6 Best HR Outsourcing Services for Small Businesses in 2023
This article is part of a larger series on Payroll Services.
Human resources (HR) outsourcing is the delegation of specific HR functions and activities to an external provider. The best HR outsourcing services for small businesses provide several benefits to employers, such as better HR processes, improved compliance, and cost savings from not having to directly hire an HR manager.
In this guide, we reviewed 14 companies that offer HR services for small business owners looking to outsource HR administration. Then, we narrowed the list down to our top six recommendations.
- Bambee: Best overall HR outsourcing service for those needing a dedicated HR manager to identify HR gaps and ensure compliance
- Justworks: Best professional employer organization (PEO) services for managing payroll and employee benefits
- Jumpstart: Best for startups and small businesses requiring project work and a dedicated HR person for employees to contact
- ADP TotalSource: Best for growing companies needing strategic HR management
- Rippling: Best for tech-heavy businesses looking for an all-inclusive HR, IT, and PEO solution
- Employers Advantage: Best for employers needing HR policy creation and targeted recruiting assistance
Top HR Outsourcing Services Compared
$99 per month
$59 per employee monthly
$197 per hour
$85 per employee monthly*
$65 per employee monthly
*Pricing is based on a quote we received
Bambee: Best Overall HR Outsourcing Service
- Dedicated HR manager
- Reasonably priced starter plan
- Automated workflows for tracking HR compliance and documents requiring electronic signatures
- Online chat with a live person; all chat conversations are saved automatically in Bambee’s cloud-based platform
- Starter tier only comes with email and chat support
- Charges setup fees for higher plans
- Guided payroll solution is a paid add-on
Higher plans (with employees):
- 1–4 employees: $299 monthly plus a $500 setup fee
- 5–19 employees: $399 monthly plus a $500 setup fee
- 20–49 employees: $699 monthly plus a $1,500 setup fee
- 50–99 employees: $1,299 monthly plus a $2,000 setup fee
- 100–149 employees: $2,499 monthly plus a $2,500 setup fee
- 150–249 employees: $3,699 monthly plus a $3,500 setup fee
- 250+ employees: Custom-priced
Bambee is our top recommended HR outsourcing service because it offers solid compliance support and a dedicated HR manager to help you navigate the intricacies of handling HR and managing employees—from onboarding to conflict resolutions and terminations. Aside from helping create your HR policies, it has an online platform where you can track HR documents, staff performance, and training certifications.
Its “Employee Voices” tool even provides your staff with an online space where they can share their concerns, express appreciation, and raise workplace issues either anonymously or publicly. However, it isn’t a confidential third-party hotline like the one offered by Employer’s Advantage. And while Bambee can help you pay employees, this service is a paid add-on (unlike Rippling, Justworks, and ADP TotalSource).
Bambee Key Features
- Dedicated HR manager: Bambee’s dedicated HR manager is there to provide you with expert guidance as you set up your HR policies and procedures. If you need assistance navigating a sensitive employee issue or if you want clarity on labor regulations, your dedicated HR manager provides full remote support and coaching if you need it. Bambee’s online system also allows you to easily connect with your HR manager to raise requests (such as policy reviews) via chat or email. You also get phone support—provided you subscribe to Bambee’s higher tiers.
- HR Autopilot and compliance support: With Bambee, you don’t have to worry about keeping track of compliances. Its HR autopilot solution helps ensure that your HR policies are up-to-date, signed by your employees, and re-affirmed twice a year. Plus, your workers’ attendance to mandatory training (such as workplace safety and sexual harassment sessions) will be tracked, and you’ll even be notified of your team’s progress.
- HR audits: Bambee conducts audits to help you identify HR gaps and formulate action plans to address the gaps. Its system even has an “HR Compliance Score” tool, providing an estimate of your HR’s general health (either excellent, good, or poor) based on the audit.
Justworks: Best PEO Services for Managing Payroll & Benefits
- Enterprise-level benefits from major insurance companies + 401(k); includes access to wellness perks
- IRS and ESAC certified
- User-friendly interface
- Solid payroll tools
- Has preset payout schedules for hourly and non-exempt salaried employees (set every other Friday)
- Lacks mobile app for employees and employers
- Limited HR services (such as recruiting assistance and performance review tracking)
- Time tracking is a paid add-on
- Basic: $59 per employee monthly for the first 50 workers; $49 per employee monthly for the 50th worker onward
- Plus: $99 per employee monthly for the first 50 workers; $89 per employee monthly for the 50th worker onward
- “Justworks Hours” time tracking solution: $8 per employee monthly
Justworks is excellent for companies looking for a reasonably priced PEO to handle essential HR administrative tasks. Apart from full-service payroll, it provides access to enterprise-level benefits plans (such as medical, vision, and dental insurance) and wellness perks (like fitness memberships) at affordable rates.
