The honest answer about HR costs
One of the most common questions we get is: "How much does outsourced HR cost?" It's a fair question — and one that most HR consultancies are frustratingly vague about. We're going to be straightforward with you.
What in-house HR actually costs
Before comparing, let's look at what you're comparing against. A junior in-house HR Manager in the UK costs:
- Salary: A significant annual fixed cost
- Employer NI: Additional statutory contributions
- Pension contributions: Mandatory workplace pension costs
- Holiday cover, sick leave, training: add another 15–20%
- Total fully loaded cost: A substantial financial commitment for a small business
And that's a junior HR person. A mid-level HR Business Partner requires an even higher salary commitment.
What outsourced HR costs
Outsourced HR typically comes in three models:
Pay As You Go
You pay for time when you need it. You only pay for the time you use. This suits businesses with occasional needs — an employment issue here, a policy review there. This is highly cost-effective for businesses with infrequent needs.
Retained HR (monthly retainer)
A fixed monthly fee for ongoing support. This is the most popular model for growing SMEs. Pricing typically scales with headcount:
- Up to 10 employees: Accessible entry-level pricing
- 10–30 employees: Mid-tier support as you scale
- 30–75 employees: Comprehensive coverage for established teams
Retained HR gives you access to senior HR expertise, employment law advice, and document support — at a fraction of the cost of an in-house hire.
Project-based
For specific projects — a restructure, TUPE transfer, culture programme, or policy overhaul. Priced per project, agreed transparently in advance depending on complexity.
The real ROI calculation
Don't just look at the fee — look at what it protects you against:
- Employment tribunal awards: Can be financially devastating for a small business
- Cost of replacing an employee who leaves: Recruitment fees, lost productivity, and training time
- Manager time saved: Freeing your leadership team to focus on growth
Avoiding even one tribunal claim often more than pays for years of retained HR support.
What to look for when comparing providers
- Do they have real HR professionals, not just templates and chatbots?
- What's included in the retainer vs what costs extra?
- Do they understand your sector and the specific challenges you face?
- Can you speak to a real person when you have an urgent issue?
- Do they have employment law expertise, or will they refer you out?
Want a specific quote for your business? Get in touch and we'll give you a straight answer based on your actual situation — no obligation.