It is one of the most common questions growing Australian businesses face. The team has reached a size where managing people informally is starting to create problems. There is no consistent onboarding process, nobody is tracking leave properly, and the founder is spending two hours a week answering HR questions that probably should not be landing on their desk.
The instinct is often to hire. Get an HR person in, hand it all over, and move on. But for many businesses at this stage, a full-time HR hire is the wrong answer, at least for now. Outsourcing HR, or using a fractional model, is often a faster, cheaper, and more effective solution.
This article walks through the key questions to help you decide.
Before deciding whether to hire or outsource, it helps to be clear on what you actually need. The term "HR manager" covers a wide range of responsibilities, and not all of them require a full-time internal hire.
Operational HR tasks include managing leave, maintaining employee records, running onboarding and offboarding processes, keeping employment contracts current, and administering your HR platform. These tasks are essential but largely systematic. They require attention and accuracy, not necessarily seniority or full-time availability.
Recruitment coordination involves managing the hiring process: briefing recruiters, tracking candidate pipelines, coordinating interviews, conducting reference checks, and preparing offer letters. For a business doing two to six hires per year, this is a part-time task.
People and culture work includes pulse surveys, engagement initiatives, performance frameworks, and team events. This is the work that most businesses deprioritise until turnover becomes a problem.
Strategic HR advisory involves working with leadership on organisation design, people strategy, workforce planning, and complex people matters. This is genuinely senior work and does not need to happen every day.
The honest reality for most businesses with 10 to 50 employees is that the total volume of HR work, if measured properly, does not justify a full-time hire. A well-organised business in this size range needs roughly one to two days per week of dedicated HR capacity, not five.
Outsourcing HR means engaging an external provider to handle some or all of your people function. This can take several forms.
An HR consultant is engaged for specific projects: a policy review, a restructure, an investigation. They are not embedded in your business and are not available for day-to-day support.
An HR platform such as Employment Hero automates and systematises many HR tasks, but it does not replace human judgement, relationship management, or strategic thinking. A platform is a tool, not a people function.
A fractional HR provider is embedded in your business on an ongoing basis, handling both operational and strategic HR across a defined scope. They are available daily via Slack or Zoom, active on your HR platform, and accountable for the outcomes of your people function. This is the model that most closely replicates what an internal hire would do, at a fraction of the cost.
There are several situations where outsourcing is clearly the better option. If you need HR capability within the next four to six weeks and cannot afford the three to four months a full recruitment and onboarding process takes, outsourcing gets you operational immediately. If your total HR workload does not justify five days per week of dedicated attention, you will be paying for capacity you do not need with a full-time hire. If you have just lost an internal HR or operations person and need continuity fast, a fractional engagement can step in within days. If you want to build and test your HR function before committing to an internal hire, outsourcing lets you do that without locking in a long-term employment obligation.
Hiring a full-time HR manager makes more sense when your employee count is approaching or exceeding 60 to 80 people and the volume of people work is genuinely full-time. It also makes sense if your culture and people strategy is a core competitive differentiator that requires full-time, fully dedicated attention. And it makes sense if you have already established your HR systems, processes, and playbooks through a fractional engagement and are ready to bring that function fully in-house.
A fractional HR engagement from a provider like Scale Suite is priced as a monthly retainer, typically between $2,500 and $6,000 per month depending on scope. At $3,750 per month, that is $45,000 per year, compared to $120,000 to $150,000 for a full-time hire. There are no recruitment fees, no super obligations, no leave liabilities, and no risk of a misaligned hire.
Scale Suite is a Sydney-based provider of outsourced HR and finance services for Australian SMEs. We deliver payroll processing, recruitment support, employee onboarding, employee development, people and culture support, and fractional HR oversight - all as a fully embedded team that works inside your business.
Employment Hero Gold Partner, CA-qualified, and Xero Certified, we replace fragmented HR processes and reactive people management with one responsive HR function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.
Learn more about our embedded HR model at scalesuite.com.au/services/human-resources
Do I need an HR manager or can I outsource HR?
It depends on the size and complexity of your business. For most Australian businesses with 10 to 60 employees, a fractional or outsourced HR arrangement provides the capability you need at a fraction of the cost of a full-time hire. A full-time internal hire typically makes more sense at 60 to 80 employees and above.
What is the difference between outsourced HR and an HR consultant?
An HR consultant is typically engaged for specific projects and is not embedded in your business. Outsourced or fractional HR is ongoing and operational, with a provider working inside your business daily on your people function.
How quickly can outsourced HR get started?
A fractional HR engagement can typically be operational within one to two weeks of signing. A full-time internal hire takes three to four months when you account for recruitment, notice periods, and onboarding.
What HR tasks can be outsourced?
Most operational and strategic HR tasks can be outsourced, including recruitment coordination, onboarding and offboarding, Employment Hero administration, leave management, people policies, pulse surveys, and culture initiatives. Legal matters such as Fair Work disputes and formal workplace investigations should be referred to specialist providers.
How much does outsourced HR cost in Australia?
Fractional HR retainers typically range from $2,500 to $6,000 per month, or $30,000 to $72,000 per year. This compares favourably to the $120,000 to $150,000 annual cost of a full-time people and culture manager.
Can I switch from outsourced HR to an internal hire later?
Yes, and this is a common path. Many businesses use outsourced HR to build their people function and establish systems before bringing it in-house. A good fractional provider will document everything in a way that makes that transition straightforward.
Scale Suite is a Sydney-based provider of outsourced finance and HR services for Australian SMEs. We deliver bookkeeping, financial reporting, payroll processing, fractional CFO support, recruitment, employee onboarding, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
Employment Hero Gold Partner, CA-qualified, and Xero Certified, we replace fragmented finance and HR processes with one responsive, senior-level function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.
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