What is HR Outsourcing Services?

The Milestone Team November 23, 2021
What is HR Outsourcing Services?

Human resources (HR) covers a lot of ground. For a small to mid-sized business looking for outsourced HR services, it can be good to know what kinds of services an outsourced HR firm can provide effectively. In general, outsourced HR is equipped for strategic initiatives that build strong work teams, like recruiting, hiring, onboarding, and developing company culture. They are also often responsible for other critical tasks like payroll, administering benefits, and compliance. Let’s take a deeper look at hr outsourcing examples that HR firms can provide and how they can benefit your business. 

What are outsourced HR services?

In HR outsourcing, an agreement is made between a business and an external HR provider where the company transfers the management and responsibility for specific HR functions to the HR provider. Outsourcing HR services can be very beneficial to growing a business. Having a full-scale, in-house HR department doesn’t help you sell more of your services or gain a more significant market share. It can be time consuming and expensive to make sure an in house HR team is up to speed on the latest compliance and tool best practices. What helps increase sales and market presence is eliminating time-consuming administrative tasks associated with HR management so your in-house resources can focus on revenue-generating activities. Because of this, many organizations decide instead to focus on their core strengths by outsourcing HR.

There are many functions of HR that can be outsourced. Compensation and benefits is a place many companies decide to start with first. Here are a few of the best HR services in compensation and benefits that outsourced providers can be great for:


A big challenge for business owners is the process of running accurate, compliant, and on-time payroll. Not only is this a time-intensive task, but not complying with federal and state payroll tax regulations can spell trouble.

Outsourced HR companies can provide online solutions that help you with the many facets of payroll–like record-keeping, automating direct deposits, paying hourly employees, and managing paid time off. Outsourcing payroll services with HR allows you to manage payroll as a part of your broader compensation strategy.

Benefits Administration

Ensuring your employees know about benefits options while also understanding them can be a full time job. Administering health coverage and benefits, like 401(k), commuter benefits, and major medical are what Outsourcing companies can help with. Outsourced HR firms can also provide benchmarking to make sure benefits, salary, and other vital factors are competitive to attract talent. 

Employment Law Compliance

Along with payroll tax compliance, there are numerous other federal, state, and local employment-related regulations that employers need to comply with. These include workers’ comp, sexual harassment prevention training requirements, hiring process compliance, and other workplace regulations. 

Employee Assistance Program (EAP) 

Your team’s mental health is another facet of HR that outsourcing providers can assist with. HR companies can assist your team with the support they need to be healthy and happy by offering access to  a robust Employee Assistance Program (EAP).

Companies can use a standalone EAP or they can add EAP to a benefit program like long-term disability. A standalone will typically be more robust with more benefits and options so the company can pick and choose what’s best for their employees and providers that are within their medical network. When companies add EAP to a benefit program like long-term disability, the EAP will choose providers that are within their network. 

Employee Relations

Employees sometimes need help navigating company systems or with a specific interpretation of a policy. Managers also often need help navigating difficult employee conversations, or they may want strategies on how to approach a dismissal conversation with an employee in a way that is in line with company culture and protects the business from future litigation liability. 

Outsourced HR partners can help a company gain a compliant, expert, and third party perspective on employee relations. 

Engagement and Culture 

HR is more than just writing job descriptions and the logistics of hiring employees. Developing employees personally and professionally can be critical for employee retention and productivity. 

Outsourced HR can help you assess ways to invest in employees so they are tied to the mission and value of the company. 

How to choose an HR service provider

Before outsourcing your HR, evaluate the provider you’re considering to ensure they’re right for you and your business. Here are some steps to follow:

  • Check references and reputation. The outsourced provider you choose should be licensed, insured, and have good reviews. 
  • Make sure that the provider has documented up-to-date processes, policies, and systems. Ensure those processes, procedures, and methods provide an integrated solution―you shouldn’t have to go to multiple areas to complete different tasks.
  • Outsourcing should help your organization improve. Ensure that the provider you select brings best practice-based solutions that situate your company for success while mitigating risk.
  • Ask the partner you’re looking to outsource with to explain how your company will benefit from their expertise and experience and expertise. Ask for examples with different companies where their services have successfully benefitted that company. Pay attention to see if they have a proven approach vs. concept instead of just focusing on cost savings. 
  • Ask your potential partner about the extent of their services. Although you may not have a current need for all of their services, you may want to think about future requirements. You want a partner that will meet both your current and future strategic requirements.

Outsource your HR with Milestone 

By outsourcing HR, businesses can focus their internal talent and resources towards other initiatives that can boost their business. Milestone Business Solutions is an Indianapolis-based HR service provider with a national footprint. We offer tailored HR services designed to make our clients’ lives easier and the businesses they run more successful. Our experts in human resources focus directly on you and your business. We provide a customized approach that addresses opportunities for growth while building on your company’s strengths. 

Ready to see how outsourced HR services can help your business thrive? Contact us today.

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