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Updated Jul 03, 2024

The Best HR Outsourcing Services of 2024

If HR is too much for your business to handle in-house, outsource the responsibility to trusted companies like TriNet and Bambee.

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Written By: Skye SchooleySenior Lead Analyst & Expert on Business Operations
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Best for Industry-Specific Needs
TriNet HRO
Trinet logo
  • Custom pricing
  • Annual contracts
  • Four plans (plus add-ons)
  • Custom pricing
  • Annual contracts
  • Four plans (plus add-ons)
Best for Risk Mitigation
Bambee
  • Starts at 99/mo
  • Annual & multiyear contracts
  • Six plans (plus add-ons)
USALinks to Bambee
Visit Site
  • Starts at 99/mo
  • Annual & multiyear contracts
  • Six plans (plus add-ons)
Best for Remote Teams
Paychex HRO
  • Custom pricing
  • Annual contracts
  • Four plans (plus add-ons)
USALinks to Paychex HRO
Visit Site
  • Custom pricing
  • Annual contracts
  • Four plans (plus add-ons)
Best for SMBs
Insperity HRO
  • Custom pricing
  • Annual & multiyear contracts
  • Three plans
USALinks to Insperity HRO
Visit Site
  • Custom pricing
  • Annual & multiyear contracts
  • Three plans
Best Benefits Administrator
ADP HRO
ADP logo
  • Custom pricing
  • Monthly, annual & multiyear contracts
  • One plan (plus add-ons)
USALinks to ADP HRO
Visit Site
  • Custom pricing
  • Monthly, annual & multiyear contracts
  • One plan (plus add-ons)

Table of Contents

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At business.com, we strive to provide business owners with unparalleled recommendations for the best HR software and services, along with actionable advice for navigating human resources processes, fostering a healthy company culture and improving employee engagement. We infuse our playbooks and explainers with expertise from real HR advisers, payroll consultants, retirement planners and other human resources professionals.

Across our HR reviews and product guides, every solution we recommend — whether it be a payroll platform, PEO/HRO service or employee monitoring software — is thoroughly tested, investigated and vetted independently to ensure vendor claims about products are legitimate and backed by real user experiences. As part of our commitment to fairness and accuracy, each assessment is reviewed by a top business.com editor who was not involved in the analysis process. Learn more about our editorial process.

Tip Bulb

How We Decided

When choosing our picks for the best HR outsourcing (HROs) services, we looked for reputable vendors that allow businesses to outsource all or only some HR responsibilities. We compared each provider’s software platform to see how...

MoreMore

When choosing our picks for the best HR outsourcing (HROs) services, we looked for reputable vendors that allow businesses to outsource all or only some HR responsibilities. We compared each provider’s software platform to see how they facilitated human resources functions like recruitment and onboarding, benefits administration, time tracking and payroll. We preferred HROs that helped with legal compliance and risk mitigation, and we investigated whether the vendor also offered a PEO alternative.

20

evaluated

11

researched

5

chosen

When choosing our picks for the best HR outsourcing (HROs) services, we looked for reputable vendors that allow businesses to outsource all or only some HR responsibilities. We compared each provider’s software platform to see how they facilitated human resources functions like recruitment and onboarding, benefits administration, time tracking and payroll. We preferred HROs that helped with legal compliance and risk mitigation, and we investigated whether the vendor also offered a PEO alternative.

20

evaluated

11

researched

5

chosen

If you have employees, you are probably all too familiar with how challenging it can be to manage your human resources (HR) needs. Although you may have been able to take care of your HR in-house with just a few workers, the burden of HR can become too much as you hire more workers and your business starts to grow. This is when many companies turn to HR outsourcing (HRO) services to manage some (or all) of their HR functions for them.

There are great HRO services on the market, which is why we spent dozens of hours researching and testing them for you. We evaluated and broke down our top options in this guide, reviewing key factors like pricing, features, usability and support.

