The Best HR Outsourcing Services of 2024

Human resources outsourcing is when a third-party performs key HR functions like hiring, compliance, payroll and benefits administration. HR outsourcing (HRO) services are often flexible, allowing you to outsource only one or all of your HR functions. Businesses with growing teams can benefit from HRO services because they provide the support your employees need at a fraction of the cost of developing an in-house HR department.

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.

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.

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 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 processes can make a big difference in your business’s success. 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.

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.

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
• A percentage of each employee’s monthly pre tax salary

A fixed monthly fee per employee is the most common of these two models.

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

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.

Before 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.

Since HROs have a lot of variation in what they offer, it can be hard to know which features are most valuable to consider during the selection process. As a result, we spoke with business leaders to identify some key considerations to help you choose the right HR outsourcing company.

Break down the HRO’s pricing and contract requirements.

The way one HRO packages their services can be very different from the next. This makes it difficult to determine at a glance which vendor provides a better value. Consult with your top vendors about the exact pricing and contract requirements that are relevant to you.

Do they have employee minimums? Are some features considered “add-ons” and therefore incur additional fees? How long are their contracts? Does implementation cost extra? Consider this for the features you currently need to outsource, as well as features you may want to outsource in the future.

The key here isn’t to simply look for the vendor with the lowest pricing – it’s to find a vendor that satisfactorily meets all of your HR needs, within your budget. James-Dylan Lloyd, business development manager at Bella Virtual Staging, has experience partnering with an HRO, and he echoed the same sentiment.

“My advice would be to really think about what aspects of HR are most time-consuming or challenging for your business and choose a provider that excels in those areas,” Lloyd told us. “Don’t just go for the biggest name or the cheapest option – find a partner that aligns with your specific needs.”

Ask about payroll and benefits administration.

Two of the most commonly outsourced HR functions are payroll and benefits administration. Ask about these features in depth. Can the HRO support payroll in the cities, states or countries you operate in? What about employee benefits? How comprehensive and affordable are those? You can assess some of these features directly by conducting a software demo.

Assess their compliance assistance.

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. However, some HROs specialize in certain industries, making them a better fit than others.

“A top consideration was risk and compliance management because staying on top of labor laws and regulations is crucial,” said Lloyd.

Assess the HRO’s compliance measures and how proactive they are about supporting you.

Inquire about their training and development features.

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.

If training and development are important to you, it’s important to ask an HRO about their course options. The best HR outsourcing services will work with you one-on-one to determine the best training programs for your employees.

Test out the platform’s usability.

HRO software is only beneficial if your staff knows how to use it. One of the most important features that business leaders look for in an HRO is its usability, coupled with adequate customer support. This was a key factor for Lloyd and his team.

“When evaluating HRO providers, we placed a high priority on customer support and platform usability,” he said. “We wanted a provider who could offer a seamless user experience for our team and be responsive when we needed help.”

Conduct a demo to test out the platform’s usability and see if it’s a good fit for your workers. Inquire about integrations, customizations and customer support options as well.

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 features to look for:

• 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

In addition to looking for the specific HR features or services you need to outsource, it’s important that you also evaluate each vendors’ pricing and contracts, plan scalability, platform usability, integration capabilities, implementation process and ongoing customer support.

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.

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.

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

Implementing an HR outsourcing service requires a thoughtful and organized approach. However, it can be a tedious, time-consuming process, so here are three best practices for ensuring a successful HRO implementation:

1. Create an HR service transition plan. Work with the HRO provider to establish a step-by-step timeline for implementing their services, including key milestones and deadlines. Involve your HR staff in this transition, training them on the new platforms and processes.
2. Migrate HR data and systems. Collaborate with the HRO to securely transfer employee data, payroll information and compliance records. Test the system before launching it by performing a dry run of key functions like payroll processing and benefits enrollment. This will help you troubleshoot potential issues before going live.
3. Inform and train your workforce. Notify the rest of your staff about the HRO partnership, clearly explaining the benefits of outsourcing. Provide employee training on the new HR platforms, and establish points of contact for employee questions or concerns.

After your HRO is implemented, it’s important to track its performance and success. As your business needs evolve, work with the HRO provider to modify the scope of services, such as scaling support or adjusting compliance needs.

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.

To determine the best HR outsourcing services on the market, our team of HR experts and software analysts evaluated an initial list of 20 vendors. We examined each to compare pricing plans and available features, as well as the usability of associated software and the responsiveness and quality of customer support.

Based on these factors, we narrowed our list down to 11 vendors. We scheduled live demonstrations and Q&As with company representatives to more closely investigate their offerings and find out about their onboarding processes. In the end, we chose five HRO services as our top recommendations. Our experts and analysts studied each solution’s functionality and evaluated the products on 125 factors.

These factors were broken down into categories and weighted differently in our overall conclusion. The weights were determined based on how much business owners prioritize these criteria when shopping for business software and services and making purchasing decisions.

• Pricing: (30%): Our experts and analysts compared and contrasted each HRO service’s plans, judging which packages offered the best bang for your buck. They took into account plan structures, bundled vs. a la carte options, employee minimums, costs per employee, contract length requirements, and additional fees like implementation and cancellation fees.
• Features (25%): We looked for standard HRO service functions like administrative HR services, employee benefits administration, payroll and tax administration, employee training and development, risk mitigation and legal compliance assistance. We also assessed the available integrations and awarded extra points for advanced services, like PEO agreements.
• Ease of Use (20%): Each HR outsourcing service includes HR technology, so we tried the software solutions themselves, gauging each platform’s learning curve, user-friendliness and customization options. We also considered whether there was a fully featured mobile app to manage HR details on the go.
• Customer Service: (15%): We evaluated the range of customer service options, including whether phone, email and web chat assistance was provided with all package tiers. We also examined each vendor’s online resources for businesses interested in self-guided help.
• Customizations (10%): No two business HRO needs are exactly the same, which is why service customization is key. We evaluated not only how customizable each service plan was (including number of options and add-ons) but also how customizable the software was itself. We also took a look at how many third-party applications each vendor is compatible with.

Based on these criteria, we not only determined which HR outsourcing services our readers could trust but also the ways in which each solution could best serve different business needs. Some services were better at certain tasks than others or more suited to a particular type of company. These takeaways informed the “Best for” use cases you see on this page.

To learn more about our methodology, see our full editorial process.