The Ultimate Guide to Outsourcing HR: External HR Companies Unveiled

Introduction

Are you ready to revolutionise your HR strategy? You are invited to explore the life of External HR Companies that can be beneficial in driving a meaningful change in your business.

HR Companies on the outside is another name used in place of HR Outsourcing (HRO) Providers. These companies offer specialised HR services to organisations on an outsourced basis. These organisations execute tasks such as payroll management, employee benefits administration, recruitment, and compliance; therefore, businesses can concentrate on their prime activities, and HR provides expert support.

The reason for using External HR businesses grows from the fact that there is increasing complexity in HR functions, and there is also a growing need for cost-effective solutions. It is clear from the fact that the global Human Resource Outsourcing market is predicted to reach USD 5294167 million by 2031 that more businesses are starting to turn to external providers to tackle their HR requirements most efficiently.

In this article, we will discuss the advantages of outsourcing HR to external HR companies and the critical factors for selecting the best supplier for our purpose. You will also learn how this partnership can drive the companies to success. Whether you are a small startup or a large enterprise, hiring External HR Companies can provide access to opportunities for stability and scalability that are crucial in today’s cut-throat business world.

What Are External HR Companies?

External HR Companies, also known as Human Resource Outsourcing (HRO) providers, offer specialised HR services to organisations on an outsourced basis. These companies handle tasks such as payroll management, employee benefits administration, recruitment, and compliance, allowing businesses to focus on their core activities while leveraging expert HR support.

The need for External HR Companies stems from the increasingly complex nature of HR functions and the growing demand for cost-effective solutions. With the global Human Resource Outsourcing market projected to reach USD 5294167 million by 2031, it’s evident that more businesses are turning to external providers to meet their HR needs efficiently.

For example, in 2006, Unilever deliberately subcontracted the human resources functions, including payroll processing, contracts administration, recruitment, training, and annual appraisals, to Accenture. The displacing of those activities enabled Unilever to focus on its core competencies, but it also reflected a cost-effective outsourcing of certain HR services to Accenture.

While hiring any of the best External HR Companies for transactional HR activities, organisations balance this by taking responsibility for transformational HR functions. These comprise attracting and keeping talent, directing strategic change collaboratively with line managers, and advocating for employee concerns. Outsourcing routine HR activities will avail companies of resources they can dedicate to these critical strategic initiatives, thus enhancing their organisational success and market differentiation amidst stiff competition.

In this environment where HR programs and services are becoming more complicated by the day, the growth of HR outsourcing is a testament to its importance in increasing operating effectiveness and allowing organisations to focus on their core business.

Comparing The Best External HR Companies For You! 

Here’s a comparison table of some of the best External HR Companies: 

7 Best External HR Companies Of 2024

Workday

Workday is one of the best External HR Companies, with its complete set of cloud-based software applications that handles everything concerning HR, finance, planning, and analysis. Through the user-friendly data interface, which combines people and financial data, Workday gives enterprises extensive access to analytics, thus enabling finance teams to stay attuned to real-time business facts and HR to accomplish plans.

Regarding HR features, Workday includes payroll, workforce management, spend management, talent management, and other solutions. Workday does not divulge pricing plans or open pricing on its website but brings up subscription-based service plans that match the different business needs. Though among the pricier choices in the market, Workday has a reported starting price of $99 per user per month; this is by far the most revered option for External HR Company that comes equipped with robust features and capabilities.

Pros Of The Company 

• Workday has an appealing interface that is simple to use, providing users with a delightful experience and increased productivity.
• The platform’s simplicity and design enable users with different technical levels of expertise to use it efficiently, providing quick and smooth adoption and utilisation.
• Workday endows workers with self-service functionality wherein they can manage their HR tasks without help, including changing personal information and accessing benefits information, which strengthens the process of self-drive and engagement.

Cons Of The Company

• No version of Workday is free or on a trial base, meaning that smaller businesses and organisations looking into the system might be limited.

MME

MME is an organisation in the Category Leaders among the HR External Companies with the highest-end HR services. Covering PEO, EOR, Remote Hiring, Payroll outsourcing, and individualised HR arrangements, MM Enterprises delivers integrated solutions configured to the unique demands of each client. With a proven team behind them, they focus on successfully meeting clients’ needs and creating tailored strategies that help them achieve the best results.

MM Enterprises aims to be the leading and trustworthy global one-stop HR solution provider specialising in External HR Companies. The solution provides the best services across all industries. The company focuses on strategic client partnerships, creating efficient and unique HR policies that pay off, and building lasting relationships based on trust and expected progress.

