 13 employees uses Paychex for HR functions like payroll and employee benefits. He said Paychex's customization and setup support have been key in streamlining his company's HR.

"Paychex has been very helpful in tailoring their services to meet our company's needs," Bailey told business.com. "They've also appeared onsite with us before to assist our current HR professional in setting up a system that would make things run more smoothly."

Speak with your HR staff to see what duties take up the most of their time. This will help you discover which HR features would be most beneficial to outsource. For example, Rex Freiberger, CEO of Gadget Review, said his business partners with ADP's HRO program for payroll, employee benefits and HR administration. 

"Most of our processes are outsourced with the help of ADP," said Freiberger. "Payroll and benefits are the biggest, but we also outsource HR administration. Recruitment and employee development are handled by on-staff HR."

Freiberger found ADP's customer service to be very responsive and resourceful whenever his team ran into any HR issues, which is another selling point for him.

Brian Patrick, CEO of Pest Strategies, said his five-person team needed an experienced third-party service to handle all their HR-related activities; they chose G&A Partners for its robust employee training and development services.

"Since we are a small team, we require all of our employees to perform their best so that the company can thrive," said Patrick. "Investing in our employees' career development and skills enhancement is one of the best decisions we made. The move boosted productivity levels, increased [efficiency] and enhanced output quality."  

Although employee development is a critical aspect of HR management, Patrick said many small businesses have a misconception that it is expensive, out of reach or unnecessary. He said G&A Partners provided his team with advanced training and development features while remaining cost-effective.

Whether payroll, employee benefits, or training and development is the most important HR function you need to outsource, there is an HRO provider that fits your needs and your wallet.

What to Expect in 2020

In 2020, the demand for human resources outsourcing is increasing. Research from Global Industry Analysts Inc. predicts that the global market for HR outsourcing services will reach $43.8 billion within the next four years. This increase is due to changes within many companies' human resources departments, like staff cuts. Technological advances and software have further reduced the need for in-house HR staff.

Another factor in the rise of HROs (which will contribute to even more small businesses using HROs in 2020) is compliance with state and federal regulations. In-house HR staff may have a difficult time staying up to date with changing regulations, such as new labor laws. Overlooked rules can have expensive consequences. HROs closely monitor shifting employment laws and apprise clients of these changes and how they can comply with the new laws. 

Artificial intelligence in human resource technology is also influencing the growth of HROs, according to HR Executive. One example of this is that AI can scan and sort hundreds of resumes to find candidates who have the required experience for a role. This saves hours compared to what a small in-house HR staff can do.

Skye Schooley
Skye Schooley,
business.com Writer
See Skye Schooley's Profile
Skye Schooley is an Arizona native, based in New York City. She received a business communication degree from Arizona State University and spent a few years traveling internationally, before finally settling down in the greater New York City area. She currently writes for business.com and Business News Daily, primarily contributing articles about business technology and the workplace, and reviewing categories such as remote PC access software, collection agencies, background check services, web hosting, reputation management services, cloud storage, and website design software and services.

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At what point do I need to offer benefits and think about using a payroll service?
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Charles Barouch
Charles Barouch
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Also remember that benefits are not just insurance. I've worked at companies that do random prize draws, group dinners out, offer free services (like help quitting smoking, inexpensive daycare) or college tuition assistance. Free coffee is good, too.
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Outsourcing payroll: Who do you prefer, a privately owned local payroll company or one of the big guys, and why?
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Barry Ross
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I think people that choose one of the big guys do so because they are a known quantity. The smaller companies don't have as many reviews, and in some cases, can't provide all the services that are needed. They don't know what they are missing, as many clients go back & forth from ADP to Paychex because of problems. Our cloud based solution combines a powerful payroll & a web-based HR application along with the convenience of services typically offered by payroll outsourcing providers. ...
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Becca, First you need to consider if you are willing to walk away from this opportunity if the salary does not meet your requirements or if this is a must have position. Obviously if it is a must have position the negotiation becomes more difficult for you. Before you begin negotiating you need to determine industry rates, what is the minimum salary you are willing to accept and what benefits do you require. Once you receive an offer you need to ensure it includes salary, benefits,...
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The only advice I have is if you are going to use the HR solution to handle your payroll make sure you handle your taxes unless the company you select is Public and you can see their financial status. There are hundreds of web based HR and payroll solutions on the market and if they fail to file and pay the payroll taxes the business owner is personally liable.
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Other Services Considered

Insperity PEO provides employee benefits administration, payroll processing, risk management resources, and human resource consulting, but where it excels is in employee training and HR outsourcing. Insperity has a five-employee minimum, competitive pricing and a contract structure that can scale with your business. Insperity is our pick as the best PEO for small businesses due to its extensive training resources and flexible services.

ADP TotalSource

Small businesses that partner with ADP get top-of-the-line human resource services, including payroll, compliance, risk management, employee benefits, training and development, and great customer support. ADP TotalSource provides personalized PEO services throughout all 50 states, and even offers international client service through their partnership with Globalization Partners. In addition to its fantastic customer service, ADP's benefits offering is ideal for any small business seeking outsourced HR services. Thanks to its impressive offering, ADP is a double winner, it's our best pick for customer service in our PEO category and best for benefits in our human resources outsourcing (HRO) category. ADP is accredited by the Better Business Bureau, earning an A+ with the rating agency. It is also certified by the IRS and accredited by the Employer Services Assurance Corporation. 

Paychex provides businesses with comprehensive PEO features, including risk management, payroll, employee benefits, HR administration, and numerous onsite and virtual training solutions. This nationwide company represents thousands of employees and businesses of all sizes, so you'll be joining a provider that is equipped to handle your organization. It also assigns you an HR generalist who remains your point person as your business grows and a mobile application so you can access your services on the go. Plans are scalable as your company grows. Paychex is certified by the IRS and accredited by the Employer Services Assurance Corporation (ESAC) and the Better Business Bureau, with an A+ BBB rating. For these reasons, Paychex earns our pick for best PEO service for midsize businesses. 

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