What types of HR functions are generally outsourced?

The Milestone Team August 8, 2021
types of hr functions outsourced

With so many demands on time, HR tasks can stack up and quickly become overwhelming. Some businesses avoid HR altogether, not realizing how important HR functions are for their business, or try to get by with doing the bare minimum. Other businesses turn to HR outsourcing as their solution and consider moving these tasks to an external company. HR is an important part of a thriving and healthy business, and it’s important to understand what types of human resources management functions are appropriate for outsourcing.

What HR functions work best for outsourcing? 

Outsourcing HR functions can look very different depending on the company and their unique needs, but there are some specific types of HR functions that are generally outsourced. These functions include:

Payroll Processing

Running payroll every week can get complicated and is a time consuming chore, especially if you have a mixture of salaried and hourly workers (or have more complex situations like wage garnering or pro-rating). 

Compensation and Benefits

Analyzing pay and administering benefits are two areas where having an HR professional at the helm can really pay off. Benefits are complex, and outsourcing the tasks of understanding the ins and outs, as well as having someone to explain and help your employees understand their options is hugely beneficial. 


Stay up-to-date on all the important legal tasks like maintaining employee files,  accurate and complete I9s, ensure you are displaying the most recent labor law postings, and feel confident knowing your employee handbooks and people facing policies are compliant, an accurate representation of your company and culture, and aligned with industry best practices.

Talent Acquisition

Recruiting the right people can be a full time job in and of itself. Many HR outsourcing solutions manage the entire recruiting process to help you get the right people on board. If you choose to run the process yourself, an outsourced consultant can help to ensure you have an efficient and compliant program, including training your internal team on interviewing best practices. 

Employee Administration

Once you’ve identified the right new hires, the next step is onboarding and managing them as an employee. HR outsourcing can handle onboarding, offboarding, employee data updates, address the many notices and requests for information, and even manage employee relations and investigations.

Performance Management

Employees need consistent feedback to do their best. Outsourcing tasks like developing and executing a performance management strategy can ensure your team has the information they need to do their best work. Tasks like job analysis, manager education sessions, and performance review coordination are all able to be outsourced to an HR solution provider. 

Employee Engagement 

HR outsourcing strategies often include employee engagement programs. From conducting employee engagement surveys and interpreting the results, to designing reward and recognition programs, an outsourced HR provider can ensure your employees feel heard and valued.  And, it’s a great way to make sure you are focusing your efforts on the initiatives that will have the most impact. 

Are companies outsourcing HR?

Absolutely! In fact, many small- and mid-sized companies turn to these solutions, and outsourcing different business functions has become a popular business strategy, especially during the uptick in remote work during the 2020 pandemic and the overall increasingly virtual business environment. In fact, 88% of organizations worldwide made remote work mandatory or encouraged their employees to work from home during the pandemic. That, combined with the fact that 8 in 10 small businesses (80%) plan to outsource business functions in 2021, shows that HR outsourcing is here to stay and will continue to be a preferred business solution. 

What are the advantages and disadvantages of outsourcing HR functions?

Is it better to outsource HR? Some business owners worry about losing the personal touch and not having the ability to walk down the hallway and talk to their HR department. Other concerns include a lack of control when putting sensitive information in the hands of an external firm, and worrying about hidden costs or surprise bills that might pop up when outsourcing. However, many of the disadvantages of outsourcing HR functions can be eliminated or minimized with an experienced and reliable outsourcing company. 

There are reasons for HR outsourcing,  but one major advantage is that as businesses grow and expand, many hit a point where strategic expertise is needed in order to continue their current trajectory, but they aren’t quite ready to bring additional employees on board. HR outsourcing gives you access to industry expertise that you may not otherwise be able to afford. 

Experience the difference with Milestone

Worried about an impersonal or unreliable outsourcing company? Here at Milestone, we have a dedicated point person who stays with you throughout your entire engagement with us. Our years of experience in HR and our commitment to being a true business partner creates a collaborative working relationship, providing your team the support they need and allowing you to focus on growing your business.  What about the price tag? Our flexible and customizable HR packages start at around $500 per month, depending on company size and scope of services.  

At Milestone, we understand the challenges you face and the hard work that you put in as a small business owner. We do what we do because we love being a part of your success and enabling you to make informed decisions. Our team is your team, and our C-level leadership is on your side at a fraction of the cost of a full-time resource. Milestone is committed to making a difference for entrepreneurs who are out there working hard each and every day. Every business deserves access to strategy and expertise, no matter their size, and you will find that here at Milestone. Contact us today to learn more about our custom outsourcing solutions!

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