HR Outsourcing Basics

Hybrid Outsourcing Firms
If you're not entirely comfortable handing off all your HR responsibilities to a PEO, or if you don't need a full suite of services, consider outsourcing a few time-consuming or labor-intensive HR tasks.

For example, many companies use recruiters to find suitable candidates, but opt to retain control of staffing activities such as hiring and firing. Recruiters may charge on an hourly or a per-project basis, and generally command $60 to $120 per hour. Executive recruiters contract for approximately 25 to 35 percent of an executive's first-year salary.

Another key function many companies outsource is payroll. Payroll service usually costs $10 to $30 per employee per pay period.

You can also outsource HR services by the project. HR firms provide all kinds of specialized services, and will develop your employee handbook, set up your compensation program, or establish a performance management system that you can use to evaluate your employees. Rates for these types of services vary by project complexity and duration. Shop for competitive rates by getting estimates from a few different vendors.

Whether you go with a comprehensive solution or outsource specific components of your HR functions, it's important to develop a solid working relationship with the vendor. You need to have good chemistry with the outsourcing firm, and should feel confident that it will be responsive to your needs. Since it will be handling your recruiting, hiring, training, benefits, and other important tasks, you need to trust this firm to act in your best interests.