This guide sorts HR outsourcing into seven models, which differ on two things: who legally employs your staff, and how much of the work somebody else actually performs. Once you know which of those two matters to you, the choice narrows quickly.
The confusing part is that the market cannot agree on how many models exist, so every guide you read defines a different set. This one names all seven, including managed services, which none of the six guides we read lists. If you are starting from the beginning, our overview of HR outsourcing solutions covers the service side.
Key takeaways
- This guide sorts HR outsourcing into seven models: PEO, EOR, ASO, HRO, HR BPO, managed services and HCM software.
- Only two of the seven, the PEO and the EOR, change who legally employs your staff.
- Of the six guides we read, five state a count, and those counts are three, four, six, six and seven.
- None of the six guides we read names a managed-service provider as a category at all.
The Short Version
The table below sets out the seven models by who employs your staff and what each one covers. Only three employment arrangements appear: co-employment (the PEO), an employer of record (the EOR), and your company as the sole employer (the other five).
| Model | Who employs your staff | What it covers |
|---|---|---|
| PEO | Co-employed with the PEO | Payroll, tax filing, benefits under the PEO's plan, workers' compensation, shared compliance responsibilities |
| EOR | The EOR, as employer of record | Legal employment where you have no entity, often abroad |
| ASO | You | Administration under a service contract, your benefits stay yours |
| HRO | You | Whole HR functions handed off, often one at a time |
| HR BPO | You | Defined processes run end to end, usually at volume |
| Managed Services | You | Administration plus management of your HCM platform |
| HCM Software | You | A platform. Somebody on your side still has to run it |
On this page
- What does HR outsourcing actually cover?
- Why nobody agrees on how many types there are
- The models that change who employs your staff
- The administrative models: ASO, HRO and HR BPO
- Managed services, and where MSP differs
- What does HCM software leave you to do?
- Which model does a midsize team actually need?
- What is the most commonly outsourced HR activity?
- Where Corban OneSource fits
- Frequently asked questions
What does HR outsourcing actually cover?
HR outsourcing is an umbrella term, and this guide sorts it into seven commercial arrangements that differ in how much work and legal responsibility they move to somebody else. The label tells you almost nothing on its own.
A PEO is one of the seven, and one of the two that change who employs your staff, so HR outsourcing and PEO are not interchangeable terms.
Why nobody agrees on how many types there are
The guides ranking for this question do not agree on how many models there are, and the disagreement is not small. The five that state a number say three, four, six, six and seven.
How we researched this
In September 2026 we read six US guides on the types of HR outsourcing that rank on the first two pages of results for this question, the five that state a number of models plus ExtensisHR’s, which does not, and checked each stated count against the models its body actually lists.
Five of the six state a count. TriNet says there are three main types. G&A Partners says four, though its page goes on to describe three groups. Escalon and Optimum HR each say six. Paycor says seven. The sixth, ExtensisHR, states no number and lists six models, including employee leasing, HRIS and payroll services. The lists also differ in what they count, from employer arrangements such as the PEO to software such as an HRIS, and none of the six names managed services. That is a reason to read any single guide, this one included, alongside another.
The models that change who employs your staff
Two of the seven change your legal relationship with your own people, and everything else about them follows from that. A PEO co-employs your staff under a contract that divides employer responsibilities and liabilities, compliance risk included, typically becoming the administrative employer for tax and insurance purposes while your company continues to direct the work. Unless the PEO is certified by the IRS, your company generally remains responsible for its federal employment taxes. An EOR goes further and becomes the legal employer on paper, the employer of record, which is why it is often used to employ someone in a country where the company has no entity.
The PEO model is large and well established. The National Association of Professional Employer Organizations (NAPEO) counts 500 US PEOs, whose clients employ 4.5 million people, in its industry overview, last updated in November 2025. Its October 2025 study of PEO clients estimates that more than 230,000 businesses use a PEO, including 14 percent of employers with 20 to 499 employees.
For a fuller comparison of how the PEO sits against the administrative models, our guide to the difference between an HRO, a PEO and an ASO covers the three-way view.
The administrative models: ASO, HRO and HR BPO
Three models perform HR administration without touching the employment relationship, and the distinction between them is the blurriest part of the whole category. All three leave your company as the sole employer, and all three work under a service contract rather than a co-employment agreement.
An ASO is defined by scope: it manages selected administrative functions, and your benefits stay on your own plans with your own carriers. Our note on ASO professional services sets out what that usually includes. An HRO is defined by function: you hand off whole functions, often one at a time, starting with payroll or benefits administration.
