Top HR Outsourcing Service Providers and Tools - 2023

Typically, companies use HR outsourcing companies if they don't have an HR department and if their internal resources are limited from a people, budget, or knowledge standpoint. More than that, they seek professional HR help because they want to build a productive team, optimize employee retention, and remain compliant — all while being able to focus on revenue-generating activities (not HR admin). For example:

• Build HR infrastructure: HROs allow you to build an internal HR function that you maintain complete control over. HR outsourcing companies will tailor their HR solution to your business’s unique needs. For example, if you just want to outsource payroll, you can. If you want an all-in-one HR solution, you can get that, too.
• Offer benefits: Employee benefits aren’t just for large companies. Depending on the HRO, you can offer standard benefits like health insurance or a full-suite of perks that also include 401(k), deals on gym memberships, and more.
• Outsource and automate payroll: HROs can help with all payroll-related tasks, from automating direct deposits to reporting taxes, to filing forms like W-2s and 1099s, and more. ‍
• Streamline people management: A lot goes into managing your people, from hiring and onboarding new hires, to providing development and continuing education opportunities, and everything in between. Then there’s the “back-office” work of having employees, like new employee paperwork, emergency records, state and federal filings, and more. HROs can manage all of this for you.

HR outsourcing services can be very helpful for companies large and small, but mistakes are common. In most cases, companies end up spending more than they need because they haven’t accurately anticipated their own HR needs. To ensure that you and your employees get the most out of an HRO, follow these key considerations:

• Know your HR needs: It can be tempting to go all-in on a solution that will offer every HR function under the sun. While that might be good for your company, it also might end up being more than you need. If the latter, you’ll end up paying a lot more than you need. 
• Prepare staff adequately: Depending on the HR features you use, your staff will have access. For example, they might need to login to a portal to request PTO, enroll in benefits, etc. If they aren’t properly trained on how to use it, they won’t use it — which means you’ll be spending money for naught. ‍
• Track success: Figure out what metrics make sense for tracking the success of your HRO. In other words, how will you know it’s a worthwhile investment? Common metrics include employee engagement numbers, employee satisfaction, project time, etc.

At the end of the day, HR outsourcing solutions can help make your job easier by taking a vital function — human resources — off your plate. But that’s not all. Primary benefits include:

• Increased retention: When you offer benefits, development opportunities, and streamlined processes for things like benefits and PTO management, your employees will feel happier and more engaged. This, of course, means you’ll experience less employee attrition. 
• Less administrative overhead: HR procedures take a lot of time and people to manage. When you outsource them, you’ll have less people to hire and train internally — not to mention less work to do yourself.
• Increased productivity: Outsourcing HR allows you to be more efficient with your time. In other words, you can focus on bigger-picture plans for your business operations and growth.

To see how this can actually improve your bottom line, check out our HR Tech ROI Calculators.

HROs either charge a per-employee per-month fee or a percentage of each employee’s pre-tax monthly salary. How much you’ll end up paying depends on how many employees you have, what features you need, and where your business operates. 

As you talk to HRO providers, ask them for a cost breakdown specific to your company and needs. That way, you can more easily compare costs and pick one that will give you the most bang for your buck.

HROs offer a range of services to help you streamline your HR operations. As we mentioned previously, they tailor their HR packages to your needs, so you could benefit from some or all of what they provide. For example:

• Benefits: HROs help you offer a variety of employee benefits, from healthcare (like medical, dental, and vision insurance), wellness perks and fitness memberships, commuter benefits, 401(k) plans, and more.
• Payroll administration: HROs can automate your payroll services, with some integrating with accounting software like Xero, Quickbooks, and QBO. They can also automate direct deposits for full-time employees, vendors, and contractors, and split payments across multiple accounts, if necessary.  
• Compliance: Remain compliant by letting an HRO handle all government-related paperwork, filings, and more. This includes everything from workers’ compensation, to W-2 and 1099 filings, to Employment Practices Liability Insurance, to unemployment insurance filings, and more. 
• PTO: Easily manage paid time off for your employees with tools that streamline and automate PTO requests and approvals. 
• Employee Retention: With HRO help, you can keep employees engaged and happy with a retention strategy that includes everything from onboarding and training, to performance management, to leadership training, and more.
• HR Consulting: If you’re looking for guidance from HR professionals, some HROs offer consulting services to provide HR best practices and tailored advice on topics ranging from paid family leave to terminating employees, to managing overtime, and more.‍
• Mobile access: Most HROs have a mobile app for both employers and employees. Employers can access their admin portals and benefits, while employees can access and manage their benefits portals, track PTO, and more.

To ensure you pick a solution that’s right for you, you’re going to want to evaluate a few companies before you make a decision. Part of that evaluation process should include a demo where you can see the product in action and speak to a rep about all the features and costs as well as your questions and/or concerns. Common questions to ask on these demos include:

• Do you integrate with other systems (like accounting, expenses, or time tracking)?
• What security measures do you take when handling employee data?
• What HR tasks and features do you specialize in?
• Can we pick features a la carte based on our needs?
• How do you help with recruiting and onboarding? Do you write job descriptions for us? Do you run background checks? Will you create an employee handbook for us based on our unique needs?
• What employment laws do you help with?
• How do your services differ from typical PEO services?
• How will this solution fit into the rest of my tech stack? What integrations do I need?
• How will others in the organization use this solution?
• Are there any concerns or issues that existing customers talk about? 
• How does pricing work?
• What implementation guidelines do you suggest?

Implementing an HRO depends on the solution you choose and the features you end up outsourcing. It’s important to discuss implementation requirements with your HRO provider so you know exactly what is expected from your end. For example, will you need to involve your IT team to manage certain tech integrations? 

In general, we recommend the following implementation plan best practices:

• Elect a project manager: If the implementation process will take a lot of time and require participation from key stakeholders, you’re going to want one person to run point and make sure everyone is on the same page with timelines, communication, etc. 
• Create a timeline: Map out exactly what needs to get done, by when, and by whom. Your project manager will then use this as a guide to keep everyone and everything on track.
• Communicate: Keep a continuous dialogue with all parties involved in the implementation, including internal stakeholders and your HRO partner. Having regular check-ins always helps keep things running smoothly. 

What is an HRO?

An HRO (human resource outsourcing service) is an organization that acts as a full human resources team on your company's behalf.

What services do HROs offer?

HROs offer services such as recruiting, employee onboarding, training, and development, payroll and taxes, benefits administration, workers’ compensation, compliance and risk management, and other general HR administrative tasks.

What types of companies benefit from an HRO?

Startups, small businesses, nonprofits, or fortune 500 companies could all benefit from an HR. If you'd rather not build an in-house HR team, which costs a lot of time and money, then using an HRO will work in a pinch.

Regardless of your number of employees, you need HR - whether that's one HR manager, an entire HR team, or outsourced HR software. If you are looking to outsource, think about your unique HR needs then book demos with a couple of HR service providers best suited to meet those needs.

Thanks for reading our guide on HR outsourcing service providers. We constantly review the top software vendors in the HR space. If you’re new to HR tech and want to learn more, we recommend you start by checking out our top HRIS, payroll and benefit administration vendor recommendations.