Published: May 2025

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Human Resources (HR) is essential but complex for Australian business owners. Outsourcing HR—whether for specific tasks or alongside an existing HR team—saves time, ensures compliance, and enhances employee satisfaction. This blog details HR outsourcing services, cost comparisons, and benefits, with a worked example, emphasising flexibility for small or partial HR functions.

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Why Outsource HR?

Outsourcing HR lets you delegate tasks like recruitment or compliance, freeing you to focus on growth. Benefits include:

• Cost Savings: Avoid in-house HR salaries and overheads.
• Expertise: Access specialists in Fair Work regulations.
• Flexibility: Outsource specific tasks (e.g., recruitment) or work alongside a small HR team.
• Scalability: Adjust services as your business grows.

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Key HR Outsourcing Services

HR outsourcing covers a range of tasks, which can be tailored to your needs:

1. Fractional HR
   • Part-time support for policies, compliance, and employee relations.
   • Tasks: Drafting contracts, handling disputes, ensuring award compliance.
   • Example: Updating employee handbooks to meet Fair Work standards.
2. Recruitment and Hiring
   • Sourcing, screening, interviewing, and onboarding candidates.
   • Tasks: Job ad creation, candidate shortlisting, interview panel assistance.
   • Example: Hiring a developer in two weeks vs. months in-house.
3. Performance Management
   • Setting KPIs, conducting reviews, and managing underperformance.
   • Tasks: Designing review templates, facilitating 360-degree feedback.
   • Example: Implementing quarterly reviews to boost productivity.
4. Incentive Reviews
   • Creating bonus schemes, equity plans, or non-financial rewards.
   • Tasks: Analysing market benchmarks, tailoring incentives to roles.
   • Example: Offering performance bonuses, increasing retention.
5. Employee Engagement and Surveys
   • Measuring satisfaction and improving culture via surveys and initiatives.
   • Tasks: Designing surveys, analysing results, recommending actions.
   • Example: Identifying communication gaps, leading to team-building programs.

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Cost Comparison: In-House vs. Outsourced HR

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In-House HR

For a 15-employee business:

• HR Manager: $90,000-$120,000/year (average $105,000).
• Software: $200/month ($2,400/year).
• Overheads: Office, equipment ($10,000/year).
• Benefits: Superannuation, leave ($12,000/year).
• Total Annual Cost: $129,400 ($10,783/month).

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Outsourced HR

• Provider Fee: $1,500-$3,000/month ($18,000-$36,000/year) for comprehensive services or $500-$1,000/month for specific tasks (e.g., recruitment). Scale Suite services start from just $400.
• Total Annual Cost: $18,000 (fractional) to $36,000 (full HR).

Savings: $129,400 - $36,000 = $93,400/year (full HR) or up to $111,400 for fractional services.

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Worked Example: Outsourcing HR for a Retail Business

Lisa runs a 15-employee retail store with a $500,000 turnover. She spends 20 hours/month on HR: hiring staff, ensuring compliance, and addressing concerns. In-house costs:

• Part-time HR staff: $2,500/month ($30,000/year).
• Software: $2,400/year.
• Overheads/Benefits: $13,000/year.
• Total: $45,400/year.

Lisa outsources HR for $2,000/month ($24,000/year), covering:

• Recruitment: Sources two sales staff in one month, drafting ads and conducting interviews.
• Compliance: Updates contracts for Fair Work compliance, avoiding a $10,000 penalty.
• Engagement: Runs a survey, revealing staff want training, which Lisa implements, reducing turnover by 10%.
• Performance: Sets KPIs, increasing sales by 15%.

Savings: $45,400 - $24,000 = $21,400/year, plus 20 hours/month saved ($24,000/year at $100/hour). The provider works alongside Lisa’s part-time HR coordinator, handling complex tasks.

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Conclusion

Outsourcing HR—whether for specific tasks or full support—saves costs, ensures compliance, and boosts employee engagement for Australian businesses. With flexible options to complement small HR teams, outsourcing lets you focus on growth. Evaluate your needs and partner with a provider to streamline HR today.

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