Best 5 HR Outsourcing Rates 2025

How Human Resource Outsourcing Helps You and Your Employees

• HR outsourcing helps your employees by providing them with more convenient access to information on payroll, employee benefits and retirement plans, and health insurance. Outsourcing companies offer web portals and apps that allow your employees to view and download paystubs and W2s, make changes to their insurance and retirement plans, access benefits, and update their personal and withholding information. {' '}
• Outsourcing reduces administrative and overhead expenses associated with having an in-house HR department.
• You can streamline many HR functions such as recruitment and hiring. It reduces the amount of paperwork needed for payroll tax compliance. Your staff will spend less time processing new hire paperwork.
• Outsourcing helps you improve productivity and make better strategic decisions about recruiting, workforce development, and helps you to move forward confidently when you need to downsize your workforce.

Benefits of HR Outsourcing

Human resource outsourcing provides you with benefits including access to expertise, ability to reduce and control operating costs, and ability to focus resources on other business strategies and policies.

1. A high level of expertise is required for certain financial, technical, and legal aspects of human resource management. Without an outsourcing solution, you could be putting complex tasks in the hands of employees with limited time or inadequate training. {' '}
2. HR outsourcing can save you money on the cost of payroll processing and administration. You may also be able to reduce the costs of health insurance and workers compensation premiums.
3. Outsourcing allows you to automate many key HR functions. You and your staff will have more time to devote to business growth activities and to implement policies that improve employee retention and increase productivity in every department.

Choosing the Right Human Resource Outsourcing Company

Selecting an outsourcing firm that will meet your company’s needs is not an easy task. There are different types of firms that exist in the HR outsourcing arena. Here’s a description of three types of HR outsourcing firms.

• General HR outsourcing firms are companies that perform a wide range of services including benefits administration, payroll, and risk management. With a general HR outsource company, you can choose the services that you need the most. These firms can offer a choice of ongoing or regular-need services with other services as needed. For example, you could choose weekly payroll service with bi-annual employee handbook updates.
• Professional employer organizations or PEOs become important strategic business partners as they assume legal, administrative, and partially financial responsibilities of your employees. They take on hiring, recruitment, and training functions. Some PEOs even fully employ manage your workforce, take care of scheduling, and manage daily functions such as employee absences, and planning for temporary or seasonal labor needs.
• Specialist HR outsourcing firms perform a highly specialized function such as recruiting or employee screening. With specialty firms, you may have occasional need for a targeted recruitment effort or staff re-training initiative as opposed to ongoing workforce management services. {' '}

Human Resource Outsourcing Cost and Pricing Guide

There are three basic pricing models used in the HR outsourcing industry.

1. First, is the per employee per month fixed fee model which can range from $20 to $200 per employee.
2. The second pricing model is based on a percentage of employee salary or wages, varying from 2% to 20% per person. How the fee is calculated and billed can vary between HR companies. With salaried employees, the fee is usually based on a percentage of the annual salary. For hourly employees, fees are based on the average monthly wage.
3. Finally, for single services, you will pay a fixed rate either per service or per employee per use. For example, for HR policy auditing including your HR manual updating can cost $250 to $500 depending on the depth and scope of your policy manual. Outsource services such as pre-employment screening or random screening of existing employees can cost $25 to $50 per employee for each screening. These services are usually billed as provided, rather than on a fixed monthly contract.

Smaller companies can expect to see costs for annual compliance auditing to be around $3,500 on average. While full-service payroll management will cost around $2,400 annually for each employee. Mid-size companies can pay $7,200 annually per employee for comprehensive HR management. Larger organizations may see annual costs of $80,000 for full-scale HR management outsourcing services.

Human Resources Outsourcing Is a Smart Business Strategy

Your HR department is charged with making sure your company complies employment laws and regulations, tax withholding and payment, and for ensuring that employees have a safe work environment and access to benefit programs that provide insurance and retirement planning. Some HR functions can be performed by a generalist. But some areas including legal compliance, payroll and tax processing, and certain recruiting functions require an HR specialist. If you have a small staff, you may not want to hire HR specialists that you won’t need daily. Larger companies may want to streamline the HR department and reduce HR administrative costs.