Compare Our Best Picks

BDC Ribbon
Our Top Picks for 2024
TriNet HRO
Paychex HRO
Insperity HRO
ADP HRO
Rating (Out of 10)9.69.59.49.69.4
Best For

Industry-Specific Needs

Risk Mitigation

Remote Teams

SMBs

Benefits Administration

Employee minimum

5

0

1

5

5

Pricing

Rates customized per plan

Starting at $99 per month (plus setup fee)

Rates customized per plan

Rates customized per plan

Rates customized per plan

Contracts

Annual

Annual and multiyear

Annual

Annual and multiyear

Month-to-month to multiyear

Employee training courses

Virtual

Virtual

Virtual

Virtual and onsite

Virtual and onsite

Integrations

Yes

N/A

Yes (200+)

Yes

Yes (700+)

Mobile app

iOS and Android

None

iOS and Android

iOS and Android

iOS and Android

Live chat

Yes

Yes

Yes

No

No

Customer support

Phone, email, live chat, contact form, Connect 360

Phone, email, live chat and a dedicated HR professional

Phone, live chat, and a dedicated HR professional

Phone, email, and a dedicated service team

A strategic account manager; designated support representatives for items like payroll, benefits and HR

Review Link
Scroll Table

Our Reviews

Trinet logo
  • Base Price: Custom quote
  • Top Features: Customized contracts, industry-specific HR support, user-friendly platform
  • Trial Period: None
Editor's Rating: 9.6/10

Why TriNet is Best for Industry-Specific Needs

TriNet is a full-service HR solution for SMBs. We like how it offers specialized support in numerous industries, such as engineering, consulting, education, e-commerce, financial services, manufacturing, marketing and advertising, nonprofits, retail and technology. Businesses in these industries partner with TriNet for many HR services, such as payroll processing and tax administration, expense management, time and attendance tracking, employee benefits administration, risk management, workforce analytics and compensation management. We were impressed with its learning management platform with essential HR compliance training, premium learning content, and the ability for clients to upload custom training content pertinent to their business. What separates TriNet from some of its competitors is its industry-specific customer support. Its team of skilled HR experts can facilitate compliant and efficient HR processes for your business.

TriNet platform

This screenshot, taken from a demo we conducted with TriNet, shows how clean and user-friendly the platform is. Source: TriNet

TriNet Pricing & Services

Service Plan Key Services Add-On Services Price
TriNet HR Platform (Essentials) Automated onboarding, employee management, time off tracking, scheduling, integrations, analytics dashboard and mobile app Payroll tax compliance manager, payroll manager, HR manager, payroll tax compliance audit, HR operations audit $8 per employee per month (billed annually)
TriNet HR Platform (Growth) Everything in Essentials, plus configurable people analytics, compensation management and performance management Payroll tax compliance manager, payroll manager, HR manager, payroll tax compliance audit, HR operations audit $16 per employee per month (billed annually)
TriNet HR Platform (Zen) Everything in Growth, plus payroll, employee engagement surveys and a people hub Payroll tax compliance manager, payroll manager, HR manager, payroll tax compliance audit, HR operations audit $27 per employee per month (billed annually)
TriNet PEO TriNet technology platform, administrative HR services, payroll, benefits administration, risk mitigation and employee training and development Global payments, contractor payments Custom quote

TriNet HRO Advantages

  • TriNet offers industry-specialized HR services.
  • With its Connect 360 services, you can contact TriNet HR support professionals about industry-specific questions.
  • The HR platform is intuitive and easy to navigate.

TriNet HRO Disadvantages

  • To use TriNet’s services, you must pay for at least five employees.
  • Companies in hazardous industries, like oil drilling and heavy construction, may not be eligible for its services.
  • Certain businesses in the retail and hospitality industries aren’t a good fit for TriNet because their HR needs are very basic and they find that TriNet is too robust and expensive for them.

TriNet User Score

TriNet received a 7.1/10 rating from users who reviewed the platform on TrustRadius. Customers praised the service for its employee onboarding and training features, as well as its implementation, scalability and total value. However, some users mentioned that they had challenges contacting customer service. You may be able to mitigate this issue by opting for TriNet’s Connect 360 services.

CHECK OUT OUR FULL TRINET REVIEW

  • Base Price: $99 per month
  • Top Features: Risk mitigation support, HR policy creation, employee termination assistance, HR auditing
  • Trial Period: 30 days for $1
Editor's Rating: 9.5/10
Visit Site

Why Bambee is Best for Risk Mitigation

Bambee is an HR solution that gives businesses access to outsourced HR experts. We like how with Bambeeyou have access to a plethora of resources to help you mitigate the HR risks associated with hiring and managing employees. When we tested Bambee, we found it ideal for small businesses that need assistance with employee classification, HR policy creation, employee conflict resolution, payroll and tax administration, federal and state compliance and employee terminations. Other critical aspects of mitigating HR risks are proper document storage retention and creating sound business policies. Your Bambee HR manager can help create custom HR and document retention policies while maintaining compliant staff folders.

