ASO vs PEO: What's The Difference Between Both HRO models?

Young reflective payroll specialist

ASO vs PEO vs – one of the most recurring debates in the world of Human Resources Outsourcing. The total market value of global outsourcing is estimated at around $92.5 billion (Statista, 2019). With a growing number of companies endeavoring to go global, HR outsourcing stands out as the perfect solution to allow experts to handle this key function of business operations. This is the reason why HR outsourcing companies are only expected to grow in number the near future. In an ocean of offers, how can you navigate and choose the best captain to handle the crew? Knowing the specific features of each service will allow you to identify the right fit for your specific needs.

ASO vs PEO - Key Takeaways

The main difference between these services is a relationship of co-employment, each of which has its own bearings in terms of area of expertise and risk absorption

PEO 

ASO

Co-employs with client- legally liable for registration of the employees with tax and social security bodies

Client is sole employer- bears full legal liability of registration of the employees and ensuing compliance issues (if any)

Sponsors your benefit and insurance plans

Does not sponsor benefits and insurance plans

Advises with regards to compliance, although the PEO is not liable for lack of compliance

Focused on administrative duties and tasks, without providing compliance advice

Bears legal and financial liability for payroll and any mistake in payroll administration

Runs payroll on behalf of the client who remains the legal employer. Client, however, remains responsible for any mistake

Files taxes as the legal employer and bears legal liability for error in reporting

Files taxes on behalf of the client who remains the legal employer. Client however remains liable for any error in reporting

In practice, an all-in-one, stand-alone service

In practice, needs to be complemented by small internal HR team

What is an ASO?

An Administrative Services Outsourcing company is an entity that provides a certain range of administrative HR tasks. They often include payroll and workers’ compensation and benefits, while legally operating under the status of a service provider.

Why would I need an ASO?

An ASO can be particularly helpful in the African continent, in the context of running payroll and HR in countries whose laws and regulations vary greatly from yours. For instance, in Africa, social security payments and workers’ compensation insurance vary greatly according to each country. While workers’ compensation insurance is mandatory in Angola, health insurance is mandatory in Ghana, but no insurance at all is mandatory in Madagascar.

How does it help my expansion in Africa?

Considering the diverse legal landscape on the continent, a centralized African HR outsourcing organization will therefore be able to handle all of these aspects simultaneously.

As a trusted ASO in the African continent, Africa HR helps an array of multinationals and other corporate clients by providing them with:

  • Employee self-service platforms
  • Cloud-based payroll solutions
  • Deductions of taxes and contributions at source
  • Filing taxes on behalf of the employing organization

Such support relieves HR staff from time-consuming tasks, allowing them to focus on strategy and analytics for better-informed business decisions.

What is a PEO?

A Professional Employer Organization (PEO)’s services typically allow you to outsource a host of human resources tasks. From payroll administration, to benefits, workers’ compensation and other business insurance, services vary according to the organization you choose.

Why do I need a PEO?

A PEO’s major benefit is that it co-employs your workforce. As such, it bears legal liability for the services it offers. For instance, by choosing a PEO, not only do you outsource the payroll function; you also outsource the liability for any mistake that occurs in the payroll administration process.

How does it help my expansion in Africa?

As a trusted PEO in the African continent, Africa HR helps an ever-growing portfolio of clients. As experts with over a decade’s experience, we provide:

  • a streamlined onboarding process 
  • worker-related in-country assistance.
  • employee benefits, both mandatory and customized (including payments to third parties for insurance coverage and pension fund contributions).
  • ancillary services, such as identifying and securing office space, or leasing or purchasing IT equipment among others  

With the advantage of saving your company precious time and resources, Africa HR most importantly provides you with the expertise of degreed and trained professionals in the field of human resources.

Flexibility is the main benefit of an experienced HR organization

So, you’ve identified your needs. Which service provider should you choose? The right HR outsourcing organization is here to help your staff focus on core business and thrive. At Africa HR, we provide both ASO and PEO services to accommodate your company’s unique HR needs. Whether your needs stay the same or evolve to switch from one solution to the other, you will benefit from the continuous support of experts who share the same values, ethics, and standards for a great experience on your business growth journey.

At Africa HR, we’re all about lasting relationships. Learn more now!

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For your HR Outsourcing needs, think Africa HR Solutions

Contact us now to find out more about our extensive range of payroll solutions for businesses seeking a compliant expansion across the African continent.
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