5 Best HR Outsourcing Options for Small Businesses

Human resources consultant pricing can vary from $50 per hour to write job descriptions to as much as $500 per hour to manage an HR strategy session. However, most HR consultants will range between $100–$150 per hour for the type of HR generalist work you’ll need done as a small business.

A consultant will want to talk with you to help determine whether hourly or package pricing is better based on your specific HR needs. Even so, paying $300–$500 a week for a few hours of HR consulting, or up to $11,000 a year, is still much lower than what you’d pay for a direct hire or a PEO co-employer.

While the services offered by an HR consultant are as varied as the consultants themselves, most can provide small businesses with the basics, such as creating HR policies, providing HR forms, and helping you set up legally compliant processes for hiring, paying, and managing employees.

Some of the other services an HR consultant may provide include:

• Helping you recruit, hire, and onboard employees and managers
• Assisting you with setting up your HR filing system, forms, and processes
• Helping you choose the best HR, payroll, or time keeping systems
• Assisting you in documenting policies and/or writing an employee handbook
• Helping you create job descriptions and org charts
• Training employees and managers on HR best practices, safety, and labor law
• Setting up a performance management system

Most HR consulting companies offer custom-priced plans—you have to call the provider to discuss your requirements and request a quote. Many providers typically charge hourly rates, ranging from $100–$200. Services can also be bundled into a package for a fixed price, such as a package price to conduct training, hire staff members, or manage benefits enrollment—or you can purchase a fixed number of hours of consulting services per month.

For instance, Jumpstart charges $197 per hour for an HR coordinator, which includes a dedicated HR consultant to handle services as needed, such as setting up an employee handbook, forms, and files. It also has a monthly subscription plan for as low as $250 per month that includes monthly coaching calls with an HR expert.

Similar to Jumpstart, Bambee offers monthly plans with pricing that is based on the number of employees you have (up to 500 only). Fees start at $99 per month and include access to a dedicated HR manager who can set up your HR policies and guide you in managing employee-related concerns (such as terminations) and compliance issues correctly. Bambee also utilizes online tools to keep you informed about labor laws, as well as automate essential HR processes, like training, performance tracking, and document management.

An HR consulting firm can provide everything people-related, from compliance to paperwork. It will serve as your HR adviser to ensure your business is on track and help you reduce the risk of labor law violations by setting up best practice policies and procedures. Most offer phone consulting as well, serving as your go-to resource for all employee-related matters.

Some of the services include:

• General HR consulting available by phone
• HR projects like creating job descriptions or conducting a personnel file audit
• Helping you choose what HR systems and processes to set up
• HR strategy to help you plan for growth or improve employee engagement and productivity
• Training your managers and staff
• Helping you recruit staff
• Setting up employee benefits, compensation packages, and other programs
• Helping you manage employee leave programs

Pricing for HR software varies from a few dollars per employee per month to $100 per month or more. In addition, HR functions are built into many benefits and payroll software programs as well; when you buy or subscribe to those software packages, you get the HR compliance features included.

Online HR software provides a system and tools to track everything related to your employees, from onboarding documentation like I-9 forms to performance management. Some, like Gusto, add benefits and payroll at nearly the same price point. All the data is stored online in a cloud-based system that typically provides your employees with some level of employee self-service, via internet or mobile app.

Some of the other services of HR software include:

• HR onboarding and processing of new hire paperwork
• Benefits enrollment and confirmation of benefit options chosen
• Timekeeping and payroll processing, compliant with US labor and tax laws
• Access to employee contact information (and sometimes org charts)
• Employee self-service tool to update personal information and download documents

Pricing for HR services runs a bit higher than software alone—between $10 and $75 per month, plus an extra $2–$15 per month per employee. What you get in addition to the inclusive software is expertise that can help you resolve employment issues. Some HR service providers price based on the number of phone calls you make per month or the number of employees you have or services you need. For example, if you need them to help recruit, that often costs extra.

HR services, like software, provide the system and tools to manage hiring, payroll, benefits, and performance management. They also offer self-service features to allow employees access to their own information, like benefits providers or 401(k) balances. In addition to best-in-class tools that are easy to use, HR service companies are advisers to you and your staff, helping you manage day-to-day HR issues that come up.

Some services they may offer include:

• HR, benefits, payroll, and labor law compliance
• Applicant tracking and recruiting
• Dedicated help answering complex HR questions you or employees may have
• Standardized forms, policies, and templates you can customize
• Assistance in updating org charts, job descriptions, and job postings
• HR compliance training so managers and employees abide by labor laws
• Strategic HR consulting to help you structure your organization for growth

PEOs are priced in various ways. Some, like Justworks, starter monthly fees are priced as low as $59 per employee (for the first 49 employees; it goes down to $49 for your 50th employee onward). Others cost between 2% and 6% of employee annual salaries.

PEOs based on a payroll model, like ADP, are priced on the number of payrolls you run, costing less if you pay monthly than if you pay weekly. It’s not uncommon to pay $100–$200 or more per employee monthly if you provide health benefits and a 401(k) and use the extensive service offerings of a PEO.

PEOs manage all people, paperwork, forms, legal docs, payroll, taxes, workers’ compensation, and insurance. Your job is the day-to-day supervision of the employee, such as setting their schedules and providing feedback on their work.

Benefits of a PEO include:

• It manages the hiring process, onboarding, and all new hire documentation and forms
• It provides employee benefits, including health insurance and retirement savings
• It manages all payroll and often provide a system for time keeping
• It, not you, deal with labor issues, preventing discrimination and reducing risk
• It provides year-end tax documents, like W-2s, 1099s, and all tax reporting
• It handles workers’ compensation, unemployment claims, and garnishments
• It has HR, benefits, payroll, and labor law compliance experts on staff to answer your questions, as well as questions your workers may have
• It typically provides online self-service options for employees to maintain their own information, as well as download documents they need, like pay stubs and W-2s

Outsourcing HR makes more sense for startups and small businesses as they may not have the resources to hire a full HR team to manage HR operations. This allows employers to delegate specific tasks (such as creating HR policies, processing payroll, and managing benefits plans) to a consultant or HR service provider.

Plus, HR consulting services for small business users have the knowledge, tools, and resources to assist you so you can set up your company with best practice resources based on the specific HR needs you have. These providers will also ensure you stay up-to-date with labor regulations and help you avoid compliance risks.

Because an HR outsourcing firm can be a person, vendor, or a group of consultants, you need to do your due diligence and have a contract to clarify terms and expectations. A few areas to consider when looking to outsource HR functions include level of expected HR expertise, availability of transparent pricing, and an agreement on who owns materials created, as well as maintaining confidentiality.