"HRO" (Human Resources Outsourcing) is an umbrella term. A PEO is one specific type of HRO arrangement — the co-employment-based bundled model. Other HRO models include payroll-only, ASO (admin-only without co-employment), benefits administration outsourcing, recruiting outsourcing, and various subset arrangements.
| PEO | HRO (general) | |
|---|---|---|
| Co-employment | Yes — defining feature of PEO | Varies — PEO is co-employment; others are not |
| Scope | Bundled: payroll + comp + benefits + HR support | Modular: pick which HR functions to outsource |
| Pricing model | PEPM bundle | Varies — per-function or per-employee |
| Decision speed | Single vendor selection | Often multiple vendors to coordinate |
PEO wins when: you want one vendor, one contract, one bundled fee, and bundled liability transfer.
Modular HRO wins when: you want to mix-and-match — keep your benefits broker, use a separate payroll vendor, etc.
PEO is the simplest HRO model when it fits. Modular HRO is more flexible but creates coordination overhead.
PEO wins when: you want one vendor, one contract, one bundled fee, and bundled liability transfer.
Modular HRO wins when: you want to mix-and-match — keep your benefits broker, use a separate payroll vendor, etc.
PEO is the simplest HRO model when it fits. Modular HRO is more flexible but creates coordination overhead.
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