It provides compliance support by handling payroll tax filings, payments, and reporting for you. Justworks also ensures that you are covered and in compliance with workers’ compensation, ACA filings, and state unemployment insurance. While it provides HR advisory services, its certified HR professionals won’t help you create HR policies and an employee handbook like Bambee, Employers Advantage, and Jumpstart’s HR experts will.
Justworks Key Features
- Low-cost PEO: Justworks’ affordable PEO plans are just one of the things that I appreciate about this provider. Its starter tier is less expensive than ADP TotalSource and Rippling’s PEO services ($59 per employee monthly vs $85 and $65 per employee monthly, respectively). Plus, its PEO is IRS and Employer Services Assurance Corporation (ESAC)-certified, which is considered a gold standard in the PEO industry.
- Payroll services: While Justworks can handle payments for hourly and salaried employees with ease, it also supports payouts for vendors and contractors. Apart from unlimited and automated pay runs, its payroll solution seamlessly syncs with its time tracking tool (Justworks Hours), so you can easily capture the actual number of hours that your employees worked in a payroll period.
- Full-service support: Justworks provides 24/7 customer service and support to its clients. You can contact its support team via phone, email, chat, Slack, and SMS. Its team of HR experts can even help you set up benefits plans, run payroll, and update your company information in its system.
Jumpstart: Best for Startups & Small Companies Requiring Project Work & Dedicated HR Support
- Offers hourly and monthly HR support plans, including a custom-priced package
- HR services cover a wide range of functions (such as recruiting, onboarding, performance management, leadership development, and more)
- Strategic administration HR services include compensation market analysis and HR data entry into various client systems
- Its HR On-call plan only allows you to contact an HR expert four times per month
- Doesn’t have payroll and benefits administration solutions
- Lacks an online platform where you can track HR documents and employee profiles
- HR Coordinator: $197 per hour
- HR On-call: $250 per month
- HR Strategic Services: Fixed monthly fee; custom-priced
Jumpstart is great for those who need help with one-off HR projects, like creating an employee handbook, posting to job boards, or researching latest compensation and benefits strategies. Its starter plan provides access to a dedicated HR consultant you can pay by the hour. Although, it also has a monthly plan if you need coaching calls with an HR expert.
Similar to Bambee and Employers Advantage, it also provides HR services for small business owners if you need to outsource HR functions like recruiting, new hire onboarding, and manual HR data entry into client systems (like payroll software). Your dedicated HR consultant can even serve as your employees’ contact person if they have HR-related inquiries and requests.
Jumpstart Key Features
- Flexible HR plans: Unlike the other providers on our list, Jumpstart offers both hourly and monthly HR support plans. This is optimal for startups and small company owners as they start with the hourly plan for one-time projects requiring the assistance of an HR professional. As their business grows, they can move up to Jumpstart’s monthly HR strategic services package if they need help handling legal HR issues and managing day-to-day HR administrative tasks.
- Robust HR services: Similar to Employers Advantage, Jumpstart offers a wide range of HR services—from recruiting and onboarding to performance management and workplace culture development. It even provides outplacement HR services, should your retrenched staff need resume creation tips, interview coaching, and counseling. However, it lacks Bambee and Employers Advantage’s employee feedback tool.
- New business compliance support: What sets Jumpstart apart from the other providers in this guide is the compliance support it provides to new businesses. Apart from helping create HR policies and an employee handbook, Jumpstart provides new employer registration assistance. And, if you’re getting new HR technology (like payroll software), Jumpstart will guide you through the vendor selection process.
ADP TotalSource: Best for Growing Companies Needing Strategic HR Management
- Highly experienced PEO that’s IRS and ESAC certified
- Access to enterprise-level benefits
- Global payroll available
- Dedicated team of specialists provide day-to-day support and strategic HR guidance
- Pricing isn’t transparent
- Time tracking is a paid add-on
- Customer service isn’t always easy to contact
ADP TotalSource Pricing*
- Starts at $85 per employee monthly
- Requires a minimum of five workers
*Pricing is based on a quote we received
ADP’s PEO services, ADP TotalSource, offers decades of HR expertise and experience (60+ years) and a robust set of features to choose from. Companies with plans to expand operations can take advantage of the strategic HR guidance provided by ADP’s team of dedicated specialists to ensure that you remain compliant with labor laws and regulations as you grow your business and workforce. Aside from expert HR support, you are also granted access to an online HR platform for tracking employee information, benefits, payroll, and more.
