3 HR Outsourcing Solutions for Small Business

Small businesses have to manage with fewer resources. This can be a challenge and one that could be solved with the use of outsourcing. When it comes to outsourcing HR functionalities, there are some options that small businesses should definitely consider.

Outsourcing means organising someone outside of the organisation to conduct specific tasks and operations. It can work in many different areas of the business. For small businesses, it can be specifically beneficial in the field of human resources (HR).

When you are struggling to manage HR functions and you have limited resources at hand, here are the three HR outsourcing solutions your small business must keep in mind.


HR consulting is one of the key areas that could and, often should, be outsourced. There are two ways consulting can be outsourced by a small business.

The first option is to opt for an HR consultant like The Pendolino Group in the Bay Area. This is an independent consultant who will work at the organisation – often on-site – and provides expertise and services as needed. In essence, they are acting like an in-house HR professional with the exception that they often don’t work more than few days a week. Their work can range from helping organisations create HR policies to assisting with onboarding and recruitment.

The second option to get help with consulting is to opt for a consulting company. This is not as a personalised system since you will often have numerous people helping you instead of a single HR professional. But they often come with a much broader ability to perform different functionalities and their access to resources can be a lot greater. Consulting companies are specifically good for small businesses struggling with legislative issues.

2. Software and service providers

Now, it’s also possible to outsource HR functions by opting for online HR software or HR service providers. For small businesses, this is often the lowest priced option.

Online software is often packed as human resource management system. These can help with things like payroll, scheduling, and benefit management. The benefit of these systems is that you don’t need to invest in actual IT infrastructure because the software is in the cloud. They also enhance things like data acquisition, management and analysis, giving the organisation a wider access to data. In can result in less paperwork and time spent on HR tasks due to automation. While it requires you to have some sort of in-house HR functionality, it can make it easier to manage the HR needs.

The step-up from online software is to opt for HR service providers. This means that you not only get the software to deal with your HR needs but also the personnel and expertise to do it. In most instances, the service providers are the same that also can provide the standalone software services. These are still less costly to full-out consulting, but costlier than simply opting for human resource management system on its own.

3. Full outsourced employee management

Finally, companies can also choose to outsource their HR functionality to a PEO. These are companies that do the employee management for you. They don’t just help you either through consulting or software but actually conduct the work for you. It’s often not possible, or advisable, to pick and choose between what aspects of HR you outsource. PEOs are at their best when they cover all of your small business HR needs from recruitment to payroll. Naturally, this solution is the most comprehensive but also the costliest.

Outsourcing HR can be beneficial to small business

Outsourcing is already highly popular. According to research, 65% of businesses are already outsourcing some aspects of HR. For big business, there are plenty of opportunities to be rather selective while small businesses have to target the opportunities that best help them.

With HR expenditures going up, finding the right venues to save money is important. The good news is that the above HR outsourcing options can help companies of all sizes.

The important thing is to pay attention to what your small business needs. You shouldn’t opt for a PEO, for example, if you already have expertise in certain areas. Instead, it might be beneficial to get human resource management system software as an additional tool. On the other hand, some companies need a lot more help, especially at the initial stages, and they might want to consider consulting to guarantee everything goes smoothly.

So, start by mapping out your small business needs. Think about what the key HR issues are for the business and what kind of expertise you might already have. This will allow you understand which outsourcing option has the most benefits for your small business – you will be able to opt for the option that yields the highest rewards.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.