How much does it cost to outsource HR?
Businesses cannot decide on the HR resources they need until they understand the costs - compare options today
HR outsourcing costs vary according to the service you need, the qualifications and reputation of the consultants, and the size of your business.
Generally, HR consulting fees are offered on an hourly or fixed price basis. Therefore, it is essential to closely look at the HR consulting fee structure of your shortlisted independent HR consultant to truly understand the HR consulting rates.
What do HR consultants and companies do?
Before examining HR consultant fees, you need to understand what HR consultants do. Then, you can establish exactly what you are paying for.
In brief, HR consultants support a wide range of HR functions, ranging from employment law to salary benchmarking, personnel administration to recruitment, and much more. HR consultants are able to advise or take care of all of your HR tasks.
HR Outsourcing Prices
HR outsourcing prices vary depending on a number of factors although, as with many products and services, you can generally make estimates based on average costs, or past buyer experiences. The same is true of HR.
With countless businesses of every size employing and outsourcing HR duties, there is a wealth of information available to help businesses understand the budget that they will need – and therefore the ROI – to facilitate an HR project, whether short-term or long-term.
|HR audits||Assess the effectiveness of your past and present human resources.||£500/day|
|HR support||Supplements the work carried out by an internal HR team.||£100-£150/month|
|Outsourced HR||Removes all HR management from your company, placing it with a provider.||£200+/month|
Take a look at the sections below to find out more about what is included in the various functions, and how much you might need to pay.
HR audit costs
Expect to pay in the region of £500 for a one-day small business HR audit.
HR audits look at your current HR activities: including terms of policy, documents, procedures and systems, in order to see what needs to be done to get your business operating legally and efficiently. It is usually extremely comprehensive and takes a ‘fine tooth comb’ approach to assess all of the different HR practices in your business.
Generally speaking, a full audit will look at a range of features, including:
- Recruitment practices
- Employee development and disciplinary
- Health and safety
- Payroll and benefits
Though these features may be included, some businesses may prefer to specify which functions they want audited – this will especially be the case where smaller businesses have established HR concerns.
In many ways, an HR audit is the first step in answering ‘what do HR consultants do?’ It is imperative for understanding what you need from outsourcing HR, and being able to make sense of human resources costs. An HR audit is also useful if you have some HR services in-house, but need to establish where changes should be made.
You should expect an HR audit to include some small fixes, but fundamentally the results form the basis of HR consulting services fees going forward, and will feed into an actionable plan.
HR Support Costs
HR consulting fee structures for HR support vary according to the level of service and the size of your business, but will be as little as £50 per month for a very small business. Generally, average fees sit between £100-£150 per month in most cases.
HR support is a way of outsourcing the day to day running of your HR function, as well as supporting the business in its people management endeavours. HR tasks can be time consuming, especially if you do not have the required knowledge and expertise to avoid mistakes.
HR support varies depending on what you need help with, and will be available either at a HR consultant hourly rate, or through fixed HR consulting service fees. It is important to note that HR support still requires your involvement, whereby the HR company will support you with your HR functions. HR functions are not completely managed by the HR company.
HR support can help you ensure you are acting legally as an employer, provide you support and advice during disciplinary and grievance procedures, redundancy, and recruitment, as well as health and safety, training and development, payroll, and benefits.
Some of the most common HR support functions include:
- Payroll and salary
- Redundancy and hiring
- Health and safety
Small businesses usually opt for HR support on a monthly fixed fee basis, making the cost of human resources clear and easy to understand.
Outsourced HR costs
When considering HR outsourcing, the HR consulting fees should be viewed on the basis of cost-effectiveness and return on investment.
HR consulting rates for outsourced HR vary enormously, as they are customised to the individual business. A small business in the UK, looking to outsource all of its HR, will be looking upwards of £200 per month.
Full HR outsourcing is a level above HR support. Generally, you can expect to outsource all of the functions of HR. HR outsourcing costs depend on the breadth of service you choose, and the size of your business.
Some HR consultancy rates will include fully serviced HR packages, whereas others will allow you to outsource different elements of your HR requirements, on a more piecemeal basis. Understanding the HR consulting fee structure, therefore, requires you to look closely at what function of HR you will need help with. For example, you may need a complete employment law service with tribunal support, or just need help keeping your contracts legal.
As opposed to HR support, with outsourced HR you can choose to fully outsource your HR functions from a range of different services including: appraisals and performance management, payroll and benefits administration, training and development, recruitment, employee management .e.g. absence management, grievances and disciplinary procedures, and employment law.
Companies offering affordable HR outsourcing costs
As mentioned above, there are a number of top HR consulting firms that offer cost-effective human resource services.
Deciding which option is best for you can require time spent on research – to try and help, we have selected our top options:
For more information, visit our top HR companies page.
Avensure specialise in employment law and health and safety – two of the key areas affecting most small businesses.
Avensure operate on a fixed fee basis, the amount being established according to the size of your business and the services you need. They aim to ensure that you are completely covered in these two areas, whilst also bringing you a customised service.
Included in Avensure’s employment law package is employment tribunal cover and representation. Ultimately, Avensure HR consultant fees depend on the size of your business and your needs. However, the fixed monthly fee ensures that you know exactly what your HR costs are.
citrusHR are dedicated to the HR needs of small businesses and charities, and they have excellent and clear cost-effective solutions. Their HR service is comprehensive and covers all aspects of HR. You also benefit from their in-house HR software.
HR consulting services fees with citrusHR start from as little as £50 per month. Registered charities receive a 10% discount on all HR consulting rates. You are not locked into a long term contract either.