HR BPO is defined by process: a provider runs defined processes end to end, typically at volume, and it is used mainly by larger organizations with high transaction counts. Our explainer on human resources business process outsourcing goes into how that works in practice.
In the market these three names are used loosely and sometimes interchangeably, so the safer approach when comparing quotes is to ignore the label and read the scope schedule.
Managed services, and where MSP differs
Managed services is the model the six taxonomies we read omit. Not one of them names a managed service provider as a category, and three use the phrase single source as the nearest equivalent, which points at a similar idea without naming it. The closest we found elsewhere on the first two results pages is CoAd’s guide, which describes software that some providers offer with optional managed services as a hybrid type of HR outsourcing.
The model takes on the administration an HRO would and adds day to day management of the HCM platform itself, whether the client already owns that platform or moves onto one at the start. Managing the platform is what separates it from a standard HRO. That is a meaningful difference for an established employer, because someone still has to configure workflows, maintain integrations and answer employee questions about the software itself. Our explainer on what a managed service provider means in HR covers the model in more depth.
What does HCM software leave you to do?
HCM software is a platform, not a service, and buying one does not outsource anything. It is on this list because several of the guides we read count HR software as a type of outsourcing.
A platform automates transactions. Somebody still has to configure it, maintain the integrations, run the payroll cycle, and answer the employee who cannot find their tax form. If that somebody is your existing HR team, you have bought software, not relief. The distinction matters enough that it drives the entire managed-services category above.
Which model does a midsize team actually need?
A midsize employer can work through the seven models by elimination, starting with who employs your staff and then looking at what each model covers.
If you want the administrative burden gone but the employment relationship untouched, the PEO and EOR models are out, which removes two of the seven immediately. If you already own a platform such as ADP Workforce Now or Paylocity, buying HCM software is not the answer either, because you have it. That leaves the administrative models and managed services, and the deciding factor between them is whether you need someone to operate the platform as well as the process.
If you want the benefits pooling a PEO provides and are comfortable with co-employment, the calculation is genuinely different, and our comparison of the HRO and PEO models is the better starting point.
What is the most commonly outsourced HR activity?
Health insurance and payroll are among the most commonly outsourced functions: in NAPEO’s 2025 Annual Tracking Survey, 61 percent of businesses said they outsource health insurance and 56 percent payroll. Payroll is also a common starting point, and the reason is structural: it runs on a fixed cycle, it is unforgiving of errors, and the consequences of getting it wrong arrive immediately and land on every employee at once.
The survey covered 500 US business decision-makers at companies with at least one employee and annual revenue of at least $250,000, surveyed online from November 18 to December 9, 2025, so it describes businesses of many sizes rather than midsize employers alone.
TriNet and Optimum HR both list payroll first and benefits administration second among the functions businesses hand over.
Where Corban OneSource fits
Corban OneSource is a Managed Service Provider for HR, the managed-services model described above. It runs HR administration, payroll, benefits administration and the HCM platform, whether that is ADP Workforce Now or Paylocity, while your company remains the sole employer.
There is no co-employment in the arrangement, which is the structural difference from a PEO, and managing the HCM platform is what separates it from a standard HRO. The company has been in business nearly 30 years and reports 95 percent client retention on its own site. Pricing is per employee per month. Because your company remains the employer, compliance liability stays with you, with access to legal counsel as needed.
FAQ
This guide uses seven: PEO, EOR, ASO, HRO, HR BPO, managed services and HCM software, the last included because several guides count HR software as a type even though it outsources nothing on its own. They separate on two axes, who legally employs your staff and how much of the work the provider actually performs. Only the PEO and EOR change the employment relationship.
Yes. The models are not mutually exclusive: an employer can keep its HCM software and pay a managed service provider to run it, or hand payroll to one provider and benefits administration to another. The exception is co-employment, because a PEO usually brings its own benefits plan and HR platform, which limits what can be combined with it.
No. HCM software is a platform you operate. HR outsourcing is a service somebody else performs. A platform still needs someone on your side to run it.
It depends on whether you will accept co-employment and on how much of the work, platform included, you want the provider to perform. Midsize employers who want to stay the sole employer can choose between the administrative models and managed services, which is the one that also runs the platform; those who want pooled benefits pricing and accept co-employment can look at a PEO.
Definitions vary. NAPEO says the term was historically used for what has evolved into the PEO industry, and the IRS notes that a PEO is sometimes called an employee leasing organization. ExtensisHR, one guide we read, uses it for workers obtained through a leasing or staffing company for a defined period, closer to staffing than to long-term HR management.
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