5 Compelling Reasons to Employ Third Party HR Services

Getting assistance for other tasks like managing employees is a great option, especially if you have a growing business to focus on.


     Nunzio Presta
     Senior Sales and Marketing Executive


Running your own business means dealing with a lot of responsibilities at the same time. Getting a client, making business proposals, filing legal documents, money stuff. The list goes on. So getting assistance for other tasks like managing employees is a great option, especially if you have a growing business to focus on.

One of the latest trends in the market for small businesses is getting 3rd party HR services and outsourcing to them the HR functions of your company. Through this, you can ensure that your company is in the hands of field experts.

Background: What is HR Outsourcing?

As we discussed in ‘Third Party Employment Services’ article, “A third party employment or outsourcing agency is a firm or company that provides recruitment or HR services to a company that hires them. They will fill in and take on some of the tasks of an in-house HR department like recruitment, payroll, and employee relations.”

That means that you can hire these firms for specific services like recruitment and business consulting or hire them to act like your whole HR department. If you plan to expand your business to another country, the best option is to get a local HR firm in that area. With this, you will have someone on your side who knows the law of that country very well and could guide you in navigating your business in their market.

Communicate Effectively and Frequently

Flexibility: You Choose Your Services

We cannot emphasize this enough, but one of the best qualities of external HR firms is that they are flexible with their services to help companies get their exact needs and more. You can just outsource a specific HR function that you need at the moment or have them manage your entire human resources department.

Business-Process Outsourcing (BPO)

With Business-Process Outsourcing or  BPO arrangement, you can outsource just a single HR function to your chosen third-party service provider. Examples of tasks that you can outsource are payroll and benefits administration. This arrangement offers both the service and software needed to lift the administrative and other burdens from your in-house HR department.

Single-Source Outsourcing

HR firms who offer this outsourcing arrangement can give you access to HR professionals who can cater to all your needs, from recruitment to separation-of-employment process and everything in between. You’ll have a single supplier that will cover the whole employee life cycle. You can get them to manage anything employee-related tasks, including payroll, benefits administration, and talent management.

Communicate Effectively and Frequently

Professional Employer Organization

A professional employer organization, or PEO, offers a co-employer relationship or employee leasing arrangement to provide HR management services and benefits to your employees. In this arrangement, employment responsibilities are shared between the employer and the PEO. Usually, employers manage and control the work performed by the hired employee, while PEO takes on payroll, benefits, taxes, and such.

Small Business or Enterprise? We got you covered!

Either you have a startup, small business, or an established enterprise, human resources outsourcing companies could cover your HR needs. Larger companies usually have an HR manager that leads the department to manage all the HR needs of the company. In contrast, small businesses typically have a one-person team that caters to every task available.

With that in mind, both businesses would still have needs covered by HR services firms that are experts in the field. They have the experience, skills, and knowledge that internal HR staff might not have yet. Hiring them could also give you a different perspective that could help solve current and long-term problems in your company.

Stay Compliant

Some of the most frequently outsourced HR functions involve compliance issues. It doesn’t matter how big or small your company is. You would want to avoid any legal issues. Outsourced HR firms can help you stay compliant, so your company will not be sanctioned or sued anytime soon. Legal requirements for businesses vary from country to country, so getting an expert would be your best choice all the time.

Some specialized HR functions that most often are outsourced because they are not within the expertise of the internal HR team include:

  • Family and Medical Leave Act (FMLA) administration and complex leave and disability cases.
  • Federal contractor compliance, including creating an affirmative action plan, analyzing the adverse impact on minorities and women, and preventing pay disparity.
  • Providing specialized training.

You Can Control the Scope Of Services And Base Price

As explained earlier, human resources outsourcing companies are mostly flexible with the services you need, so you may also control the scope of the services you’ll hire them for. This also means that you will have control over if you’ll be billed within or more than your budget.

They usually have a baseline for the price of their services, and there would be increases or decreases depending on your needed services upon discussion. Of course, firms have different pricing methods, but they try to achieve predictability, efficiency, and competitiveness when coming up with their pricing terms.

Their pricing model should be predictable in terms of having clear and quantifiable prices on their services. The pricing models’ efficiency can be measured on whether they can bring their costs down if needed without having loss. Lastly, the price should be competitive enough even when compared to other HR outsourcing firms in the market.

    Take Advantage Of Technology Not Available In-house

    Software-as-a-Service (SaaS), as defined by Investopedia, is a software licensing model in which access to the software is provided on a subscription basis, with the software being located on external servers rather than on servers situated in-house. Employers usually use SaaS in the HR field to access payroll applications and talent management, such as tracking applicants and employee training.

    Using an HR cloud application is now the trend as it showed lots of benefits for organizations that already switched to using it. One of these benefits is that companies won’t need some in-house servers anymore, and its pricing is scalable.

    But if you ought to use SaaS applications, make sure to roll out the implementation gradually so that the people who will use it won’t be too overwhelmed with the sudden change of the process. Remember that not everyone could understand this innovative system right away, so communication is the key as always.


    There is no doubt that outsourcing HR functions of your company come with a price, but you will see your savings in the long run by hiring the right vendor with the expertise and skills that an in-house HR staff might not have. In addition, establish a collaborative relationship with your chosen vendor through trust and communication. Getting an outsourced vendor who can deliver outstanding results in a timely manner will surely make your investment in their services so worthy and beneficial to your organization in the long run.

    For over 35 years, HR Options® has provided highly personalized solutions aimed at identifying and filling supplemental human resource needs for clients throughout the U.S. and Canada. Whether augmenting your HR department or serving as a complete outsourced solution, our suite of services and experienced professionals will help you navigate through complex and ever-evolving employment regulations in the US and Canada.


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