HR Outsourcing for Small Businesses


Human resources (HR) demands can be overwhelming - especially if you’re a small business with limited assets. If you find yourself unable to manage HR, you may want to consider HR outsourcing as a cost-effective way to help your company reach its objective.

Defining Outsourced HR

HR outsourcing is when a third-party provider directs specific HR functions for your business. These can include, but aren’t limited to:

  • Benefits and payroll
  • Garnering and promoting talent
  • Managing legislative and regulatory compliance

The purpose of HR outsourcing is to shift you and your team’s attention from administrative work to strategic tasks that allow your company to meet its goals and grow.

Why Would a Small Business Outsource HR?

Outsourcing HR comes with a price tag. Whenever you’re adding another expense to your budget, it’s critical to consider the benefits that cost may bring in.

In the case of outsourcing HR, many businesses are going down this route for the sake of:

  • Focusing on Business - When you take away the administrative work that comes alongside business, your team has more time to focus on strategic efforts that can help productivity and growth.

  • Complying with Laws and Regulations - The rules of running a business are constantly changing. While it’s vital to keep up with these laws, it can also be a hassle. Outsourcing HR will allow you to understand new regulations without having to do any of the heavy research yourself.

  • Efficient Recruitment - If you’re looking to recruit more members on your team either now or in the future, you’ll find that outsourcing HR can help you land the best candidates thanks to leveraging recruiting technology.

  • Enterprise-Class Benefits - Outsourcing HR may give you access to enterprise-class solutions which can be both cost-effective and successful in managing your business.
  • How Does HR Outsourcing Work?

    The landscape for human resources management is constantly developing and, with that, they bring upon new responsibilities your business won’t have to worry about. Typically, HR outsourcing is responsible for:

    • Attracting talent
    • Background checks
    • COBRA administration
    • Employee assistance and counseling services
    • Flexible spending account administration 
    • Health care benefits administration
    • Keeping up with regulations
    • Payroll processing
    • Retirement benefits administration
    • Tracking employee time
    • Training and development
    • Workers’ compensation

    Various HR solutions are designed to operate differently. With that, it’s essential to do your research on a company before deciding which solution is best for your business.

    When to Look for HR Support?

    There are several reasons your business may find HR services beneficial. It’s essential to consider some of the issues your company has been facing recently.

    Some may find their employees are focused on administrative work (such as data input and forms processing) rather than strategic efforts. In such cases, HR outsourcing can give the time back to your employees to make the contributions you hired them for.

    Furthermore, most HR technologies allow you for self-service portals that can work through a number of tasks all at once. In other words, you can conduct benefits, update employee information, and work on employee training all through a self-service portal. Not to mention, many of these technological benefits can be supported on mobile. Such benefits are ideal when many of us are still working from home due to COVID-19.

    Still, one of the biggest reasons people outsource HR is for the sake of keeping up with federal, state, and local laws. If your HR team struggles to garner this information as soon as it’s released, HR outsourcing can help to protect your small business from penalties and fees.

    How Much Does HR Outsourcing Cost?

    Many small businesses question whether HR outsourcing is worth it merely by the cost. Admittedly, if you’re already struggling to make ends meet, HR outsourcing may not necessarily be worth it at the moment. However, if you have the extra funds, we promise HR outsourcing is anything but a liability. In fact, considering how much time it will offer to your employees, many small businesses look at it as an asset.

    The exact pricing on HR outsourcing varies from company to company. According to, the average price for these services is anywhere between $53 a month to $1,510 - depending on the type of service your business requests. It’s worth mentioning that you’ll most likely have the option to pay either a fixed rate or a percentage cost.

    Final Thoughts

    If you find that your HR team is running into several difficulties preventing your business from focusing on strategic solutions, it’s most likely time to consider HR outsourcing. Of course, the pricing of such services may seem unaffordable to some who are currently struggling through the COVID-19 pandemic. Yet, it may be the essential asset your business has needed to get to that next step.