INSIGHT

Fractional HR vs Outsourced HR: Finding the Right Solution for Your Business 

Jill Pappenheimer • November 3, 2025

Services: Outsourced HR

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You know your business needs HR support, but you’re not sure what kind. Should you bring in a fractional HR leader? Outsource specific functions? Hand over your entire HR department to a trusted partner? These terms get thrown around frequently, and the lines between them often blur in real-world applications. 

Here’s the truth: the terminology matters less than finding the right solution for your unique situation. This article will clarify what fractional and outsourced HR actually mean, explore how businesses use each approach, and show you how to identify what your organization truly needs. 

What Fractional HR Means for Your Organization 

Fractional HR typically refers to bringing in an interim HR professional, leader or director to fill a specific position or leadership gap in your organization. This person works on a part-time or temporary basis, providing guidance and support without the commitment of a full-time hire. 

You might need fractional HR  when your HR manager or director leaves unexpectedly, HR staff takes extended leave, or when you’re growing rapidly and need strategic HR guidance before you’re ready to hire a permanent leader. Some companies start with a fractional arrangement and discover it works so well that it becomes a long-term solution. 

Fractional HR professionals integrate into your organization’s HR team. They attend  meetings, understand your culture and business objectives, and make necessary decisions about your people and processes. The difference is they’re not sitting in your office five days a week or drawing a full-time salary with benefits. 

This arrangement gives you access to seasoned HR professionals when you need it most, whether that’s for three months during a transition, one year while you scale, or ongoing as your business evolves. 

Understanding Outsourced HR Services 

Outsourced HR can mean different things depending on your needs. Some companies outsource specific HR functions like payroll processing, benefits administration, or leave management. Others outsource their entire HR department, essentially partnering with an external team that becomes their complete HR function. 

When you outsource your full HR function, your partner doesn’t just handle paperwork from a distance. They become embedded in your organization, working closely with your leadership team, understanding your culture, and developing people strategies that align with your business goals. 

Outsourced HR professionals participate in important conversations about talent acquisition, employee development, performance management, and organizational culture. They know your people, understand your challenges, and bring both strategic thinking and tactical execution to your HR needs. 

The key advantage of outsourcing is that you get a complete HR team without the overhead of hiring, training, and managing multiple full-time employees. You pay for the services you need while gaining access to professionals who handle everything from compliance requirements to employee relations issues. 

Learn more about our Outsourced HR Services

When Each Solution Makes Sense 

Your business might benefit from fractional HR support if you’re facing a temporary gap in HR professionals, need interim guidance during a transition period, or want to test whether a  HR role makes sense for your organization before committing to a full-time hire. 

Outsourced HR services work well when you need specific functions handled by specialists, want to eliminate the burden of managing an internal HR team, or need a complete HR department but can’t justify the cost of building one in-house. 

Many companies actually need a combination of both approaches. You might outsource payroll and benefits administration while bringing in a fractional HR leader for strategic guidance. Or you might start with a fractional leader who helps you transition to a fully outsourced model. 

The Challenge of Knowing What You Actually Need 

Here’s where it gets complicated: most business leaders don’t work in HR, so they’re not always sure what they need. You might call looking for a fractional HR leader and discover that project-based support or partial outsourcing better addresses your challenges. You might think you need to outsource payroll when what you really need is someone to build your entire HR infrastructure. 

The terms “fractional” and “outsourced” get used interchangeably, and honestly, the distinction doesn’t matter as much as finding the right solution. What matters is having someone assess your current HR capabilities, identify gaps, understand your business objectives, and recommend an approach that actually solves your problems. 

“Many of our clients are re-evaluating their HR departments, partly because the business environment keeps changing, partly because of AI capability, or maybe as a cost cutting measure.   Starting with an assessment of the HR capability and needs of the organization is a great place to start, allowing us to partner with organizations to create the ideal structure for their function.” – Jill Pappenheimer, Partner, at BPM leading the HR Consulting services team.   

This is why trying to self-diagnose your HR needs rarely works. You need a partner who can look objectively at your situation and tell you what will actually move your business forward. 

Let BPM Help You Determine the Right Approach 

At BPM, we recognize that every business faces different HR challenges, and those challenges evolve as you grow. Rather than pushing you toward a predetermined solution, we start by conducting a comprehensive assessment of your HR function, current roles, overall capabilities, and business objectives. 

Through this assessment process, we work with you to identify exactly what you need—whether that’s fractional leadership to guide you through a transition, outsourced services for specific functions, a complete HR solution, or some combination that we customize for your situation. We provide both fractional and outsourced HR services because we understand that different businesses need different solutions, and sometimes those needs change over time. 

Ready to stop guessing about what your business needs? Contact BPM today to schedule an HR assessment. We’ll help you understand your current state, identify your gaps, and develop a clear path forward that aligns with your business goals and budget.