Bambee platform

This screenshot, taken from a demo we conducted with Bambee, gives you an idea of just how easy it is to begin a corrective action within the platform. Source: Bambee

Bambee Pricing & Services

No. of employees supported Key Services Price
0 Access to Bambee HR, email and chat support; four core HR policies; two custom HR policies; and two job descriptions $99 per month (billed annually)
1-4 Access to an HR manager with unlimited phone, email and chat support; four core HR policies; two custom HR policies; and three job descriptions $299 per month (billed annually) with a one-time setup fee of $500
5-19 Access to an HR manager with unlimited phone, email and chat support; four core HR policies; four custom HR policies; and four job descriptions $399 per month (billed annually) with a one-time setup fee of $500
20-49 Access to an HR manager with unlimited phone, email and chat support; four core HR policies; eight custom HR policies; and five job descriptions $499 per month (billed annually) with a one-time setup fee of $1,500
50-70 Access to an HR manager with unlimited phone, email and chat support; four core HR policies; 12 custom HR policies; and five job descriptions $1,299 per month (billed annually) with a one-time setup fee of $2,000
71+ Custom services Custom pricing with a one-time setup fee of $2,500

Bambee Advantages

  • Bambee can conduct an HR audit on your organization.
  • Your Bambee HR manager can be easily contacted directly through the Bambee platform.
  • Your HR manager can help you craft compliant internal HR policies that meet the needs of your business.

Bambee Disadvantages

  • Bambee charges setup fees.
  • It isn’t suitable for organizations with more than 500 employees.
  • It doesn’t offer mobile apps.

Bambee User Score

Bambee received a 4/5 rating from users who reviewed the platform on Trustpilot. Customers like how accessible and helpful their Bambee HR managers are, but they note that the service pricing can get expensive.

CHECK OUT OUR FULL BAMBEE REVIEW

  • Base Price: Customized quote
  • Top Features: Scalable HR outsourcing plans, no minimum requirements, advanced help center
  • Trial Period: None
Editor's Rating: 9.4/10
Visit Site

Why Paychex is Best for Remote Teams

Paychex provides comprehensive outsourcing services, including essential HR functions like remote recruiting and onboarding, time and attendance tracking, benefits administration and employee training. When we tested out its easy-to-use dashboard and intuitive mobile app, we found it incredibly convenient for anyone managing a remote workforce. We especially like that remote onboarding is simplified through automated workflows, digital forms and documents, and e-signature capabilities. Once employees are onboarded, they can access self-service features to manage some HR functions on their own. We like how Paychex can also act as your payroll provider and tax administrator ― ideal for small businesses that want to manage all remote employee salaries and payment details from one platform.

Paychex dashboard

This Paychex dashboard example is just a quick glance at the many HR functions you can manage from your Paychex platform. Source: Paychex

Paychex Pricing & Services

Service Plan Key Services Pricing
Paychex Flex Select Payroll and tax administration, analytics and reports, labor posters, employee self-service, financial wellness and cashflow assistance and an HR library Custom quote
Paychex Flex Pro Everything in the Select plan, plus garnishments, general ledger service, pre-employment screening, employee handbook builder, state unemployment insurance service and workers’ compensation reports Custom quote
Paychex Flex Enterprise Everything in the Pro plan, plus performance management, document management, job costing and paycheck preview and approval Custom quote
Paychex Flex Add-On Services Garnishments, general ledger service, same-day payments, expense management, pre-employment screening, employee handbook builder, performance management, job posting, recruiting, employee onboarding, enhanced learning library, state unemployment insurance service, document management, job costing, HR analytics, time and attendance, learning management, and workers’ compensation, business insurance, employee benefits and integrations Custom quote
Paychex PEO Paychex Flex technology, payroll, employee benefits, compliance and safety, and HR support and guidance Custom quote

Paychex Advantages

  • Paychex proactively monitors employment laws and regulations to help you stay compliant.
  • It offers tailored, contextual learning opportunities in its Help Center.
  • Paychex simplifies the payroll and tax filing process.

