Shared HR Services vs. Hiring an HR Team: Which is Right for Your Business?
Managing human resources effectively is critical for business success, but deciding how to manage HR is often challenging, especially for MSMEs. Should you build an in-house HR team or opt for shared HR services? Let’s break down both options and help you choose what’s best for your business.
What are Shared HR Services?
Shared HR services refer to outsourced HR functions provided by external agencies or virtual HR teams. Instead of hiring full-time HR staff, companies leverage these services to handle everything from payroll & compliance to employee management.
Pros and Cons of Shared HR Services
✅ Pros:
- Cost-Effective: Pay for what you need, when you need it—ideal for startups and SMEs.
- Expertise on Demand: Access to specialists in multiple HR domains.
- Scalable: Services can expand or contract as your business grows or shrinks.
- Focus on Core Business: Less time managing HR, more on growing your business.
❌ Cons:
- Less Control: You don’t manage the team directly.
- Dependency on Third-Party: Need a reliable provider to ensure quality.
What is an In-House HR Team?
An in-house HR team is a full-time, internal department managing all aspects of human resources directly within the organization, including leave and attendance management, policy audits, and employee support.
Pros and Cons of Hiring an HR Team
✅ Pros:
- Direct Oversight: Full control over HR operations.
- Personalized Culture Fit: Team aligned with your company culture.
- Employee Trust: Employees may feel more comfortable interacting with known internal staff.
❌ Cons:
- Higher Costs: Salaries, benefits, tools, and training add up.
- Limited Expertise: Smaller teams may lack specialized knowledge in all HR areas.
- Less Agility: Scaling up or down can be time-consuming and expensive.
Key Factors to Consider When Choosing
| Factor | Shared HR Services | In-House HR Team |
| Cost | Low, flexible based on needs | High, fixed salaries & benefits |
| Expertise | Access to a pool of specialists | Limited to team’s knowledge |
| Scalability | Easy to scale up/down | Difficult and costly |
| Control & Oversight | Limited | High |
| Culture Alignment | May take time to understand company culture | Naturally aligned |
| Speed of Implementation | Fast, using existing tools & processes | Slower, building from scratch |
Which is Right for Your Business?
If you’re a startup or growing SME, shared HR services are likely the best option, offering cost-effective, expert-led, and scalable solutions without the overhead. For large enterprises or companies with highly specific HR needs, an in-house team may provide the control and cultural alignment desired.
Ultimately, hybrid models where a small internal HR presence is supplemented with shared services are also a popular choice. At Emgage, we offer customized HR solutions that align with your unique business needs, whether you want fully outsourced services or a hybrid approach.
Explore our pricing plans and discover how Emgage can help streamline your HR operations efficiently.