Pros Of The Company 

• MM Enterprises is accredited, and thus, the fulfilment of quality standards in the HR sector is assured.
• The company is wide-ranging in HR, providing services with PEO & EOR, remote hiring, and payroll outsourcing, covering a variety of clients’ demands.

Cons Of The Company

• Clients may feel that the presentation of the lack of details on the concerned or processing specific services is a disadvantage.

Rippling.

Rippling is one of the innovative External HR Companies, using one system to synchronise human resources, IT, and Finance operations. They help manage employees and contractors globally and becomes an unspeakably easy automated process. The platform supports several human resources roles, including payroll, HR experts, hiring assistance, and PEO services, while the latter includes health insurance management and 401(k) plans.

Moreover, Rippling has a straight deposit, tax filing, mobile clock-in, the ability to customise workflows, and more among its features. Although pricing is set according to specific requirements, starting at $8 per month per user, Rippling offers its service to a wide array of industries, including tech, finance, health, and more, making it the right solution for any business aiming to save time and minimise the overhead.

Pros Of The Company 

• Starting from $8 per user per month, plans come in quite affordable, making Rippling an option for any business.
• With no learning curve for ripple, it is quickly adopted with little or no interference with the workflow.
• Rippling’s adaptability does not lock businesses into providers; therefore, they can switch providers easily, should the need arise, which means companies can handle the hassle and downtime.

Cons Of The Company

• For others, the minimum one-year unit might be too binding, for example, as they prefer a temporary arrangement.
• No standard pricing option: The custom pricing model of Rippling might make it tricky for companies to check and compare costs with other providers or predict expenses precisely.

UKG Pro

The UKG Pro is one of the top External HR Companies, which has developed a robust global human capital management platform to increase employee productivity, connectivity, and satisfaction. With a complete set of HR and workforce management tools UKG Pro offers, the business can productively manage the whole employee’s lifespan. From robust payroll capabilities to talent management, workforce planning, and analytics, UKG Pro has developed everything one needs to have a robust support system tailored to meet different business needs.

Besides that, UKG Pro offers personalised, proactive support, post savings, and HR/payroll expertise, which has a 96% satisfaction rate. Although the site’s pricing policy does not show transparency and a custom quote is required, UKG Pro is much sought after for its delivery of alignment between the pricing and the value for money it offers, which makes it a good choice for midsize companies and enterprises seeking an integrated HR suite.

Pros Of The Company 

• UKG Pro is a comprehensive tool providing HR and workforce management functionality, which covers multiple areas of human capital operation.
• The platform allows applying a uniform regulatory system in the presence of global and local rules, thus reducing risks for businesses that constitute economic entities in various territories.
• UKG Pro gives an employee self-service system, allowing the workers to manage their HR matters themselves, increasing engagement and enhancing efficiency.

Cons Of The Company

• UKG Pro doesn’t have a free or trial version, which might make it difficult for businesses that want to know more about it while still testing it.
• Users might experience having to ask for technical support when they try to use UKG Pro properly, which may give rise to more costs or their dependency on non-internal assistance.

Papaya Global Global. 

Papaya Global is among the External HR Companies. They have been the first in the global market to develop an integrated, licensed, and regulated payroll and payments system. Papaya Global’s solution tackles the complications of ruling different workforces in more than one country. Through providing financial funding in 12 different currencies and facilitating wire transfer services in more than 160 nations, Papaya Global has become a global platform for firms with a worldwide workforce.

Service provider Papaya Global leverages several payroll, payment, and HR systems into one operating system. This reduces the complexity and streamlines the entire process, allowing companies to concentrate on business growth rather than administrative tediums.

The pricing plans range from $3 per month per employee for the essential payroll services to $650 per month per employee for the management of EOR locations. Papaya Global tailors its services to different-sized companies, such as startups, mid-to-large firms, and multinational enterprises. Whether businesses need essential payroll services only or more comprehensive solutions, Papaya Global has a few plan options to serve them, and even quotes that fit their requirements are provided.

Pros Of The Company 

• The AI-based technology designed by Papaya Global to optimise and automate HR and payroll functions is used by this organisation to achieve efficiency and precision.
• On its Global Workforce platform, Papaya makes the administration of the workforce doing business in different countries easy through its tailor-made solutions offered to enterprises operating all around the globe.
• Papaya endeavours to make it possible for businesses to remit paychecks to their employees residing in over one hundred sixty countries, making it convenient to conduct operations in multiple countries.