Paychex Disadvantages

  • Paychex does not list its HR outsourcing prices online.
  • Paychex doesn’t offer free trials.
  • Its custom reporting features are somewhat limited.

Paychex User Score

Customers who reviewed Paychex on TrustRadius rated it 6.6 out of 10. They highlighted positive features such as payroll and tax filing, user-friendly software, and helpful customer support. They also like that Paychex acts as one central location for their workforce management information. However, some users said its custom reporting tool was not as intuitive as they would like.

CHECK OUT OUR FULL PAYCHEX REVIEW

  • Base Price: Customized quote
  • Top Features: Full-service HR outsourcing, employee self-service platform, dedicated support team
  • Trial Period: None
Editor's Rating: 9.6/10
Visit Site

Why Insperity is Best for SMBs

Whether you have five employees or 5,000, Insperity has HR outsourcing solutions to fit your needs. For example, Insperity processes payroll, administers payroll tax filings, tracks employee time and attendance and administers competitive employee benefits at affordable rates. We like that Insperity can save you time by managing them with features like paperless onboarding, access to more than 50 built-in HR reports and the ability to build custom reports. Another great way Insperity streamlines your HR processes is by offering employee self-service capabilities. This gives employees the flexibility to manage their own HR information. Since plans can be customized, you’re sure to find an HR solution to meet your evolving needs.

Insperity dashboard

With Insperity, employers and employees alike can easily navigate through the platform to access pertinent HR information.  Source: Insperity

Insperity Pricing & Services

Service Plan Key Services Pricing
PEO for Small Business HR administration, employee benefits, payroll, compliance assistance, personalized HR support, all-in-one HR technology Custom quote
PEO for Middle Market Business HR administration, employee benefits, payroll, compliance assistance, risk mitigation, HR support and consulting, advanced workforce technology and analytics Custom quote
HCM + HR Technology Suite HR administration, employee benefits, payroll, compliance tools and support, workforce management technology, as-needed support from an HR service team Custom quote

Insperity Advantages

  • Businesses with up to 5,000 employees can partner with Insperity, so it can scale easily with your small to medium-sized business (SMB) as you grow.
  • Employees can access a 24/7 self-service portal.
  • Employees can access hundreds of online courses and educational materials on the Insperity platform.

Insperity Disadvantages

  • Insperity requires a five-employee minimum.
  • It doesn’t list service prices online.
  • Insperity is not compatible with third-party payroll providers.

Insperity User Score

Customers who reviewed Insperity on TrustRadius rated it 4.4 out of 10. They highlighted the platform’s onboarding process as a key feature that they liked. However, some users didn’t like the cost, stating that it was more expensive than some competitors.

CHECK OUT OUR FULL INSPERITY REVIEW

ADP logo
  • Base Price: Customized quote
  • Top Features: Employee self-service, ACA & COBRA compliance, competitive carriers, online enrollment
  • Trial Period: None
Editor's Rating: 9.4/10
Visit Site

Why ADP TotalSource the Best Benefits Administrator

As a major HR service provider in the United States, ADP provides robust benefits options. When you’re an ADP client, you tap into a national provider with significant bargaining power with insurance and benefits providers. This ensures you can offer your employees affordable benefits like medical insurance, workers’ compensation, retirement savings plans, student loan repayment programs, flexible working arrangements, family leave and professional development opportunities.

We like that ADP’s application programming interface-driven technology syncs data automatically between its platform and benefit carriers, increasing administration speed and accuracy. It also features the ability to configure benefits plans in real time, giving employees instant visibility into any updates or changes.

ADP benefits dashboard

ADP’s benefits dashboard makes it easy for users to manage benefits administration online. Source: ADP

ADP TotalSource Pricing & Services

Service Plan Key Services Pricing
ADP TotalSource ADP Workforce Now technology suite, employee onboarding, employee benefits administration, payroll, document management, online learning courses, reporting, compliance support, workers’ comp and claims management, unemployment claims administration, and a team of dedicated support representatives with full-service implementation Custom quote
Popular Add-ons Enhanced talent suite (recruitment, performance and compensation management; succession planning, talent strategic support), full-service recruitment and resume search service, employee engagement and leadership training, time tracking and scheduling, ADP Marketplace with custom API integrations Custom quote

ADP Advantages

  • ADP’s risk and compliance experts can walk you through federal, state and local guidelines to help you avoid mistakes with benefits administration or HR management.
  • Since ADP can provide payroll and tax administration, you can manage employee payroll and benefits easily on the same platform.
  • ADP has significant bargaining power with healthcare providers, offering you competitive benefits packages.

