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The Best HR Outsourcing Companies of 2021

By
Patrick Proctor
,
Business News Daily Contributing Writer
| Updated
Jun 04, 2021

This guide offers tips on how to choose an HR outsourcing company, as well as our best picks for the best HR outsourcing companies of 2021.
Best Benefits Administrator
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Established market leader
Benefit-management tools
Attentive customer service
Best for Small Businesses
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Decades of experience
Extensive training
Regulatory expertise
Best Customer Support
TriNet HR Outsourcing
Exceptional customer support
Industry-specific advisors
Payroll & expense tools
Best for Large Businesses
Insperity HR Outsourcing
Health-benefit-management tools
Extensive training
Applicant-tracking tools
Best for Startups
Zenefits HR Outsourcing
Strong customer support
Recruiting & hiring tools
Ideal for fast-growing startups
This guide offers tips on how to choose an HR outsourcing company, as well as our best picks for the best HR outsourcing companies of 2021.

  • Your business can redistribute any or all of its HR processes to a human resources outsourcing (HRO) service.
  • An HRO can save your company money you would otherwise spend on salaries and wages for HR personnel while introducing a heightened level of HR expertise to your company and employees.
  • HROs can help your business comply with several rules and regulations in various areas, including employment law, payroll, benefits management, recruiting, hiring/firing and more.
  • This best picks page is for business owners and decision-makers who are considering whether they should partner with an HRO to conduct some or all of their HR processes.

A growing number of small and midsize companies are partnering with human resources outsourcing services, or HROs, to help alleviate the complexity and burden of managing various HR administrative processes. HROs have expertise in labor laws, employee benefits and compensation management, hiring and onboarding, employee tracking, and retirement planning, and they can be a smart way to help manage your HR department.

In addition to our reviews, we walk you through the do's and don'ts of choosing an HRO. Since an HRO effectively becomes your HR department, including the primary contact point for your employees whenever an issue arises, you want to choose an effective partner who won't let you down.

Find the Right HRO Service for Your Business

Fill out this questionnaire to find vendors that meet your needs.

Reviews

ADP HR Outsourcing: Best Benefits Administrator

Employees and administrators have a lot of control over their benefits.
ADP is an experienced, proven leader in the HRO industry. Businesses can feel confident about the quality of the services that ADP offers.
ADP does not list pricing online; you must contact a representative for a quote.
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Professional employer organizations (PEOs) and many HROs assist companies with benefits administration, but ADP's TotalSource stands out from the crowd. It offers several plans, including custom plans that can meet the needs of your employees. In addition to their best-in-class benefits administration, ADP offers a complete HR personnel management system, payroll tools and coverage in more than 26 countries. All of these features are included in a platform that helps small and large businesses utilize their time and resources more efficiently while better serving their workers.

ADP's ability to help organizations of any size deftly manage complex benefit offerings, along with its tried-and-true services and platform, make it one of the strongest, most comprehensive HROs on our list.

Read ADP HR Outsourcing Review

Paychex HR Outsourcing: Best HRO for Small Businesses

In Paychex's help center, customers can find a variety of resources, including training materials and tools to help maximize the system's benefits.
Paychex's team of experts actively monitor and report on new employment laws and regulatory changes.
Customer support is sometimes slow to respond to phone calls and emails.
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Paychex has been in the game for an exceptionally long time and offers affordable HRO services for small businesses that will more than meet a small business's needs. Paychex is also a leader in mobile accessibility. With Paychex, you can access your company's data when you're on the go with Paychex's mobile apps for iPhone and Android smartphones and tablets. To further assist customers, Paychex offers 24/7 live support within the United States. Customers can discuss their payroll, HR and other related business or personnel questions with a Paychex expert.

Paychex has also streamlined the process of transitioning to an HRO from a PEO service. Many businesses first use a PEO service but then, as they grow, transition to an HRO. Frequently, the transition can be bumpy, but with Paychex, it can be smooth and seamless.