Cons Of The Company

• Periodically, large corporations may feel that Papaya Global pricing could be better, especially when complete functionality packages or managing a large workforce are considered.

Types Of External HR Services

External HR Companies play a pivotal role in providing a diverse range of HR outsourcing models tailored to meet the unique needs of businesses:

Professional Employer Organization (PEO) Outsourcing

PEO outsourcing is based on a co-employment model that links business entities to third-party organisations. The main feature of this model is that the service provider is regarded as the employer of record, assuming responsibility for tasks such as payroll processing, tax filings, and benefits administration. On the one hand, the company will manage the recruitment, dismissals, and all extraordinary activities at the workplace daily.

Administrative Services Organization (ASO) Outsourcing

ASO outsourcing delivers the same service but using a separate company. This type of outsourcing is related to all HR procedures an external agency performs. In contrast to PEO, a firm will be considered the employer of record, permitting direct contact with the workforce while using the combined wisdom and service of a third-party HR service provider. ASO outsourcing allows companies to outsource chosen HR functions or provide full support depending on the situation.

Human Resources Organization (HRO) Outsourcing

HRO is a type of external HR company that offers client-oriented HR services individually adjusted to the particular needs of their clients. With this model, businesses can outsource any HR functions that can help them cut costs and increase efficiency, including payroll processing, employee training, performance management, or compliance. HRO outsourcing is beneficial for large enterprises with many HR issues requiring external aid to enhance the productivity of their internal HR managers.

Software-as-a-Service (SaaS) HR Outsourcing

SaaS HR outsourcing is often based on the cloud, and automated HR functions are frequently integrated. Companies nowadays buy software packages from external agents to handle tasks such as payroll, benefits, employee onboarding, and tracking the performance of employees quickly and easily. SaaS HR outsourcing makes a business more flexible, scalable, and cost-effective than on-premises HR software solutions.

Business Process Outsourcing (BPO) HR Outsourcing

BPO HR outsourcing refers to services that transfer part of the HR functions to outside vendors. Unlike SaaS HR outsourcing formerly, it is now focused on software solutions. In contrast, BPO HR outsourcing offers holistic and integral support, including services such as recruitment process outsourcing (RPO), benefits administration, and HR consulting.

Single-Source HR Outsourcing

This holistic outsourcing model empowers businesses to offload all their HR functions to an external services agency. The External HR Companies will support the HR instruction from end to end, covering aspects such as talent acquisition, payroll administration, benefits management, performance evaluation, training and development, and compliance.

Profits Of Hiring External HR Companies

External HR Companies offer several benefits that significantly enhance HR operations within organisations:

Huge Savings

Outsourcing HR will result in huge savings through a reduction in overhead costs attributed to the upkeep of the internal HR department. Working with a Professional Employer Organization (PEO) allows organisations to get team members or experts in human resources and instruction in payroll processing and training without hiring additional staff. This reduces expenses.

Offer Employees More Services

Working with a PEO helps small to medium-sized companies offer employee benefits and services that are usually considered compensation for big companies. Employees enjoy the significant business benefits offered, significantly boosting their compensation satisfaction and helping keep them in the company longer.

Stronger Risk Management

Outsourcing HR helps risk management by providing access to human resource experts knowledgeable about labour and employment laws. External HR Companies bring in the expertise of the Best Practices to keep the organisation in line with local, state, and federal laws, thus minimising the possibility of unfair charges.

Efficient Performance Management Tools

Outsourcing HR offers employees access to HR performance management tools (PRM) that help increase employee engagement and retention rates. Tools such as engagement surveys allow the company to get into employees’ minds, thus achieving all-round organisational efficiency and satisfaction.

Accelerating the Time Required for New Employees to Ramp Up

PEOs with a human resources background are of great value when managing employee onboarding processes, especially in new geographical areas. A perfect onboarding process helps increase recruitment and production, which is the beginning of organisational success.

Features To Look For In External HR Companies

When selecting one of the best external HR Companies, consider these key features to ensure the best fit for your organisation:

1. Level of Service

Assess the service model offered by the potential partner. Find out whether they can provide the required level of assistance – this can be done online, through chat, or personally when needed. Find out the time frame to consider for inquiries and check if we have on-site or virtual counselling facilitated to meet your specific needs.

2. Cost

The way is to understand the pricing structure of different providers and compare the costs. In determining the spectrum of services available, choose the ones customised to your needs and avoid paying for services you don’t need. Consider together cost-saving opportunities with suppliers and negotiate special deals or vote for one-off support.

