Human Resources Outsourcing (HRO)

Definition

HRO (Human Resources Outsourcing) is a broad category that covers any arrangement where a business contracts a third party to handle HR functions. The category spans the spectrum from narrow (payroll-only outsourcing via Gusto or ADP) to comprehensive (full PEO relationship).

Within HRO, there are several common models: payroll service providers (PSPs), benefits administration outsourcing (BAO), ASO arrangements (admin-only, no co-employment), and PEOs (co-employment with bundled comp + benefits). The right HRO model depends on size, complexity, and which functions a business wants to control vs. outsource.

The term "HRO" is used more loosely than "PEO" — vendors marketing HRO may be offering anything from a payroll-only solution to a full co-employment arrangement, so verify the specific service scope before assuming.

Common questions about Human Resources Outsourcing (HRO)

Related terms

• Professional Employer Organization (PEO) — A company that enters into a co-employment relationship with a client business to handle payroll, benefits, workers comp, and HR compliance.
• Administrative Services Organization (ASO) — A service model where a provider handles HR administration without entering co-employment — the client remains the sole legal employer.

Browse the full PEO glossary

This is one entry from our PEO glossary covering payroll, benefits, workers comp, HR compliance, and PEO mechanics. Browse all terms.