HR outsourcing services

What is HR outsourcing, why should you outsource HR and how much money can outsourcing HR services save your business?

First published on Wednesday, Jun 24, 2020

Last updated on Monday, Jun 10, 2024

As a small or medium-sized business owner in the UK, it's highly likely that you need HR support to manage your employees and related responsibilities.

You might assume that hiring an in-house HR management team is your only option, which is often costly and unaffordable for many small businesses.

The good news is, in today’s digital age, there are effective alternatives available for outsourcing HR services that are affordable, help you avoid risks, and ensure the success of your business.

So, let’s take a look at what outsourcing HR services can offer to your organisation on a company-wide scale.

What is HR outsourcing?

HR outsourcing is the process of purchasing HR services for your business from an external HR provider.

The specific HR services that are outsourced vary from company to company. Some may outsource all their HR processes, while others may only outsource a particular HR function, such as payroll or recruitment.

Making HR outsourcing a viable option for businesses in need of specialists to manage some or all HR activities.

brighthr's recruitment management tool on laptop

The types of outsourced HR services

Three main types of HR outsourcing services are most popular among business owners, they are:

Business process outsourcing (BPO)

This type of outsourcing involves a provider who manages specific HR tasks for your business, such as payroll or hiring strategies.

Shared services

This refers to the management of transactional or administrative aspects of human resources by external sources.

Application services

This service involves the management of physical and technology-based tasks.

Of course, you may need to combine different HR outsourcing services to meet your specific needs. However, the primary goal of HR outsourcing is to take a specific workload off your business.

Why outsource HR?

Outsourcing HR functions can provide your business with a cost-effective way to save valuable time and money. An HR provider's solution can either replace an in-house department or work alongside an existing team to fulfil the daily requirements of your workforce.

The reason why companies outsource HR is to make sure that experts directly manage human resource activities, taking away a large amount of administrative duties from the company's hands.

Although outsourcing HR services for small businesses may result in losing control of these functions, using a reputable HR provider can guarantee a return on investment and offer impressive rewards.

There are several benefits your business can experience should you decide to outsource your  HR functions.

Some of the main benefits include:

Cost saving

By outsourcing your HR needs, you can save a significant amount of money on salaries, benefits, and other overhead costs associated with maintaining in-house HR departments.

Imagine what you could do with all those savings—invest in new equipment, hire more employees, or even expand your business.


When you use an outsourcing partner, you get to work with a team of experienced HR professionals. They're equipped with specialist skills and knowledge to manage even the most complex HR issues for you.

This way, you can focus on what you do best and let the experts handle your HR challenges.  

Time saving

HR administration is often time-consuming, taking your focus away from core business operations. But outsourcing your HR admin frees up your time to focus on the big picture—growing your business, leading to increased productivity and profitability, which is always a win-win situation.

Legal Requirements

As a business owner, keeping up to date with employment law can be daunting. Especially if you’re not familiar with the legal landscape, but with the help of outsourced HR services, like an HR advice line. You can ensure that you meet all of your legal requirements and minimise the risk of legal issues such as employment tribunal claims.


Partnering with an HR service provider can offer your business the flexibility to quickly adapt to changing needs, without the burden of recruitment or termination. This can help you scale up or down with ease, ensuring you have the right employees to support your business goals at all times.


Imagine having access to advanced HR technology and HR software that streamlines your HR processes, improves data management, and enhances reporting capabilities. Well, that's what you'll get if you decide to partner with an HR provider.

Overall, outsourcing HR functions can help you operate more efficiently, reduce costs, and improve compliance, which all lead to long-term success and growth.

male business owner and female hr expert discussing outsourcing HR

HR outsourcing vs HR consulting firms

It's common for people to confuse outsourced HR services with HR consultancy. But there are significant differences between both.

Outsourcing HR involves transferring the entire HR function or certain processes to an external service provider. On the other hand, hiring an HR consultant involves seeking expert advice and guidance on specific HR processes and issues. Both options offer benefits for businesses.

Did you know that BrightHR provides both? Our HR software and services are backed by HR support and the expertise of professional HR consultants with over 50 years of experience.

Cost considerations for outsourcing HR services

You’re probably thinking by now, how much would it cost to outsource your human resources?

Well, it depends on your business requirements, but you’ll often find it’s far more cost effective than hiring an in-house human resource management team.

Other HR outsourcing companies may offer only basic HR services, but at BrightHR, we go above and beyond to provide you with a comprehensive HR solution for managing your employees, that's more than just HR software.

Our Connect, Protect, and Prime packages start at just £5 per employee per month and can be customised to meet the unique needs and goals of your business.

Each package offers an increasingly comprehensive range of HR services and support, no matter the HR or employee relations issue. For a look into our pricing and packages check out our pricing page.

So, the question you have to ask yourself is...

Are you looking to maximise your business's ROI while saving time and money?

If the answer is yes then, outsourcing HR functions is the perfect solution.

Whether you want to replace an in-house department or complement your existing team, HR outsourcing solutions, like BrightHR, are the most cost-effective option.

By outsourcing your HR, you can ensure that your human resource activities and any HR issues are managed by HR specialists, who will take care of the HR admin, leaving you with more time to focus on growing your business.

While it may seem daunting to relinquish control, entrusting your business to BrightHR is a decision that can reap significant benefits and guarantee a great return on investment.

But don’t just take our word for it, see for yourself how much you could save with BrightHR…

How could this look for your business?

Discover your savings with BrightHR’s payback calculator

Return on your investments

for every £1 you spend


Sources: The cost of HR documentation, recording staff lateness and absence to recording staff overtime is based on...

Mollie Eckersley

Head of Operations at BrightHR Australia and New Zealand

Share this article

More on what is a human resource information system (hris)?

The Difference Between Paid vs Free HR Software

Every business needs some form of HR software. They could use it to monitor employee performance, store employee information or just focus on talent ...

people using computers in office

What is human capital management?

How you run your human resources department can have a big impact on your success as a business. But there are many ways in which you can go about ...

Person using laptop

What is an HR business partner?

Many SMEs turn to human resources consultants for extra support with their requirements. And one approach is to get an HR business partner. That, ...

filing cabinet

What is an HR database?

As a business, you’ll want to store your important human resources information in a secure and stable environment. The good news is these days a top ...

hand holding a flower

The benefits of HRMS

Managing your daily, monthly, and annual HR activities is time-consuming. In the past, maintaining everything alongside your business processes was ...