Outsourcing HR operations? PEO, ASO, HRO, etc?

January 11, 2020

by a searcher from Northwestern University - Kellogg School of Management in Denver, CO, USA

We are at 30 people and have met our HR needs with 1 in-house HR specialist to date. We're adding a new service line that will considerably ramp up the volume our hiring, onboarding, and on-going HR operational needs. Its time to look at outsourcing our HR operations as opposed to expanding our internal team - likely keeping recruiting in-house.

Have any of you taken your org through an HR outsourcing? If so, any recommendations on PEOs, ASOs, HROs, etc. or best practices / things to avoid?

Thanks!

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Reply by an investor
from University of Pennsylvania in Dallas, TX, USA

Congrats on the growth Kelly! I am out of the PEO industry now, but I acquired and ran a PEO for 9 years before selling it to our largest PEO competitor (Oasis) at that time. I then ran the Western half of the country (60k WSE) for Oasis for a short time before they sold to Paychex. Our clients that were in growth mode often employed a hybrid solution whereby they employed a HR Manager that worked with us as the PEO / ASO. Hiring a large number of employees in a short period of time can certainly increase the need for recruiting and HR support. While some PEOs provide recruiting services, we found that our clients tended to own that function in-house. We provided some support (ATS, background checks, online onboarding), but the sourcing, screening and interviewing was primarily done by the client. We focused on the other components such as payroll, HR compliance, employee benefits and workplace safety. Pricing can vary among PEOs and your net cost may vary as well depending on whether there is a cost reduction with the PEO's health insurance and workers' comp offerings. I would be happy to chat in more detail to give you objective insights based on my experience.

Reply by a searcher
in Minnesota, USA

This has been an elusive need for me to address as a small business (10 employees). I acquired in July. I offer full benefits for FTE and the amount of time required on a bi-weekly basis. I have spent hours trying to figure out how to outsource my HR requirements, and have gone through the reel with ADP, Bambee, and others. I am now at the point of posting a part time role on Indeed. PEO's seemed to be too expensive and too many layers to churn through. My insurance provider has a great offering for me to tap into HR resources on demand (such as questions regarding personnel issues, etc)

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