Hr Outsourcing

Written by Serena Berger
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HR outsourcing is a viable option for small and mid-size companies that understand the importance of HR issues but do not have the revenue or staff to justify having an in-house department. Common HR duties include hiring, dismissing, payroll and benefits administration, as well as being up-to-date on changes in local and federal tax policies. Your company may be inclined to outsource certain HR responsibilities, such as payroll, while remaining responsibility for the rest of the tasks yourself.

Types of HR Outsourcing

There are, loosely defined, four different models of HR outsourcing available. In one, a professional employer organization (PEO) assumes full responsibility for your HR needs. In essence, they become a partner in your organization and handle all operations regarding employees from hiring to determining how much each employee makes. Technically a PEO is legally responsible for your employees, but some firms refer to themselves as PEOs and only handle some HR tasks like payroll and benefits administration.

A business process organization (BPO) ensures that companies are using the latest technology for their HR systems. Application service providers (ASPs) provide software packages for their clients. The software may be a well-known application or one that is customized for the client. Both BPOs and ASPs fall under the broader categorization of an E-service, which are those products that are web-based.

The size of your company will be a major factor in determining which type of provider you select. If you have a mid-size company with IT support, a BPO or ASP might be sufficient for your needs. If, on the other hand, you have a small company, you might look for an ASP that can also host the application and store your files. This relieves your company of any requirement to maintain the hardware or hire an IT staff who will have to do frantic work occasionally and be under-used the rest of the time.


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