An additional benefit of using Paychex is that its Paychex Flex solution has advanced reporting features you may not get with other HROs, like diversity and equal pay reporting, general ledger live reporting, and enhanced live report functionalities. If you have a Clover point-of-sale system, or if you have a loan through Biz2Credit, Paychex recently developed streamlined integration capabilities with these two companies.

Read Paychex HR Outsourcing Review

TriNet HR Outsourcing: HRO With the Best Customer Support

TriNet has teams that specialize in benefits, payroll, and expense reporting. It can offer your SMB expert guidance in these complex areas.
TriNet has a convenient receipt-management tool that helps speed expense reporting and payroll.
Some businesses report dips in the quality of TriNet's customer service, although this perspective is not shared by all of its customers.

For many small business owners, HR can be a challenging world to navigate. When outsourcing your HR services to TriNet, you can expect to receive actionable advice, feedback and support from a team of HR experts.

With a strong customer support team that is available via mobile texting (with real-time instant messaging) and 24/7 live support, TriNet is the embodiment of a company that is truly available for its customers. Besides answering your HR questions, TriNet experts can offer strategic guidance on topics such as how to set compensation structures for your company.

Some of the concerns that TriNet customers experienced in 2020 were specific to TriNet's "Connect 360" tool. Some of the bugs are still being worked out; however, according to the company, if you have an urgent question, you can immediately be put in touch with the proper HR expert to get your questions answered or needs met quickly.

Read TriNet HR Outsourcing Review

Insperity HR Outsourcing: Best HRO for Large Businesses

Insperity offers a comprehensive selection of HRO services, including extensive health-benefit-administration tools.
Insperity's applicant-tracking tool is particularly easy to use, helping businesses to recruit top talent.
Pricing and determining which services are available between Insperity's PEO and HRO model can be confusing. You may require help from an Insperity sales representative to get clear answers.

Large businesses manage a lot of complexity. Insperity can help companies navigate complex issues relating to time and attendance, payroll, performance management, recruitment and onboarding, employee safety, and benefits and compensation. Insperity has experts dedicated to each of these areas. For large companies with many departments, Insperity's experts can serve as trusted advisors who can help companies manage a complex web of critical workforce management tasks. Insperity also assigns its customers with a dedicated account representative who can answer your questions and for more complex questions and issues, can serve as a liaison.

Insperity's HR software is efficient and easy to use. Insperity is our best pick for large businesses due to its service and product offerings, as well as its ability to streamline its services and customer support across several markets and industries. Additionally, small businesses with plans to expand their workforce can rest assured that transitioning from Insperity's PEO service to its HRO service is simple. This can offer growing businesses some reassurance that they won't run into common challenges that come with migrating from one platform to a completely new one.

Read Insperity HR Outsourcing Review

Zenefits HR Outsourcing: Best HRO for Startups

Zenefits services, as well as its platform, significantly streamlines the hiring and onboarding process.
Customer service and tech support are also strong suits of Zenefits.
The choices of 401(k) providers are limited.

Zenefits' user-friendly platform excels in helping companies with their recruiting, hiring and onboarding processes. Those benefits aren't limited to the desktop version of its software either. Zenefits' mobile app has been well-received for some time now and continues to improve, which is essential for managers working with remote teams. During the COVID-19 pandemic, where many teams have transitioned to remote work environments, an effective mobile app ensures users have effective access to the HR platform wherever they go. Not only do payroll, timecard management and PTO management work seamlessly on mobile devices, the Zenefits app is easy to navigate – something that cannot be said for many HRO mobile apps.

Zenefits anticipates the many needs of a new company. The onboarding process reflects this, with guided training and support customized to fit the needs of each client. Because Zenefits understands that every company has different needs, goals, and requirements, it's our best pick for startups.

Read Zenefits HR Outsourcing Review

BambooHR HR Outsourcing: Best HRO for International Businesses

BambooHR's mobile app is one of the best. Managers can easily support employees anywhere and at any time.
The job-posting tool allows companies to easily jump-start their recruiting efforts.
If you pay employees different wages for different jobs they perform for your company, BambooHR can struggle with calculating those costs.

