HR Outsourcing · Compared
PEOs co-employ your staff and bundle sponsored benefits. ASOs administer HR without co-employment. HRO delegates defined HR functions to outside professionals while you keep full employer control.
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The Three Models
| Factor | PEO | ASO | HRO |
|---|---|---|---|
| Employer of record | Co-employment: the PEO, for tax and benefits purposes | You | You |
| Core promise | One bundled employment infrastructure | HR and payroll administration done for you | HR expertise and functions delivered as a service |
| Benefits plans | PEO-sponsored, pooled buying power | Your plans, administered for you | Your plans; HRO advises and administers by scope |
| Payroll taxes | Filed under the PEO structure; CPEO rules apply | Under your EIN | Under your EIN |
| Compliance work | Standardized across the PEO client base | Paperwork and filings handled | Handbook, policies, monitoring, and live HR guidance |
| Cost shape | Quote-gated, often percent of payroll | Flat fee, typically per employee | Flat monthly, instant estimate in the BEG model |
| Best at | Sponsored benefits for small headcounts | Taking administration off your desk | HR judgment, compliance depth, employee relations |
| Leaving | Unwind co-employment: benefits, payroll, tax accounts | Cancel; nothing structural moved | Cancel; nothing structural moved |
Sources: IRS, Certified Professional Employer Organizations · NAPEO industry data
Understanding The Models
A Professional Employer Organization takes on your workforce as worksite employees under co-employment, then supplies the whole employment stack: payroll, sponsored benefits, workers compensation, and HR support, on its templates and inside its structure. The IRS CPEO program exists because federal employment tax liability genuinely shifts under this model. The PEO's honest superpower is benefits: pooled plans across thousands of worksite employees give a 15-person company access it could never buy alone. The honest cost is structural: your people sit inside someone else's employment framework, and unwinding it later is a project, not a cancellation.
An Administrative Services Organization does the paperwork of employment in your name: payroll processing, tax filings under your own EIN, benefits enrollment on plans you buy through your own broker. Nothing about your legal structure changes, which keeps liability with you but also keeps ownership with you. The model shines when the pain is administrative volume rather than HR judgment. Its limit is equally clear: an ASO processes what you decide, but it is not built to tell you whether the termination you are about to run is defensible. The full breakdown of that pairing lives on ASO vs PEO.
Human Resources Outsourcing delegates defined HR functions, not employment itself, to outside professionals: handbook and policy construction, compliance monitoring across your states, leave administration guidance, manager coaching, and a live expert for the hard conversations. You remain the only employer, taxes file under your EIN, and rules from agencies like the Department of Labor Wage and Hour Division get translated into policies built for your company rather than a template averaged across thousands of clients. HRO assumes you can buy your own benefits; what it adds is the HR department you do not have, at a fraction of the headcount cost.
Strip the acronyms and three pricing shapes remain. PEOs are quote-gated, commonly a percent of payroll, so the fee climbs with every raise you give even when service stays identical. ASOs charge flat per-employee fees that scale with headcount, not wages. HRO in the BEG model is a flat monthly fee by headcount band and plan level, estimated on screen before anyone calls you. The diagnostic question is simple: when my payroll grows 20 percent, what happens to this bill? Any vendor who cannot answer that in one sentence is telling you something useful about the proposal you are about to receive.
In practice the three-way decision collapses fast. If sponsored benefits buying power is the priority, you are choosing among PEOs and the other two models are irrelevant. If you already have benefits handled, you are choosing between administration (ASO) and administration plus HR expertise (HRO), and the deciding variable is how often you face judgment calls: terminations, accommodations, leave disputes, multi-state hires. Companies with real employee-relations volume outgrow pure administration quickly. The HR outsourcing overview shows how BEG structures that expertise layer, and HR outsourcing vs hiring an HR manager covers the build-or-buy version of the same question.
Which Should You Choose
That is a PEO, and we will tell you so on the call. No ASO or HRO can pool benefits the way co-employment allows. Just price the exit before you sign the entrance.
ASO-style administration may be all you need today. Buy the smaller thing first; you can add the expertise layer when terminations and leave cases start finding you.
That is HRO. Multi-state compliance, a defensible handbook, live HR professionals for the hard conversations, while your employment structure stays exactly as it is. This is the BEG model.
Where BEG Fits
BEG HR outsourcing, powered by isolved, is the no-co-employment model: certified HR professionals, a handbook built for your states, and compliance monitoring across all 50, while you remain the only employer your team ever has. Answer six questions and your flat monthly estimate appears in about ninety seconds. Construction firms comparing models under prevailing-wage pressure can start at HR outsourcing for construction.
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Questions
Professional Employer Organization, Administrative Services Organization, and Human Resources Outsourcing. PEOs co-employ your staff; ASOs administer HR in your name; HRO delegates defined HR functions to outside professionals.
Only the PEO. Under a PEO agreement your employees become worksite employees of the PEO for tax and benefits purposes. ASO and HRO leave your employment structure completely untouched.
Shapes differ more than stickers. PEOs are quote-gated, often a percent of payroll. ASO and HRO run flat monthly fees. Model each at your headcount two years out before comparing.
Yes, and many companies do: HRO for compliance and employee relations alongside their own broker for benefits, for example. The models are building blocks, not religions.
HRO with ASO-grade administration behind it: HR outsourcing, powered by isolved, with no co-employment. You stay the employer; certified HR professionals do the work at a flat monthly fee.
Ready?
Answer a few questions, get your exact number in about 90 seconds. No call required, no commitment.
Your monthly estimate on screen - no call required
