If you’ve worked at any company bigger than a handful of people, you’ve probably noticed that handling HR in-house can get messy, fast. Payroll, benefits, compliance—these are jobs that rarely fit neatly on anyone’s desk, and mistakes can get expensive. That’s why more companies are turning to different types of HR outsourcing and letting specialists handle everything from recruitment to retirement plans.
But human resource outsourcing isn’t a one-size-fits-all deal. There are plenty of ways to hand off parts of your HR workload, and knowing the right approach can make a big difference in cost, efficiency, and employee satisfaction.
In this article, we’ll break down the types of human resource outsourcing and share examples from real companies. That way, you can figure out which type makes sense for your organization.
The Types of Human Resource Outsourcing
When companies start looking into HR Outsourcing, a few big acronyms always pop up. Each approach offers a different blend of services, control, and partnership. Here’s a look at the main types of HR outsourcing and how they work in real life.
1. Professional Employer Organization (PEO)
A Professional Employer Organization, or PEO, is one of the most common types of HR outsourcing for small and midsize businesses.
With a PEO, your company enters into a co-employment relationship: the business still manages day-to-day work, but the PEO technically becomes the employer of record for tax and benefits purposes.
PEOs handle tasks like payroll, tax filings, benefits administration, and even workers’ compensation. By pooling many small companies together, PEOs can often secure better insurance rates and benefits packages than most businesses could on their own.
2. Administrative Services Organization (ASO)
An Administrative Services Organization (ASO) takes care of many of the same HR functions as a PEO, but without the co-employment arrangement. By working with an ASO, the employer keeps full legal responsibility for the employees, while the ASO provides support for payroll processing, benefits administration, compliance, and risk management. This model is popular for companies that want help with HR but don’t want to give up any employer control.
3. Human Resources Organization
A Human Resources Organization is often used by larger companies with more complex HR needs. Businesses can outsource their entire HR department or just specific functions, like recruiting or employee relations.
Human resource organizations offer tailored solutions, which might include on-site support, strategy development, and day-to-day HR management. For example, a multinational corporation might use a human resource organization to standardize policies across countries.
4. Software as a Service (SAAS)
Software as a Service (SAAS) for HR is less about people and more about platforms. Companies subscribe to cloud-based HR software that handles things like payroll, applicant tracking, time-off requests, and onboarding.
Although this is one of the more hands-off types of outsourcing in HR, it’s incredibly popular, especially for businesses looking to automate processes while keeping HR decisions in-house. Paycor’s HR & Payroll software is an example of a SAAS solution that frees up HR teams from manual work.
5. Business Process Outsourcing (BPO)
Business Process Outsourcing (BPO) goes beyond just HR, but it’s a common model for companies looking to outsource specific HR functions. With BPO, a business contracts out a particular process (like payroll, benefits administration, or recruitment) to a third-party provider.
This approach is flexible, and companies can choose exactly which HR tasks to outsource, while retaining control over others. For example, a mid-sized firm might use a BPO for payroll but keep recruiting in-house.
6. Employer of Record (EOR)
An Employer of Record (EOR) is a type of HR outsourcing that’s especially useful for companies hiring employees in new states or countries. The EOR legally employs workers on your behalf, handling payroll, taxes, compliance, and benefits. This lets a business expand into new markets without having to set up a legal entity or navigate local employment laws. EORs are popular for global hiring or temporary projects where setting up a local office doesn’t make sense.
7. Single Source HR
Single Source HR means partnering with one provider for all your HR outsourcing needs. Instead of piecing together multiple vendors for payroll, benefits, compliance, and recruiting, a company uses a single firm to handle everything.
This can simplify communication, streamline processes, and ensure consistency across HR functions. Single Source HR is often a blend of the models above, tailored to the specific needs of the business.
Comparing the Types of Human Resource Outsourcing
With so many types of outsourcing available for HR, it’s easy to get overwhelmed. To help you figure out which fits your business, here’s a comparison chart based on the main models used in the industry.
| Type | What It Covers | Who It’s For | Example Services Offered | Who Handles Liability? |
| HR Technology (SAAS) | Software to automate or streamline HR tasks | Any size business looking for automation | Payroll processing, onboarding, time tracking | Employer |
| Administrative/Consulting HR Services (ASO, HRO, BPO) | Outsourcing specific HR tasks or projects | Businesses needing targeted support | Payroll, benefits, recruitment, compliance | Employer or shared, varies |
| Comprehensive HR Services (PEO & EOR) | Full-service HR management and co-employment | Businesses wanting to outsource most or all HR | Payroll, benefits, compliance, risk management | PEO: Shared; EOR: Provider |
| Single Source HR | One provider handles all HR functions | Companies wanting simplicity and a single point of contact | All of the above | Shared or provider, depending on model |
What Are the Best Types of HR Outsourcing?
There’s no universal “best” type of HR outsourcing that works for every business. What fits perfectly for one company could be a nightmare for another. The right choice depends on your company’s size, industry, goals, and how much control you want to keep.
For example, a fast-growing tech startup with a small team might stick with HR technology—using a SAAS platform to handle payroll and benefits—because it’s affordable and lets them stay nimble. A mid-sized manufacturer might lean toward a PEO, looking to offload most HR responsibilities and tap into better benefits for their employees. Large corporations with global operations might partner with an EOR to hire talent in new countries without setting up a legal entity.
Ultimately, the best type of human resource outsourcing is the one that matches your current needs and future plans. Before making a decision, take a hard look at which HR functions are slowing you down, where your team needs expertise, and what level of partnership makes you comfortable. The market now offers more types of HR outsourcing than ever, so you can find a solution that fits, not just one that’s “supposed to” be the best.
Find Your Type of HR Outsourcing with Paycor
Choosing between the different types of HR outsourcing is about finding the right fit for your business. Whether you’re looking to streamline operations, reduce risk, or expand globally, the key is to start with an honest look at your HR pain points and what you want off your plate.
If your biggest challenge is keeping up with payroll or benefits, a simple SAAS solution might be enough. But if compliance and risk management are starting to keep you up at night, an ASO or PEO could be a better fit. Expanding overseas? That’s where an Employer of Record steps in. And if you want one number to call for all things HR, Single Source HR could simplify your life.
There’s no shame in mixing and matching either. Many companies use a combo—maybe an HRO for recruiting, a BPO for payroll, and a SAAS platform for day-to-day admin. The most important thing is to find a provider who understands your business and doesn’t sell you a one-size-fits-all package.
With Paycor you can get both expert consulting and advanced technology that drive success. Our dedicated HR Services professionals offer guidance across:
HR Strategy & Support
Your dedicated HR Business Partner provides personalized advice to help manage challenges, reduce risk, and align your people strategy with business goals.
Workplace Safety
A safety expert will help you build a program that meets OSHA requirements and reduces legal risks.
Professional Services Credits
Flexible, project-based support for implementing, configuring, and optimizing your HCM system.
Retirement Services & Integrations
As the leading 401(k) provider*, Paychex offers full plan support, compliance testing, and seamless integrations.
Employee Assistance Program
Support your team’s well-being with counseling referrals, wellness tools, and legal consultations
Employee Discount Program
Give your employees access to exclusive discounts on entertainment, retail, and more.
Ready to Transform Your HR Operations?
Partner with our HR experts to modernize your people management approach and drive sustainable business growth.