One reason why small businesses that are rapidly scaling may want to consider BambooHR is that new hires can input their own employment paperwork into the platform, plus BambooHR is incredibly user-friendly. Fast-scaling companies need an active pipeline of recruits and new hires to support the company's growth. BambooHR comes with tools that help employers locate top talent and then track candidates as they progress through the hiring process. Additionally, BambooHR helps employers craft a compensation package and workplace policies that can make a company an attractive employer for candidates.

Not only does BambooHR offer a sleek, modern and fun interactive platform, but it operates in more than 70 countries. Small businesses and fast-growing startups can benefit from the tools and ease of use that BambooHR offers.

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Bambee HR Outsourcing: Best HRO for Fast-Scaling Companies

Bambee offers knowledgeable HR advice for one of the lowest costs in the industry.
Bambee can help you craft your internal HR policies to fit how you run your business.
Bambee is not well suited for larger companies. If you have 200 or more employees, you may want to consider another HRO.

For the quality of service it offers, Bambee's low rates and customer support make it tough to beat. The cost of Bambee's service varies from $99 monthly (for one to four employees) to $449 monthly for 50 to 99 employees. For what you pay for Bambee, the value cannot be beat.

For companies that are growing rapidly, Bambee stays on top of ongoing legal compliance issues and updates; it also provides HR support, employee handbook updates, assistance with personnel management tracking and reporting, as well as in-depth audits of your team and business.

Bambee can also help you secure various types of insurance for your business. General liability and workers' compensation are a great start, but they may not give your business all the protection needed for the broader set of possible business-related exposures, which Bambee can help with. Bambee is the only HRO provider we've seen that offers supplemental insurance to its clients.

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G&A Partners HR Outsourcing: Best HRO for Employee Development

G&A Partners offers in-person and online training, as well as performance-boosting guidance.
G&A specializes in supporting small and medium-sized companies, many of which need one-on-one guidance and support.
G&A's website does not provide much information about its services, products and tools.

G&A Partners offers several of the tools and services that other HROs on our best pick list have, but G&A Partners specializes in employee professional development. Some of the HR services you can outsource to G&A Partners includes payroll processing, employee benefits administration, workplace safety measures, and risk and compliance management, but its impressive training programs and technology are what set it apart from other HROs we evaluated.

What makes G&A Partners a powerful HRO business partner is that it understands that providing employees with quality, ongoing training and development opportunities increases employee engagement and job satisfaction, and it helps companies retain top-performing employees over the long term. G&A Partners offers an affordable, scalable and comprehensive online learning management system that can be adapted to your company's needs. Whether it is one-off training or access to nearly 1,500 training courses, its platform allows businesses to assign and track the progress of professional development across your entire organization.

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How Much Does an HRO Cost?

The cost of HRO services varies widely. Most providers charge for their services based on two models: by the individual service provided or a subscription plan that comprises a bundle of features and/or services.

Consider your business's needs before purchasing a bundled subscription plan ‒ you don't want to pay for services you don't need.

For small to medium-size businesses, base costs typically range from $50 to $100 per employee per month.

Other "Add-on" Costs

If you need what many HRO providers consider "add-on services," plan on your costs increasing by $20 to $50 per employee per month. This cost is also influenced by the size of your business, if you have multiple locations and the complexity of your organization.  

Implementation Fees

Besides service-related costs, there are one-time implementation fees. These fees typically range from $1,000 to $3,000. Some HROs reduce or waive fees. Most HROs do not require you to sign an annual contract, but they will require 30 days' notice before you terminate service.

Some Perspective on the Costs of an HRO

As you consider the costs of an HRO, try not to panic. We recommend that you add up your total costs on what you presently spend on HR management, your HRIS (human resources information system) and payroll, benefits administration (including COBRA, flexible spending and health savings accounts, 401(k) management and tax preparation). These costs can all be absorbed under the HRO partner model. When you consider it from this angle, the financial comparison is more psychologically (and financially) manageable. For many small companies, switching to an HRO almost always results in cumulative savings, particularly when you factor in opportunity costs and overly worked and stressed HR team members.

