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Blog · Published: December 4, 2017 Updated: January 13, 2022

Cost of HR Outsourcing – More Affordable Than You Think

Daily HR demands for small business owners can consume up to 40 percent of the day. This is time that could be spent on revenue-generating functions. Many companies don’t realize how affordable it is to outsource HR to a professional employer organization (PEO). Far too often we hear “I’m sure that costs too much!” We decided it was time to dispel this myth.

Add it up

Let’s assume you have 20 employees and decide to hire a Human Resources manager. According to the United States Department of Labor, Bureau of Labor Statistics, the median pay for an HR manager in 2016 was $106,910. This rate obviously varies depending on location and business category. It, at least, gives you a point of reference.

Looking ahead, what happens if your HR manager takes medical leave or leaves for another job? You’re left scrambling to handle all the HR functions especially time-sensitive tasks that impact compliance with government regulations. You’ll also need to hire and train a new person. These are important considerations for a growing company.

The PEO difference

For comparison, it costs on average between 2 – 4% of payroll for companies to partner with a PEO. Research sponsored by NAPEO found that “PEOs are able to provide these services at a lower cost than their clients would have to pay for more basic HR administrative service.” 1

Beyond cost, companies instantly gain the stability of a full team of HR specialists instead of expecting one HR manager to know everything. This frees up time spent on administrative duties and provides peace of mind knowing you always have experts proactively looking out for your company’s best interests. PEOs also offer access to a broader array of HR-related benefits and services, making you a more attractive employer.

Money and time saved by outsourcing your HR to a PEO can be reinvested in your business’ strategic growth. MidwestHR, a top Chicago PEO in Illinois, lets you select which benefits and services are reflective of the culture you’re trying to build without a long-term contract. We’ve been helping companies grow for 20 years and take great pride in our 96% client retention rate. Give us a call 630-468-9286 to learn about what is HR outsourcing and how it can benefit your company.

Filed Under: Blog

David Nauert

In his 17 years at MidwestHR, David has worked to create valuable partnerships with prospective clients & strategic alliances. As Director of Sales and Strategic Alliances, he leads the Business Development team with over 21 years of experience in the industry.

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*The IRS does not endorse any particular certified professional employer organization. For more information on certified professional employer organizations go to www.irs.gov.
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