3. Reputation:

Look into the reputation of possible External HR Companies through client referral solicitation, if possible, from organisations similar to yours. Get a rating on the quality and reliability of the interventions they provided to previous clients and check how they benefited from the collaboration. Switch to third-party reviews and ratings to ensure additional knowledge.

4. Available Offerings

Evaluate the scope of services each provider provides to find out if it would fit your current and foreseeable Human Resources needs. Seek reliable providers of a range of services that can quickly adapt to an organisation’s future changes as it grows. Go with vendors that offer scalable solutions for your specific business needs.

5. Experience

Place preference on the providers experienced in HR with staff holding certifications issued by renowned industry organisations. Designate substantial executive positions to professionals who possess required competencies in areas such as compliance and employment relations and ensure the availability of these persons for strategic advice. Select a provider who has a long work history in dealing with comprehensive HR problems to be assured of regulatory compliance and strategic operational support.

External HR Companies Vs Professional Employer Organisations

Here are the significant differences between External HR Companies and Professional Employer Organizations: 

Setup

In a typical business structure, the HROs work as outsourced vendors offering HR activities without becoming co-employers. On the other hand, Professional Employer Organisations (PEOs) sign a co-employment agreement without which they share both responsibilities and risks with the client company. The PEO takes the risk of business liability, such as tax audits. While the HRO assumes the entire business liability risk, including IRS affairs, the client comes under the IRS as the liable entity, though the HRO advises it.

HR Services

HROs usually operate on a “just-in-time” arrangement where clients buy the services they need when they want them. This way, PEOs typically offer a full scale of HR services established under the co-employment agreement, including health insurance and workers` compensation. Some PEOs may offer more comprehensive plans because of their sponsorship; however, PEOs provide a limited choice of customisable options overall compared with HROs.

Costs

Unlike PEOs that charge more, the higher the fees, which may go up to $150-$200 per employee per month, and extra setup costs. However, HRO organisations usually give moderate-priced alternatives; clients only pay more for insurance if cases arise. The PEOs may have flat fees or a percentage of the total staff payroll, unlike the HROs, which can have varied pricing schemes.

Benefits Flexibility

PEOs give organisations tailored insurance but restricted customisation. Although these are comprehensive plans, they do not consider the clients’ different needs. While PEOs have the same number of insurance plans with leverage in the negotiation, HROs could provide a more comprehensive flexibility of insurance plans, but fewer premium savings are available.

Final Call

It is necessary to do thorough research on external HR companies while deciding between external human resource companies and professional employer organisations because it involves carefully evaluating the setup preferences, desired services of human resources, the available budget, and the flexibility in the benefits offered. 

Conclusion

Knowing the differences between Professional Employer Organizations (PEOs) and External HR Companies is pivotal for HR outsourcing. PEOs offer a co-employment model, where part of the responsibilities and risks are spread between the client and the service provider, who also provides overwhelming HR services. However, HROs function as contractual vendors whose HR services can be personalised to the business’s needs without the co-employment factor. 

Every business should plan and analyse its’ needs, budget, and level of service required to identify the most appropriate outsourcing options. Irrespective of whether one decides to share the risks with PEO or benefit from the flexibility of HRO, outsourcing HR functions helps organisations develop a more efficient operational structure, downplay compliance issues, and support strategic initiatives no matter the company’s size.

FAQs

What does an External HR Consultant imply?

The external HR consultant is the abbreviation of external human capital consultant. They usually work outside your organisation and collaborate with your team. From technical roles to management, they provide expertise and support in various human resource functions. Hence, they help you get the job done per your organisational goals.

Who are external employees?

External employees, otherwise called external workers or external contractors, do not have a permanent employment relationship with an organisation but are hired to cater to a specific service or do a particular task on an intermittent or contractual basis. They function externally for the organisation, often as independent consultants or through agencies.

Which EP is the Best for full-service HR?

Establishing the right business for External HR Services will be based on specific business necessities that the company prefers. Here are some of the top leaders brought up in this blog: TriNet HR Platform, Workday, Rippling, UKG Pro, Insperity, ADP Workforce Now, Namely HR, Ascender PeopleStreme, and Papaya Global. All the companies do so based on their offer’s distinct features and strengths, which are meant to meet the needs of different kinds of businesses.

Is it of any benefit to use outsourcing HR services?

The decision to get External HR Services depends on many elements: the size of the business, the budget, and the extent of HR needs. Organisations that require particular HR skills, scalability, cost efficiencies, and optimising HR operations should consider HR outsourcing as a strategic, cost-effective measure. It provides a salary support service and enables concentrating on the core business activities.