TipTip: The upfront cost of implementing an HRO is usually offset by the long-term savings you gain by not having to maintain an internal HR department.

What Features Do HROs Offer?

When it comes to assessing, researching, and comparing features and costs from one HRO to the next, it can be overwhelming. Not only are there dozens of HROs to choose from, but when you add in the different services and products, your head can spin.

Below are three hypothetical yet representative examples of subscription plans you might find when investigating HRO providers. We recommend that you give careful thought and analysis to the exact features you need ‒ and which you can do without ‒ when determining which service level is appropriate for your business.

Service Level No. 1

Regardless of the size of your company, when you partner with a third-party HRO, these are some of the "core" services that may be offered:

  • Payroll processing
  • Tax preparation (including Form 990 and Form 5500 related reporting)
  • 401(k) retirement planning (if your company offers that benefit)
  • An HRIS platform, with some degree of employee self-service functionality

Service Level No. 2

Mid-range plans are likely to offer the services and features in the previous tier plus the following:

  • Automated time and attendance and paid time off (PTO) tracking
  • Unemployment insurance case management
  • COBRA, flexible spending accounts (FSA), health savings accounts (HSA) and eligibility tracking
  • Employee recordkeeping, retention and reporting
  • Employee benefits administration, including open enrollment and insurance renewals
  • HR compliance management, including postings, handbook updates and communications
  • Job descriptions and employee performance evaluation templates, related supervisory training
  • Recruitment and interviewing support and automated applicant tracking systems
  • New employee orientations and onboarding/termination management

Service Level  No. 3

Top-tier plans generally include all of the services and features in the previous tiers plus the following:

  • Insurance provider invoice reconciliation and payment processing
  • Family Medical Leave Act (FMLA) and various state-related medical and family leave-related claims management
  • Workers' compensation claims management (which varies from state to state)
  • Legal guidance, coaching, and, at times, oversight on employee corrective actions

Different providers offer unique service levels. The above is intended only as a rough depiction of how a typical HRO service package might look. For specific pricing plans from HRO providers, read our reviews to learn more about the service plans they provide.

TipTip: If you are a startup or very small business, consider starting with the basic service level or tier. That way, you'll be able to see if the HRO provider you've chosen really works for your business. You can always add more services as your company grows.

What Are the Advantages of HRO Services?

The advantages of a strong HRO partnership are many for small and medium-size businesses. An HRO tracks, reviews, and informs your business of changes to HR trends, laws, and best practices. An HRO also allows your team to focus on business operations instead of compliance.

A good HRO service provides the following benefits:

  • Force multiplier. The first thing many businesses realize when they hire an HRO is the available time that their HR and management personnel get back. Although many business owners (and their staff) say that this attribute alone is worth the money paid each month, it is a "force multiplier," because the business has HR experts handling HR duties and staying up to date with laws and best practices while business owners can focus on long-neglected tasks and desires, like taking on new projects and planning.
  • Fully baked HR program and services. That fact is that many new business owners (and their staff) are unfamiliar with employment laws and regulations, or they know very little about recruiting, hiring, and retaining top talent. The prospect of delegating many of your HR needs to an HRO can bring peace of mind, especially when it comes to issues involving compliance. 
  • Tested expertise. Chances are, your HRO partner has customers in several different industries and around the country. Your HRO's knowledge and HR practices are shaped by expertise and are constantly under scrutiny from its customers; the best HROs are adaptable and are always on top of current and evolving HR trends.
  • Diversity, equity, and inclusion (DEI) training and development. Employee development and diversity training is an area that has generally needed more attention than it may have traditionally received in small and medium-sized companies. DEI practices and policies are the newest and most requested feature that HRO providers offer. Likewise, training and development assistance can help a small company effectively compete in their industry while also retaining top talent. Companies with more engaged employees are more productive, and HR plays a major role in employee engagement. 
  • Employee handbook updates. A big hassle for businesses is guessing whether their company employee handbook is up to date. By outsourcing this time-consuming and cumbersome task to an HRO, you no longer have to guess ‒ or hope ‒ that your handbook is up to date with current federal and state laws and regulations.
  • Recruitment and onboarding guidance. Not only are recruitment and onboarding incredibly time-consuming, but they are easy to get wrong. Recruiting and hiring the wrong person can be a costly mistake. Well-equipped HROs can help with these processes or, at the very least, provide templates, policy samples and guidance to get these all-important tasks right.

