June 25, 2024
Selecting a Human Resource Outsourcing Firm

In recent years, HR outsourcing has become a common business practice across various industries and business markets. Despite the slow pace of the economy, the HR outsourcing industry continues to thrive as employers look for ways to improve efficiency, reduce overhead and consolidate vendors.

Companies currently looking into HR outsourcing should consider the following factors. Because outsourcing relationships can last for many years, selecting the right hussetHR company takes a lot of time and research

When choosing an HR outsourcing company, consider the following criteria:

Financial stability

Many staffing companies perform fiduciary duties for their clients. These job responsibilities include processing payroll, filing payroll taxes, and paying insurance premiums. Companies must have a good financial standing, long-term banking relationships, and be able to prove payment of taxes and insurance premiums.

Verified service history

While strong financial recommendations may indicate stability but do not necessarily equate to best employment practices or superior customer service. Prospective clients should verify HR credentials, including a team of licensed HR experts and at least three client references, and ensure they have a successful track record in all compliance, benefits, and safety areas.

Niche vs. diverse client base


Depending on the company’s industry, in some cases, it may be working with a “niche” HR outsourcing company. Some HR companies gain experience in a particular market (such as high tech, transportation, construction, or entertainment), and it is in the company’s best interest to work with a company specializing in HR outsourcing.

The benefit of working with a broader, non-specialized staffing firm is that this diversification can help protect clients from economic fluctuations or insurance instability. If one industry collapses, it will have minimal impact on other industries. Diversification also reduces insurance and employment risks more broadly. This diversity can be reflected in geography, industry, or number of employees.

Presence in the local market

Many employment laws and taxation rules vary from state to state and differ from federal laws. For example, minimum wage and overtime regulations differ from their federal counterparts. In addition, dozens of new labor laws are passed each year. The local staffing provider is well versed in the nuances of the law.

Flexibility in service offering

Many HR outsourcing companies usually require their customers to purchase all the services offered as a package. It can include everything from insurance products and payroll to hiring, guidance, and training. Customers will pay an all-inclusive fee whether they use all services or not. While some businesses may require the full range of services, many still need to. It is helpful to assess which areas of labor compliance require assistance and which do not.


Choose a flexible service provider that customizes its HR services to meet the specific needs of your business.