OneSource Business Solutions Blog

Why HR Outsourcing Works


Your business needs HR support. But hiring more internal HR experts is costly. You need to train them and make sure they are doing their job correctly, and that's all after you have taken a chance on trusting that you've made the right hire. 

HR outsourcing can take all of this off your plate. When you partner with a Professional Employer Organization (PEO), you get access to many HR experts and your internal team gains the time and energy to focus on your core business needs. Through this partnership, your business sees a positive ROI. 

The secret to this success with a PEO is four principles: efficiency, specialization, economies of scale, and increased bandwidth. With these principles in mind, you can see a positive ROI with PEO HR outsourcing. 


When you hire a new HR team member, you may need them to serve several functions. They may need to do payroll, compliance, policy creation, among many other HR duties. This is inefficient and ripe for mistakes. When an employee is not an expert in any particular field, mistakes happen.  

It's extremely costly to hire an HR expert for every HR need. That's why a PEO provides your company with a more efficient solution. A PEO employs HR experts who handle your exact and specific needs, improving your employee productivity.  

Payroll, for example, requires an employee to understand overtime laws and ensure absolute accuracy with each employee's paycheck. Your PEO employs payroll experts who handle this complex and time-consuming task accurately every time. Not only does this free up your internal HR team to focus on revenue-generating tasks, payroll goes faster with a PEO. 


HR generalists can provide value to companies. But for small and mid-sized businesses, generalists may not understand the nuances of some of the more complex HR tasks.  

More specialized tasks like understanding new employment laws, compliance with changing regulations, and other complex areas of HR can take a generalist a long time to do. You may worry that their work is not accurate either, as they may need to spend a great deal of time researching. 

A PEO will employ countless HR experts in specialized areas. An HR specialist with your PEO will not only be able to get you an answer faster, but you can trust their answer is correct. Getting a fast and right answer lets you get back to running your business. 

Increased Bandwidth 

As your business grows, your internal HR team may need to grow, too. At a certain point, your internal HR employees will reach their limit on how much work they can handle.  

Your outsourced HR partner can pick up this slack instead of you needing to hire a new internal employee. A PEO can take on administrative burdens to relieve the pressure on your internal HR team. Increasing your internal team's bandwidth means they can focus on giving your employees a stellar experience, increasing employee satisfaction, and giving your business the tools it needs to grow even more. With a PEO, you never need to hire another internal HR team member again, giving you major cost and time savings. 

Economies of Scale 

Thanks to a co-employment relationship with your PEO, your company sees a positive ROI with your partnership. Co-employment is a relationship that exists between you and your PEO that gives your PEO the ability to provide you with cost savings through economies of scale. You never lose your ability to run your business as you see fit, including hiring and firing of your employees. 

Economies of scale with a PEO shines with healthcare, workers' compensation, and retirement plans. Many small and mid-sized businesses find it difficult to offer employees the benefits they seek. Many companies find these benefits are simply too expensive for them to offer their employees. 

PEOs have many clients like your business. Each of those clients enters a co-employment relationship just like you. Through this relationship, the PEO becomes the employer of record for each of their clients' employees, giving the PEO the ability to negotiate for better rates like a Fortune 500 company. Not only does this save you money over what you could obtain on your own, it also serves to make your employees more loyal to you, giving them what they want at costs both of you can afford. 

The Right PEO Makes HR Outsourcing Work 

PEOs can improve your company's cash flow by reducing your overhead in multiple ways. From taking on HR tasks that eliminate your need to hire a new HR employee to reduce your costs to offer a stellar benefits package, your company will see a positive ROI with the right PEO supporting you. 

Reducing the burden on your internal HR team lets them focus on what they do best and takes the complex and mistake-prone tasks off their shoulders, putting those duties on your PEO's HR experts. Shifting these tasks also gives your internal team the freedom to focus on providing your employees with a great employee experience. This can make your team more loyal to your company, less likely to look for other employment opportunities, further reducing your overhead by keeping your turnover low. 

Partnering with the right PEO gives your business the HR support it needs to continue growing. Through these four key principles, your company can reduce overhead, increase employee satisfaction, and achieve a positive ROI. 

Which HR Functions Should Your Business Outsource?