Key TakeawayKey takeaway: HROs free up your team's time so you can focus on your business's operations without neglecting any compliance issues or critical processes like payroll, employee development and internal policies.

How to Choose an HRO

Selecting the right HRO does not have to be an overwhelming task. Aside from getting to know what services it offers (which can be difficult if all you are doing is visiting provider websites), you must assess their reputation for customer service and product customization.

Most HROs want your contact information before they share any useful information about their services and their costs.

We recommend that you take the following steps during your search process:

  1. Ask others (or sleuth) within your industry. We highly recommend talking to other companies within your industry to see which HROs are held in high regard and which ones you should avoid.

  2. Check their background. Check references, credit ratings and industry reputation (customer reviews are a good place to start). Any HRO you partner with must be licensed, insured and bonded. 

  3. Ask the HRO for a demonstration of its platform. Besides giving you a thorough demonstration of its platform, many HROs offer a ghost site or test login that allows your company admins to test the various features.

  4. Get customer references. If you have selected an HRO provider that you are excited about, do not proceed further until they provide at least three customer references that you can then contact to learn about their experience with the HRO provider.

Customer references should be

  • Within your industry
  • Roughly the same size as your company in terms of employee headcount
  • A customer of the HRO for at least two years
  1. Confirm best practices. Ensure that the HRO provider has documented and up-to-date processes, policies and systems. Inquire about how they remain current on best practices regarding employment, payroll, leave laws and other regulatory issues.

  2. Confirm the total "buffet" of service and products. Chances are, your HR needs will evolve. Your business wants an HRO partner that meets both your current and future strategic needs. Ask yourself: If your business doubles in size in the next two years, will the HRO you're considering still be a good partner?

 

Frequently Asked Questions About HROs

Are HROs and PEOs the same thing?

Not at all. An HRO allows companies to maintain control over their employees, systems and access the administrative benefits through HR services third-party outsourcing. PEOs either directly manage or employ the client's employees. In other cases, PEOs require access to employee data to automate various processes, such as payroll, benefits and time off.

Can I ask my HRO provider to fire an employee?

No, but a good HRO provider will coach you and offer suggestions about how to best proceed with employment actions such as termination, including when legal counsel should be involved.

Can an HRO take care of my benefits management?

In many cases, yes. You will need to ask specific questions, though, relating to benefits management, such as overall service offerings and open enrollment.

Can my HRO provider handle workers' compensation claim management?

In some cases, HRO providers can partner with a customer to process and manage a workers' compensation claim. This service differs from one HRO provider to the next and from state to state, where the worker's compensation laws are set and governed.

Do HRO providers know all state employment laws within the U.S.? What about international laws?

Although the HRO providers we reviewed know all federal and state employment-related laws, not all HRO providers extend their expertise or services to international markets. Be sure you ask specific questions relating to your needs of any HRO provider.

Can I cancel my HRO provider relationship if I do not like their service?

Most HROs require 30 days' notice. However, the more services a business has assigned to their HRO provider, the longer the offboarding period should be. Winding down a partnership with an HRO should be a careful process.

Patrick Proctor
Patrick Proctor
Business News Daily Contributing Writer
Patrick Proctor, SHRM-SCP, is certified as a senior professional in human resources. His more than 15 years of executive level leadership inform his work on inclusive and engaging workplace culture, as well as educating senior leadership teams about human capital management and organizational strategy. Patrick has written dozens of articles on global business, human resources operations, management and leadership, business technology, risk management, and continuity planning
Image Credit: Antonio_Diaz / Getty Images
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