The outsourcing of employment administration is a dynamic new business service strategy provided by Professional Employer Organizations (PEO's). Outsourcing is simply allowing another party to handle a portion of your business for you. In the past few years, the range of tasks companies outsource has swelled. PEO's handle the most common tasks associated with operating a business. Among those tasks are: payroll processing, accounting, file maintenance, benefits management, insurance program procurement, human resource, injury claims management, assistance in solving federal and state compliance issues, and worksite safety program.

A key reason for outsourcing is to enhance the firm's ability to focus on core business issues, while external professionals provide non-core products and services. Through outsourcing, organizations free internal staff to concentrate on product and service improvement.

Another benefit is obtaining a level of expertise often not found in-house. Rather than spending time and money training and staying current in a non-core area, companies contract with experts who remain abreast of issues, regularly practice and specialize in a given field. Because an expert already possesses the knowledge, skill, contacts and equipment to effectively complete a job, outsourcing becomes a Cost Effective process.

Outsourcing can decrease overhead expense. PEO's do not normally require on-site workspace, while some work must take place on the company property; technological advance make communications easy and efficient and reduce the need for on-site space.

PEO's maintain their own equipment and supplies, reducing the need for peripheral capital expenditures.

Although initial cost of outsourcing may be equal to, or slightly higher than current cost, over a given period of time a company can leverage their operating cost as they grow in personnel and revenue.

As a co-employer, PEO's are positioned to sponsor benefit packages that provide economic savings to client companies and their employees. Also the co-employer relationship provides for the PEO to accept the liability for paying and filing payroll taxes, and reducing client's liability by assisting with federal and state compliance issues.