ADP Disadvantages

  • ADP pricing is not listed online.
  • It has an employee minimum.
  • It doesn’t offer a free trial.

ADP User Score

ADP received a 6.1/10 rating from customers who reviewed it on TrustRadius. Users commented positively on essential HR features like employee benefits administration and payroll processing. However, others were not as pleased with the platform’s appearance, saying it looked a bit dated.

CHECK OUT OUR FULL ADP TOTALSOURCE REVIEW

What is Human Resources Outsourcing?

Human resources outsourcing is exactly what it sounds like: the process of outsourcing your HR functions to a third-party service. While many businesses can handle their HR functions internally through an HR manager or HR department, others turn to experienced third-party vendors like HRO services. HRO services are often flexible, allowing you to outsource only one or all of your HR functions. Some HR functions that are commonly outsourced include recruitment, benefits administration, payroll, time and attendance and legal compliance.

Pricing and Terms

Since the services offered in an HR outsourcing plan can vary widely, so does the cost. The total cost of your HRO will depend largely on how many employees you have, which HR services you need and how long of a contract you are willing to sign. HRO plans run the gamut, costing anywhere from $50 to $1,500 per employee per month.

HR outsourcing services typically follow one of two pricing models:

  • A fixed monthly per-employee fee (most common)
  • A percentage of each employee’s monthly pretax salary

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, a professional employer organization (PEO) service 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 the contract’s length. Some HROs offer a la carte options (which are best for those who only need a few select services) or preset bundles (which are best for those who want a more comprehensive set of services). Many HRO companies charge extra for services like employee benefits, recruiting and staffing and performance

Bottom LineBottom line

HRO plans cost between $50 and $1,500 per employee, per month, depending mainly on the size of your business and the services you need.

What Do HR Departments Do?

Over the years, the role of HR professionals has evolved from simple recordkeeping to becoming an essential component of a business’s executive team. HR departments are responsible for a myriad of activities that all boil down to fostering a positive employee experience. Besides coordinating employee activities, HR professionals provide conflict resolution and training, establish competitive employee benefits and compensation, help manage employment budgets and ensure companies comply with employment laws and regulations. If you don’t have an internal team to handle these responsibilities, you can partner with an HR outsourcing company to meet your needs.

Benefits of HR Outsourcing

There are several benefits to partnering with an HRO company for both employers and employees, depending on the services your business needs.

1. It saves time and money.

Hiring an HRO service to take care of your HR processes can save your business time and money. Instead of wasting hours performing administrative tasks manually, you can streamline your efforts by outsourcing certain tasks. That means you can reclaim your valuable time to perform revenue-generating functions that will improve your business.

Did You Know?Did you know

Hiring an internal HR staff can cost 50 percent more than outsourcing your HR functions, according to Asure Software.

2. It helps you maintain legal compliance.

Federal, state and local employment laws are changing constantly. As a result, legal compliance has become difficult for many organizations to manage on their own, especially with the recent trend of hiring remote employees located around the state or country. Hiring an HRO to keep you compliant is often easier than trying to stay up to date with a myriad of evolving laws, especially as your company operates in multiple regions.

Your HRO can help maintain the security and privacy of your employee data, including compensation and personal matters. It can also ensure your company’s compliance with federal, state and local regulations surrounding employee benefits ― healthcare, 401(k) retirement plans and time off policies ― harassment and discrimination, workplace safety measures, workers’ compensation, payroll processing and taxation, HR policies, employee discipline and termination and the Consolidated Omnibus Budget Reconciliation Act (COBRA).

3. It streamlines hiring and onboarding employees.

Effective recruitment and onboarding can make a big difference in your business’s success. An HRO can streamline your recruiting, hiring and onboarding processes to ensure you hire the best members for your team. HROs help you not only acquire the right employees but also onboard them in a way that complies with labor and employment laws. For example, your HRO can help you distribute the necessary new-hire documents, obtain the required signatures and file the documents securely.