While you get feature-rich HR solutions and services, ADP TotalSource’s team of HR professionals won’t help create your HR policies for you (Bambee, Employers Advantage, and Jumpstart offer this service). They only provide expert guidance in addressing HR, compliance, and employee-related issues. Plus, the online solutions included in ADP TotalSource aren’t as robust as Rippling, which offers HR, IT, payroll, and expense management tools.
ADP TotalSource Key Features
- Robust compliance support: ADP TotalSource’s HR experts have decades of experience and can advise you on compliances in everything—from hiring to terminating employees. It can help you avoid potential legal issues, as it constantly tracks regulatory changes. It even provides legal assistance if an employee sues your company, provided you followed ADP’s recommended processes.
- Wide range of HR solutions: ADP’s PEO service comes with an all-inclusive HR, payroll, and benefits package. It takes on standard HR tasks like managing paid time-off (PTO), administering unemployment claims, handling garnishments, and reporting payroll taxes. You’re also granted access to full-time recruiters, applicant tracking tools, and new hire onboarding solutions so you can find and hire qualified candidates effortlessly.
- Highly-experienced PEO: ADP TotalSource is considered one of the well-established PEOs in the industry—with over 60 years of HR expertise and experience. Similar to Justworks, its PEO service is also IRS and ESAC certified.
Rippling: Best for Tech-heavy Businesses Needing an All-inclusive HR & PEO Services
- Modular HR, payroll, and IT solutions that connect seamlessly with each other
- Flexible PEO—users can easily switch its PEO solution on and off
- Integrates with 500+ third-party software
- Offers global payroll and EoR services
- Robust workflow automation tools
- Pricing isn’t fully transparent for all of its products; some solutions require contacting Rippling to get a quote
- You can’t purchase other modules without buying the core Rippling Unity platform first
- Gets pricey as you add features
- HR help desk option with phone and email support costs extra
Rippling PEO services: $65 per employee monthly
HR payroll plan: $35 plus $8 per employee monthly*
- Includes workforce automation, analytics, onboarding and offboarding, time tracking, full-service payroll, tax filing services, and software integrations
Other Per-module Costs*
- App, device, and computer inventory management: $5 per employee monthly
- Benefits administration: Pricing varies, depending on your insurance broker
- HR help desk: Custom-priced
*Pricing is based on a quote we received
We recommend Rippling for tech-heavy businesses because its robust integration options and integrated HR, payroll, and IT solutions are designed to streamline employee management processes—from onboarding new hires to issuing company computers and paying workers. It even offers global payroll and employer of record (EoR) services if you need to hire and pay international employees. In addition, its PEO solution helps manage your HR processes while ensuring compliance with federal, state, and local labor regulations and laws.
Similar to ADP TotalSource and Justworks, you are granted access to Fortune 500-level benefits plans like medical, dental, and vision insurance. Commuter benefits are also included, as well as EPLI coverage and ACA/COBRA administration. However, it lacks the dedicated HR consultant that Bambee, Jumpstart, and Employers Advantage offer—Rippling only provides HR advisory services.
Rippling Key Features
- Healthcare concierge services: What sets Rippling’s PEO services apart from similar providers include the expert healthcare support that it provides to its clients’ employees. Team members who have questions about their benefits won’t need to contact you, they can directly call or chat with a healthcare professional for support. This is made possible through Rippling’s partnership with Rightway.
- Intuitive platform: Similar to ADP TotalSource, Rippling’s PEO services include access to its intuitive online platform, which comes with robust workflow automation tools and a wide range of solutions for managing benefits, payroll, employee attendance, IT software, and more.
- Flexible PEO: You can easily turn Rippling’s PEO solution off if you no longer need its PEO services and then start using its HR platform. This is unlike ADP TotalSource and Justworks, which don’t have a flexible PEO option.
