Topic HR Technology

HR Software vs. PEO Services: A False Dilemma?

HR Software vs. PEO Services: A False Dilemma?

When deciding whether your company should partner with a Professional Employer Organization (PEO), you might be torn about implementing new HR software vs. using PEO services. Understanding the difference can ensure your business gets the services it needs and only pays for the services it uses.

Learn more about HR strategy for business performance

Streamlining HR administrative burden is vital to help your HR team focus on attracting and retaining top talent in your industry. Using the right Human Capital Management (HCM) software helps your business achieve this goal by improving efficiencies. But you have many options for software solutions that provide a different user experience. 

Your business has two options: buy HR software or outsource HR functions to a PEO. But are these two truly incompatible with each other?

HR Software

HR software is designed to help your employees and your business run more efficiently. Human capital management is complex, and the right HR technology can help streamline your internal HR team's processes.

HR software can provide:

  • All-in-one payroll software
  • Self-service employee benefits enrollment
  • Time and attendance
  • Onboarding of new hires

HR software alone might require additional vendors and work on your part. HR software only provides the technology to sync your benefits, for example. It does not offer you access to healthcare plans. Your company still needs to locate vendors and ensure HR processes are in place to train and onboard new employees. 

PEO Services

A PEO can provide the software solution and user experience your business needs. A PEO is an HR outsourcing solution specializing in the marriage of high-tech software and HR administration. A PEO takes on complex and mundane HR tasks to help your in-house HR team focus on attracting and retaining top talent and improving employee engagement.

When you partner with a PEO, the PEO becomes the employer of record for your employees. This allows your PEO to use their Federal Employer Identification Number (FEIN) to handle payroll and taxes, taking this complex burden off your internal team.

This also provides your business with a cost-effective way to offer high-quality benefits at a cost you can afford. By joining a PEO, all of the employees of the PEO's client companies give the PEO leverage to negotiate better rates. Getting better rates on health insurance means your business can save money while giving your employees the benefits they desire. Employees consistently rank benefits as the most important thing their employer can provide them, other than a competitive salary. Giving your employees what they want while also saving money helps to keep your employees engaged with your company. Engaged employees make for efficient and loyal employees.

Partnering with a PEO also gives you access to reduced workers' compensation premiums. Your PEO pays the deposit up front, allowing you to join the plan on a pay-as-you-go basis. This is combined with PEOs pre-negotiated lower rates that result in your company saving money. 

Your PEO also becomes a trusted partner to help keep your business compliant. Compliance violations and payroll mistakes cost companies both capital as well as employee trust. In fact, most employees say that after just two payroll errors, they start actively searching for other employment. Even if the mistakes are innocent and unintentional, they can break employee trust and make them worry about the ability of the company to pay them. 

Working with a trusted PEO partner can help reduce these costly errors. Taking these burdens off your internal HR team not only makes them happier, but it also makes them more efficient and gives them time to help focus on your company's growth strategies.

PEOs with HR Software

You know that your company needs HR software to help you manage your business and your team. You also know that a PEO can provide exceptional benefits to you and your employees while also saving your company money. With a PEO, you can have both — you do not have to choose HR software vs. PEO services.

Most PEOs provide the latest HR technology at no extra cost to you. PEOs utilize software that helps you run your business more efficiently while ensuring the PEO gets the data they need from your employees.

When you work with a PEO, you get all the benefits of HR software along with the service that only a PEO can provide. Taking this route means that your business can save money while providing your employees with top-notch benefits. This can keep your employees from going to a competitor with a better benefits package and help you attract other employees to your business. 

The Right PEO Gives You Both

Choosing between HR software and a PEO is a false dilemma. PEOs provide all the advantages of HR software along with the unique advantages of partnering with a best-in-class HR outsourcing partner. 

With the right PEO partnership, your company can retain assets and still offer one of the most sought after employee benefits — health insurance. Your PEO will help you achieve your goal of keeping money in your company and not in the insurance company's pockets. 

A PEO can provide your business with the software solution you seek. You want best-in-class software to give your employees an exceptional user experience. But you also want a partner that will help to keep your business compliant and avoid costly mistakes and fines. The best part is that you do not have to choose between these options — the right PEO gives you the best of both worlds. 

How the Right HR Outsourcing Partner Brings you Closer to Your Dreams

Brandon Hartsaw

Brandon Hartsaw

Acting as the Chief Operations Officer, Brandon actively promotes an environment of creativity, collaboration, and individual ownership to empower Questco team members to deliver exceptional client experiences.