BambooHR templates

Some HR solutions offer templates for things like new hire packets, to help you quickly create effective onboarding materials.  Source: BambooHR

If your company hires immigrants, you can benefit from an HR outsourcing service that is well-versed in international employment laws and has experience with the foreign worker hiring process. Immigration compliance at both the state and federal levels is a complicated process that your own HR staff may not have expertise in. HROs help protect your company and immigrant workers from unintended and potentially costly violations of immigration law.

4. It provides expert HR insight and support.

Managing every HR task for your team is a big feat, even in a small business. Without an entire department to manage and track your HR needs, there is a good chance you will need to hire a service like an HRO to help you. Even if you have an internal HR manager, they can benefit from a helping hand and additional expertise. An HRO can help you meet all your company’s HR needs, even if you’re on a tight budget.

5. It is a scalable HR solution.

Although some HROs offer bundled plans, others allow you to create unique service plans with a la carte HR features. This flexibility is convenient for any business but especially for growing organizations that need their HR support to expand as they scale up. Instead of being limited by your HR capabilities, you can add and remove HR services as soon as they apply (or don’t apply) to your organization.

Which HR Functions Can Be Outsourced?

Just about any HR function can be outsourced. You can outsource a couple of HR functions at a time or all your HR needs together.

Here are some commonly outsourced HR functions:

  • Applicant tracking
  • Background check services
  • COBRA insurance
  • Compensation plan development
  • Employee benefits administration
  • Employee discipline
  • Employee handbook creation
  • Employee recruitment
  • Employee termination assistance
  • Employee training and development
  • HR administrative tasks
  • HR audits and consulting
  • HR policy development and implementation
  • New-hire reporting
  • Payroll
  • Retirement services
  • Risk management and regulatory compliance
  • Tax administration and compliance
  • Time and attendance
  • Unemployment insurance and claims administration
  • Workers’ compensation
  • Workplace safety training

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

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

When selecting an HR outsourcing provider, assess the HR services you need assistance with ― maybe you need to outsource all of them or only a few. Many HROs allow you to choose either a full-service package or the specific services your business needs.

TipBottom line

Regardless of how many HR services you need to outsource, the HRO you choose should have expertise in your industry and state’s employment compliance to insulate your company from penalties or lawsuits.

Full-Service 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 could without the expense of hiring your own team. A full-service HRO is also advantageous if you have workers in different parts of the U.S. or the world. HROs are knowledgeable about global, federal and state employment laws, so they will ensure your company complies with the local regulations anywhere you have employees.

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 HR Outsourcing

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 the correct filing of your employment paperwork, but you need help with employee development. 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, many of which offer employee training and development programs.

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

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

ADP employee screenings

HROs can help you manage many HR functions, like employee screenings. Source: ADP

Human Resource Outsourcing vs. Professional Employer Organizations

During your research on HR outsourcing, you may also see references to professional employer organizations or PEOs. 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 a 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 PEO, the company you hire acts as a co-employer and is responsible for all your business’s 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, check out our selection of the best PEO service providers.

TipBottom line

If you need to partner with a PEO right now but think you’ll want to switch to HR outsourcing later or vice versa, consider a company that offers both.

Additional Options Worth Exploring

If you’re still looking for the right HRO for your business, here are a few more top-rated contenders worth exploring. These vendors all passed our rigorous testing and evaluation process as well.

BambooHR

BambooHR offers a variety of useful HR functions to help you hire, manage and pay your workers. You can choose BambooHR’s Core or Pro plan and customize it with add-ons like payroll processing, time tracking and benefits administration. Every plan comes with crucial employee management tools like employee record management, time off management, employee self-service and reporting and analytics. The Pro plan takes it a step further with features for managing employee performance and experience. Learn more in our detailed BambooHR review.

Gusto

Gusto is a full-service HR platform that offers comprehensive HR tools and services like hiring and onboarding, employee benefits administration, HR insights and reporting, talent management and HR guidance and support. However, one standout feature is its payroll functionality. Employers can access full-service payroll for multiple states, multiple pay rates and schedules and international contractor payments. Gusto can register you for state payroll taxes, as well as file and pay federal, state and local payroll taxes automatically on your behalf. You can set up Gusto to run your payroll automatically each pay period. If you want to pay international employees, Gusto now offers employer-of-record (EOR) capabilities for global employee onboarding and payroll. Learn more in our detailed Gusto review.