Employers Advantage: Best for HR Policy Creation & Targeted Recruiting
- Wide suite of HR services—from recruiting to leadership training
- Has HR services packages and a la carte options that provide short- to long-term HR support
- Offers a confidential “Speak Up Now Hotline” for employees to provide feedback, suggestions, and relay workplace issues (such as harassment or discrimination)
- Pricing isn’t transparent
- Doesn’t handle payroll or benefits administration for you (only provides expert guidance on how to set up and manage processes)
- Lacks weekend support (although clients can request this if needed)
Employers Advantage Pricing
HR Packages: Six options; all custom-priced
- Remote workforce HR package
- Small business HR department
- HR document starter package
- Complete HR compliance package
- HR on call
- Custom HR support
A la Carte HR Services: 12 options; all custom-priced
- HR policies and procedures
- HR investigations and documentation claims
- Employee relations
- Employee handbooks
- Job descriptions
- Employee performance management
- Human resources compliance audit
- Targeted recruiting and candidate selection
- Leadership training and customized employee training
- Speak up now hotline
- Employee assistance program
- Office yoga
Employers Advantage offers HR outsourcing services designed to streamline processes and improve employee relations while ensuring you remain compliant with labor laws and regulations. It offers a la carte HR services, which is great for businesses looking for expert HR support in creating HR policies, documents, and forms. It also provides recruitment assistance by developing your hiring tools (such as interview guides and competency-based job descriptions) and optimizing job postings to help you attract and hire qualified candidates.
What I don’t like about Employers Advantage is its non-transparent pricing. I would have appreciated seeing its rates published on its website, so I can easily make a cost comparison between the HR service providers that I’m eyeing. However, it does offer a wide range of HR packages and a la carte options that even include HR on-call services and custom HR support.
Employers Advantage Key Features
- HR outsourcing packages for long-term support: Employers Advantage offers a wide range of HR outsourcing packages to fit your needs. If you have a remote workforce, it has a package that provides multi-state compliance and the assessment of HR technologies that are best for your company. It can even create a custom package depending on the amount of HR outsourcing services and support that you need.
- A la carte HR services for outsourcing specific functions: Similar to Jumpstart and Bambee, Employers Advantage provides expert support for HR projects, like building your policy library and creating an employee handbook. It can also help with drafting job descriptions, designing a performance evaluation program, and conducting HR investigations or compliance audits. You’re even granted access to an employee assistance program and a confidential “Speak Up Now Hotline” for employees to raise their workplace concerns.
- Targeted recruiting services: While Employers Advantage isn’t a recruiting agency, it offers targeted recruiting services if you need help finding qualified candidates for your open jobs. The other providers in this guide (except ADP TotalSource) don’t offer this service. Aside from recruiting assistance, Employers Advantage also offers interview training and coaching, Indeed optimization services, and recruitment branding development to enhance your online presence so you can stand out to more candidates.
Alternatives to HR Outsourcing Services
Partnering with an HR outsourcing service provider may not be the best option for those looking for inexpensive independent HR consultants to work on simple HR projects. And while you get strong compliance support from HR outsourcing companies, they lack the end-to-end HR solution that HR software providers offer. For more suitable options, here are some of our recommendations.
Finding an inexpensive HR consultant or freelancer to fill the role
5.5% transaction fee + the cost of the project and a flat $2 fee for jobs under $50
Finding a top-rated consultant or contractor from a reputable site
5% transaction fee + the cost of the project and a fee of up to $4.95 for new contracts
Businesses looking to outsource the technical aspects of HR and get expert help managing HR and benefits
$40 (base monthly fee) plus $6 per employee monthly
Startups and small companies needing flexible HR and payroll solutions
$39 (base monthly fee) plus $5 per employee monthly
How We Chose the Best HR Outsourcing Service
We examined 14 popular HR service providers and looked for essential HR functionalities and tools small businesses need, weighing attributes accordingly. We also considered ease of use, pricing, user feedback, reporting features, and the range of HR services offered.
HR Outsourcing Frequently Asked Questions (FAQs)
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.
There are various types of HR services, and partnering with the right provider will make managing compliance and day-to-day HR administrative processes easy for you. To help determine which one is best for your company, here are four common HR outsourcing services for small business owners, including the benefits and drawbacks of each service.
An independent HR consultant is best for those wanting the benefit of working side-by-side with an expert at your location who helps you identify HR needs as your business grows. A consultant working a few hours a week will typically cost much less than hiring a full-time HR team member (which can cost around $60,000 per year).
|Hands-on assistance||May have only specialized skills in certain areas of HR (payroll, benefits, or training)|
|Costs much less than hiring a full-time HR person||May need software in addition to the consultant, which results in more costs|
|Consultant can help set up policies and procedures within your business||Consultant may not be up to date on your specific state laws|
Individual HR Consultant Pricing
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.
Individual HR Consultant Services
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
We recommend outsourcing to a professional HR consulting firm if individual tasks or projects are your primary need. For example, maybe you want to set up a health insurance benefits program, update your employee handbook, set up policies, or conduct training on how to avoid discrimination in the workplace.
