Is Outsourcing Your HR Cost-Effective?
If you’re running a small or growing business, chances are you have considered getting outside help with HR. Maybe you’ve had a tricky employee situation, need better contracts or just don’t want to spend hours googling employment law.
But the big question is, what does it actually cost to outsource your HR in 2025?
Let’s break down the options, what affects pricing, and how outsourcing compares to hiring someone in-house.
Retainer vs. Pay-As-You-Go: What’s the Difference?
One of the first decisions you’ll make is whether to go for a retainer or a pay-as-you-go (PAYG) setup.
A retainer is like a monthly subscription. You pay a fixed amount each month and get ongoing HR support. This usually includes advice by phone or email, help with contracts and policies, templates, updates to stay legally compliant and support for things like disciplinaries and grievances.
If you go for a local provider, they may include on-site support when needed. The amount of support can vary depending on the provider and the level of service they are providing. In general, less experienced providers or those new to the market will offer unlimited support for a fixed monthly fee.
However, it is worth checking their qualifications and experience first, as some providers offering unlimited support may rely on less experienced staff, templated responses, or script-based advice to keep costs low.
Retainer support is a great option if you want peace of mind and a trusted partner on hand. In 2025, most retainers range from £500 to £2,500 per month, depending on the size of your business and the level of service.
On the other hand, pay-as-you-go HR is more flexible. You only pay when you need help, maybe for a new contract, handling a redundancy or support with a grievance. This approach works well if you only need HR occasionally or want to stay in control of your budget.
PAYG services usually cost between £100 and £200 per hour or you might be quoted a fixed project fee, for example, around £350 to £750 to create or update your employee handbook.
That said, while PAYG feels cost-effective at first, it can become more expensive over time if you're calling on support for lots of small tasks. Those little jobs add up quickly so if you find yourself needing HR help more regularly, a retainer might offer better value in the long run. You should also be aware that work may take longer to complete, as many providers prioritise their retainer clients when scheduling workloads.
What Affects the Cost of HR Consultancy?
Prices can vary based on a few key factors:
- Team size: More employees often mean more HR work, which can push up the price.
- Industry: Businesses in regulated sectors (like care, education or construction) may need more complex or specialist HR support.
- Type of service: A one-off policy update is cheaper than helping with a formal investigation or major restructuring.
- On-site vs. remote support: On-site visits cost more, while remote services tend to be cheaper and quicker.
- Risk level: If your business has high staff turnover or potential legal risks, you may need more hands-on and senior-level support.
If you're looking for personalised support, particularly tailored to your local area, many consultancies offer human resources services in Kent (like us!)and provide packages that take these factors into account.
What’s Typically Included in HR Support?
Most retainer packages will include the basics to keep your business compliant and running smoothly. You can usually expect:
- Advice via phone or email
- Contract and policy reviews
- Templates for letters and documents
- Help with disciplinaries and grievances
- Regular employment law updates
However, some things may be excluded or cost extra. These include:
- On-site support or visits
- HR software or psychometric tools
- Recruitment services
- Complex investigations
- Representation at tribunals
- Strategic HR Advice
It’s always a good idea to ask your HR provider what’s included (and what’s not) before signing up, so there are no surprises down the line.
Outsourced HR vs. In-House HR: What’s More Cost-Effective?
Hiring someone in-house gives you a full-time presence but it comes at a price. A full-time HR professional at the Senior Adviser/Manager level usually costs£3540,000 to £50,000 per year, plus employer costs like National Insurance and pension contributions. That works out to around £3,700 to £4,700 per month.
However, if you want someone with more strategic HR experience, you will be looking to pay significantly more. And remember, there are other hidden costs such as holidays, sickness absence and the risk that they do not work out meaning you may have to start the recruitment and training process all over again.
Outsourced HR, by comparison, can give you access to senior-level experts (like us!) for much less, £500 to £2,500 per month, with the flexibility to scale up or down based on your needs. While you may not have someone on-site every day, you get access to a wider pool of knowledge and specialist advice that can save you time and money in the long run.
For example, small businesses using human resources services in Kent often report that outsourcing gives them better value for money, especially when their HR needs are seasonal or unpredictable.
If you’re a small or medium-sized business without complex daily HR needs, outsourcing is often the smarter and more cost-effective choice.
So, What Should You Budget in 2025?
For most businesses in the UK, here’s a quick breakdown of what you can expect to pay for HR consultancy in 2025:
- £500–£2,500/month for an HR retainer
- £100–£200/hour for pay-as-you-go advice or support
- £350–£750/project for fixed tasks like contracts or handbooks
Your exact costs will depend on your team size, industry and the kind of help you need but outsourcing your HR is often a smart move for businesses that want professional, reliable support without the overhead of an in-house hire.
If you’re based in the South East and searching for reliable, affordable human resources services in Kent, there are many local consultancies offering flexible solutions designed around your business.
Work with an HR Consultant
So, whether you go down the retainer route or prefer to call in help when you need it, working with an HR consultant can take a load off your shoulders. It saves you time, reduces legal risk and gives you the confidence to lead your team properly without the stress of doing it all alone.
If you’re unsure what’s right for your business, start small. Ask a consultant for a PAYG option and see how it goes. Many businesses that start this way end up moving onto a retainer once they see the value.
Want help figuring out the best HR support for your team?
Drop us a line at hello@dakotablueconsulting.com and we’ll talk you through the options no pressure and no fluff.