Human resources outsourcing is a category rather than a product, and the three things sold under it are different enough that quotes for them cannot be compared. Knowing which one you are being shown is the whole of the buying problem, and providers are not always quick to say.
Administrative services, the lightest model
An administrative services arrangement takes the paperwork and leaves everything else, including the employment relationship and your benefits. You stay the sole employer, the provider processes rather than decides, and the price is usually a monthly fee plus a per-employee charge. It suits an employer whose problem is volume of admin rather than access to benefits, and it is the model that most resembles buying software with a service wrapped around it.
Full HR outsourcing, the middle model
Everything above plus the documents and the advice: contracts, handbooks, policy maintenance and a line to ring when something goes wrong. Still no change to who employs your staff. This is what most buyers mean by the phrase, and it is where scope varies most between providers, so it is where reading the inclusions rather than the brochure matters most.
Co-employment, the model that changes your legal position
A professional employer organisation becomes an administrative employer of your staff, files their employment taxes under its own identification number and brings them onto its benefits and workers' compensation. It is the only one of the three that changes your benefits buying power, and the only one where certification, bonding and financial reporting are worth checking. It is also the only one that no provider in this record will price in public.
Questions people ask about human resources outsourcing
What does human resources outsourcing include?
It depends which of the three models you are buying: administrative processing only, full outsourcing including documents and advice, or co-employment through a PEO. Ask which one a quote is for before comparing it with anything.
Which model is cheapest?
Administrative processing, generally, and co-employment is generally the dearest. But they are not substitutes: only co-employment gives a small employer access to large-group benefits, which is usually why anyone pays the difference.
Do I stay the employer?
Under the first two models, yes, entirely. Under co-employment the provider becomes an employer of your staff for administrative and tax purposes while you keep directing the work.