WorkSight by G&A Partners

WorkSight is HR technology from G&A Partners ― together, the two offerings bring employers a reliable system that is great for training and upskilling workers. G&A helps develop your employees from the very beginning by offering recruitment process outsourcing services. With these services, the HRO can help find and vet the best candidates for your business. It is especially ideal for particular recruiting projects. Once employees are hired, the HR solution can help onboard and train your new hires. Learn more in our detailed WorkSight review.

HR Outsourcing FAQs

Yes, outsourcing your 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 on top of current regulations, potentially saving you thousands in legal fees.

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 you start your business. A company’s HR needs are greater than one professional can manage alone and having no HR at all puts you at risk of serious legal ramifications. The specific functions you outsource ― and when you should do so ― 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, especially if you don’t have an in-house person to do the job.

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

Outsourced HR is also 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, for instance. An HRO may also take longer than an in-house

When outsourcing HR functions, you may not be the one making the HR decisions, but you will be the one experiencing the benefits or drawbacks of those decisions. If you have an HR outsourcing service managing any of your HR functions poorly, your business is going to suffer. This is why it is paramount to thoroughly research HRO providers to ensure you are partnering with a reputable company that matches your organization’s needs.

Additionally, outsourcing any business process always comes with a security risk. Most HRO companies use web-based PEO software, leaving your business’s information ― and that of your employees ― 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.

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

You could also outsource tedious administrative HR tasks, which gives your in-house representatives more time to focus on recruiting the right employees and fostering team growth and development.

What to Expect in 2024

As workplace trends continue to change throughout 2024, we expect the demand for human resources outsourcing to keep growing. There are several factors that play into this, such as the hybrid work environment, global expansion, younger generations taking over the workforce, the increase in AI and automation, employee health and development and the increasingly complicated need to comply with state and federal regulations. In-house HR staff may have difficulty staying up to date with changing trends and regulations and HR missteps can have expensive consequences for small businesses. As a result, many organizations rely on HROs to monitor shifting employment laws and workplace trends closely.

The popularity of the hybrid workplace is a trend that significantly affected the HRO industry and will continue to do so throughout 2024. With many businesses permanently settling on hybrid work arrangements – and expanding their workforces globally – the need for cloud-based payroll and time-tracking tools has risen. Employees and employers need the ability to access their HR information from any location. We expect HRO companies to increase their offerings of flexible, cloud-based solutions and self-service features.

In our increasing global economy, many companies are choosing to hire workers across multiple states and countries. We can expect HR outsourcing companies to keep up with this trend by offering more global compliance and payroll support for international employees and contractors. With this expansion, we also anticipate HROs to tighten up their cybersecurity measures to ensure employee data remains secure.

As younger generations take over the workforce, HROs must evolve to meet their needs. For example, younger generations place a high importance on collaboration and recognition. HROs must manage HR to make employees feel seen and appreciated. Additionally, younger generations place great importance on health, wellness and professional development. We anticipate HROs will tailor their benefits packages to satisfy these needs as well.

Artificial intelligence (AI) in HR technology is also influencing the growth of HROs. For example, AI can scan hundreds of resumes to find candidates who have the required experience for a role, saving hiring managers hours of sifting through resumes. In tandem, laws around using AI for hiring and recruitment are evolving as well, and we anticipate that HROs will be able to stay up to date on compliance measures.

We expect to see HROs helping with important business diversity and inclusion initiatives throughout 2024 by offering recruiting assistance, risk management and compliance measures and employee training and development. Small businesses can lean on outsourced services like applicant tracking, HR policy development, audits and consultation to create diverse and inclusive workplaces. We believe there will be an increased demand for data analytics to track and improve employee productivity.

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Written By: Skye SchooleySenior Lead Analyst & Expert on Business Operations
Skye Schooley is a dedicated business professional who is especially passionate about human resources and digital marketing. For more than a decade, she has helped clients navigate the employee recruitment and customer acquisition processes, ensuring small business owners have the knowledge they need to succeed and grow their companies. In recent years, Schooley has enjoyed evaluating and comparing HR software and other human resources solutions to help businesses find the tools and services that best suit their needs. With a degree in business communications, she excels at simplifying complicated subjects and interviewing business vendors and entrepreneurs to gain new insights. Her guidance spans various formats, including newsletters, long-form videos and YouTube Shorts, reflecting her commitment to providing valuable expertise in accessible ways.
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