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Read our buying advice for HR outsourcing

Buying Guide for HR Outsourcing


Over the last decade, outsourcing the human resources (HR) function has become a cost-saving measure for many companies both large and small. Outsourcing the HR function can happen piecemeal or en masse.

So if you are a very small company without the resources to take care of your HR needs in house, you may choose to outsource your entire HR department. If you are a larger firm, you may choose to handle some tasks yourself and outsource others.

In either case, if this is your first time exploring what it might look like to outsource your HR needs, this Buying Guide will give you the information you need to make the right purchasing choice.


There are a number of significant benefits you can reap by outsourcing some or all of your company's HR needs. Here are some of the most important benefits to consider:

Choosing an HR Outsourcing Company

Before starting your search, first list out the tasks you need outsourced. This can be revealing because you may discover you can handle certain tasks quite well from within, or perhaps you will realize you need to outsource the entire department. After doing this exercise you will be in a much better position to shop intelligently.

This will also help you negotiate more effectively, since most HR providers today offer both piecemeal (a la carte) and package services. So you can either buy an inclusive package service or bundle together a customized package, or buy just one single service if that is all you need.

Once you start your search, you will notice right away that there are different service levels you can choose from. Here are the three basic tiers:

Once you have a better idea of which tier your company could benefit from most, your next step will be interviewing providers. Here, you want to look closely at references, see what other customers say about the services provided, find out about their background and be sure to meet the specific person or team who will handle your account.


In general, you can expect to pay anywhere from $20 to $200 per employee per month for outsourcing your HR function. Obviously this rate will vary according to which tasks you choose to outsource and what tier of services you need.

In some cases, instead of a flat fee "per head," you may be charged a percentage of each employee's annual salary. This can range anywhere from two percent to 10 percent. Here, be sure the rate stays the same (i.e. that it is based on what salaries were when you hired the provider) so you don't pay more if you give your employees a range mid-contract.

You can expect to be asked to sign a contract before beginning services. Typical contracts begin at 12 months but include a 60 day trial period clause.

Buying Tips

These five key tips will ensure you outsource your HR needs wisely.

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