A comprehensive HR service is offered for your first 20 full-time staff at £8 each, and part-time staff at £4 each (per month). This fee gives you access to all of the citrusHR employment documents, telephone consultations, HR software and health and safety help. In addition, you can select extras including tribunal insurance and bespoke consultancy work.
Moorepay offer a bespoke HR consulting fee structure. They are specialists in payroll and all generalised HR tasks. They partner with the main high-street banks to bring you cost-effective payroll solutions. Your HR consultancy fee covers software provision and HR support.
You can add other services on top including health and safety management. As Moorepay offer a highly customised outsourced HR service the costs vary between each business.
What do HR consultants charge? (Per Hour)
Having covered the costs of HR audits, support and fully outsourced services, the costs associated with these can be broken down further by understand how much HR consultants charge per hour.
Most HR consultants will have their own HR consultant rates, which may be broken down on an hourly basis, or a fixed fee per service. They may also offer a day-rate.
Typically, you can expect to pay slightly less overall if you utilise the HR consultant on a retainer basis. On a retainer basis, the HR consultant hourly rate on will be in the region of £60+. If you do not opt for a retainer, but would rather pick and choose when you require HR help, you will be looking in the region of £75+ per hour.
For a side-by-side comparison of HR consultant costs, take a look at the list below:
- £60/hour – retained HR consultant
- £480/day – retained HR consultant
- £75/hour – non-retained HR consultant
- £600/day – non-retained HR consultant
Of course, you may sometimes need to hire an HR consultant for weeks or months at a time – the rates above can be expanded to cover longer periods of time, though it is worth bearing in mind that some HR consultants may offer reduced costs for extended periods of time.
Below, we have weighed up the benefits and drawbacks of retained and pay as you go payment plans so you can assess the value of each to your business.
Pay-as-you-go vs. retained HR costs
Average HR consulting fees are usually £10-£20 per hour cheaper on a retained basis, rather than accessing the service on a pay-as-you-go basis. Which suits your business best, will depend on a number of different factors.
With retained HR consultancy services you may need to utilise a minimum amount per month or be charged the minimum service fee. However, in our experience, the majority of small businesses usually reach the threshold to make this worthwhile, particularly if you have no in-house HR skills. There will also be a maximum usage cap.
Pay-as-you-go can be extremely valuable if you have an unusual project which you need specific HR help with. However, most small businesses usually need a certain amount of HR tasks doing on a rolling basis, especially if they wish to comfortably operate inside the law as an employer. This means that it is usually cost-effective to opt for a retained arrangement, and keep the cost of human resources as low as possible.
Factors that affect HR costs
There are a number of different factors, both internal and external to the business, which affect human resources consulting fees.
The primary differential will be the size of your business in terms of employees. The more staff you have, the greater the volume of HR requirements. Beyond this, you need to look a little closer at what type of HR functions you need help with. For example, a fixed fee for payroll administration, which can largely be conducted by a payroll data entry specialist, could incur a much lower fee than engaging the services of a fully-qualified and experienced employment lawyer to represent you at an employment tribunal.
As stated above, the costs will also be affected by your choose to work with your HR consultancy on a retained or pay-as-you-go basis.
The cost of outsourcing HR vs. in-house
The most common question that businesses have is whether they should outsource HR or handle it in-house. Weighing this up accurately will help you minimise your human resources costs.
Human resources, fundamentally, is not a revenue-generating activity. Therefore you want to carry out its functions as quickly and as cheaply as possible. However, mistakes in HR can be extremely costly, and many of the functions require specialised skill sets and up to date knowledge. It is easy to get locked into the daily tasks of HR and watch it detract from the actual running of your business.
For the vast majority of small to medium businesses, and UK start-ups, it therefore makes sense to outsource your HR function. This allows you to focus on the core aims of your business. For small businesses, outsourcing HR is cost-effective because you are not operating on a big enough scale, as yet, to have the skills and knowledge needed in house. Outsourcing HR removes the headache of difficult and time-consuming tasks, until you are large enough to employ your own in house specialists.
Whether you should outsource or stay in-house also depends on the particular HR functions you need. Some are more cost-effective to outsource than others. For example, employment law, payroll, and pensions are all very difficult to conduct cost-effectively in house. Outsourcing these makes sense.
Benefits of outsourcing HR vs. costs
Of course, keeping HR in-house usually has hidden costs which are harder to quantify. Therefore it can seem easy to baulk at the clearly stated HR consultancy rates. However, this should be looked at more closely. HR consulting fees give you a very clear indication of what a service is costing you, rather than hiding in costs that are harder to pin down and quantify.
Not only will a HR consultancy have insurance against mistakes, they will prevent mistakes from happening. And mistakes where employees are concerned can be astronomically costly. Operating within UK employment law can be tricky for the small business owner who has multiple demands on his time. It is the specific job of your HR consultancy to prevent you making costly mistakes which leave you facing costly pay-outs at tribunals.
Similarly, excellent and efficient HR services make for a happy workforce and boost morale. If you attempt to keep payroll in-house, for example, but often make mistakes as you are rushing to do it yourself at the end of the month, or getting an untrained administrator to take it on, then you quickly end up with disgruntled employees. This can have a detrimental to your employee’s performance and as such negatively impact your business.
In general, for businesses with fewer than 50 staff, it is extremely cost-effective to outsource your HR services, rather than keep them in-house.
Compare HR outsourcing prices
The best way to find the services you need is to compare HR outsourcing prices – we can help with this. By filling in the form at the top of this page, we can put you in touch with up to four UK HR companies.
The process is free, quick and easy and could save your business time and money.
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