Some HR consulting services for small business owners even provide year-long access to an HR professional. This is a great choice for those who don’t have the budget to hire an in-house HR manager to help you manage employee relations and navigate labor laws.
|Can pick and choose the services you need||Rarely offer end-to-end solutions|
|Perfect for one-off projects||May still require HR personnel to work with the agency|
|Doesn’t require policies and documents be created in-house||Will not be an in-house agency—all work will be done outside of your company|
HR Consulting Company Pricing
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, which range 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.
HR Consulting Company Services
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 the payroll system or HR tools and setting up HR processes
- 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
A PEO is a company dedicated to managing your employees, which is best for businesses that want to outsource everything related to HR, benefits, and payroll. From an HR outsourcing point of view, it’s the top-tier option; it provides the most value, but comes with the highest cost. A PEO actually hires your employees and leases them back to you for a fee. While you manage day-to-day work activities and supervision, the PEO manages HR and acts as the employer of record.
A PEO is also all-inclusive, providing HR consulting to you and often to your employees. It also comes with cloud-based software, employee self-service tools, forms, electronic document management, benefits, and payroll.
|Provides all-inclusive payroll, HR, and tax processing||May not be affordable for some small businesses; and becomes even more costly for larger enterprises that plan to significantly scale their business|
|Offers large company benefits at affordable pricing||Requires an on-site HR representative to manage between employees and the PEO|
|Handles all labor law compliance issues||PEO becomes the employer of record|
PEOs are priced in various ways. Some providers, such as Justworks, have starter monthly fees 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 provides 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
Looking for more PEO options? Read our best PEO companies guide to find a provider that fits your needs.
We recommend an HR service provider as a step up from software alone to ensure your company is compliant with all labor laws, especially if you’re in a regulated industry (such as banking, healthcare, or manufacturing) that requires licensing, safety, and certifications. An HR service provider is not a co-employer like a PEO, but it provides the benefits of an HR expert at your fingertips.
Often, HR service companies are the same ones that offer standalone software, like ADP, Paychex, or Gusto. However, they provide HR services in addition to the software—for example, running payroll, setting up and educating employees on benefits offerings, advising you on HR issues, or helping you manage employee leave programs. Sometimes HR services are offered as part of premium plan options or add-ons, so you can start out using the software and transition later.
|Benefit of a dedicated HR consultant||Services cost more than software alone|
|Offers recruiting and hiring assistance||Company retains all employment risks|
|Specializes in compliance and labor law||Still requires some HR management from the company|
HR Service Provider Pricing
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 Service Provider Services
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
- Onboarding documentation (like I-9 forms) and processing new hire paperwork
- 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
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.
Verify that the HR outsourcing person, firm, service, or software has the expertise you need. For example, if you hire an individual HR consultant out of Ohio, but have employees working in California, be sure that person is aware of California labor law so that HR mistakes aren’t made due to California’s stricter requirements.
Or, if you need someone to help you as you buy an existing business and take on its employees, make sure your HR outsourcing solution can manage the people-transition activities involved. You don’t want to sign up for a package only to find out the company can’t service your change management needs.
Ensure that whatever price you agree on doesn’t include upcharges. Also, read your contract carefully, as sometimes providers will include extra services your small business doesn’t really need or want, like talent management or HR file audits. Choosing a provider or service with upfront, transparent pricing will help keep your costs down and avoid additional charges creeping up in the future.
Be sure that you retain rights to all HR materials, such as templates and forms, and can access data stored by the vendor in case the HR outsourcing relationship doesn’t work out. If you choose to switch vendors, you’ll need access to at least three to five years of historical data for employees, payroll, benefits, taxes, etc.
By nature, HR and outsourcing firms understand data confidentiality and are compliant with laws like HIPAA. However, you will have a relationship with this outsourced entity and don’t necessarily want them using your employee data for unintended purposes, such as recruiting or using your company’s proprietary business information to solicit new clients. Be sure there is a confidentiality clause in your contract.
The best HR outsourcing service for your business is the one that matches your specific needs. HR outsourcing is much less expensive for a small business than hiring a full-time HR person—whether you choose to work with a consultant or manage HR yourself with great software. In fact, until your company gets closer to 100–200 employees, a full-time HR person may not be necessary (unless you’re in a unionized business, plan rapid growth, or have lots of labor law issues).
We find Bambee to be the best overall HR outsourcing vendor for small businesses because it provides both expert HR support and the basic tools for handling onboarding, performance and training tracking, and HR compliance. Its online document storage even complies with federal and state record retention laws. Plus, you get a dedicated HR manager to help you navigate the complexities of managing employees and labor laws.