Consultant vs In-House HR: What’s Right for UK SMEs?
If you run a Business in the UK, you’re constantly balancing risk, cost and speed. HR is one of those functions where the choice between hiring in-house and partnering with a specialist can materially change your cost base and your exposure to people-related risks.
Here’s a practical comparison to help you decide.
The case for a consultant (outsourced HR)
1) Depth of expertise on demand
A strong HR consultant brings specialist experience across Employee Relations cases, TUPE, restructures, investigations, performance management, policy writing, reward, and more, without you paying for every skill set full-time.
2) Lower fixed costs, clearer ROI
Instead of funding salaries, pensions, benefits, CPD and software year-round, you pay only for what you need. Whether that’s a few retained hours each month or an intensive project (handbook overhaul, job architecture, manager training).
3) Reduced risk exposure
Up-to-date, UK-specific advice reduces the chance of costly missteps, which is especially important for SMEs where a single case can bite into cash flow.
4) Faster implementation
Consultants ship tried and tested templates, processes and training that would otherwise take an internal team months to design and gain buy-in for.
5) Elastic capacity
Seasonal hiring spikes, change programmes or complex Employee Relations cases? Scale up support for a quarter and scale back when the peak passes.
When in-house HR makes sense
1) You’re past ~100–200 employees
At this point, daily volume (recruitment, Employee Relations, payroll liaison, day-to-day admin) can justify a small in-house HR team.
2) Highly regulated or unique environments
Certain sectors benefit from an internal HR Business Partner who knows your domain’s specific compliance rhythms and risk profile.
A hybrid model that works for many SMEs
Internal: a capable People/HR lead handling leadership, direction, and day-to-day operations.
External: a retained consultant for complex Employee Relations, compensation benchmarking, change, and surge capacity, plus a helpline for managers.
This combo keeps institutional knowledge inside, while plugging gaps with specialist firepower only when needed.
What the numbers say across the UK
SMEs are the economy. In 2024 the UK had 5.5 million SMEs, making up 99.8% of all businesses, so solutions built for SMEs really matter. (Source: House of Commons Research Briefing on Business Statistics published 11/11/24)
Absence is rising. The Office for National Statistics reported that UK workers lost around 6.7 days to sickness absence in 2023, up on previous years, making proactive people management and manager training a real bottom-line issue for smaller firms.
(One implication: a consultant who tightens your absence policy, trains line managers, and implements simple reporting can pay for themselves quickly.)
Quick self-check for founders, MDs, and CEOs
Fewer than 150 employees?
Managers need training and a trusted helpline?
You want compliant, plain-English policies and faster hiring, but not a big fixed cost?
HR feels reactive rather than proactive, and you’d like to get ahead of issues before they escalate?
You want experienced support in handling sensitive exits, restructures, or performance concerns?
If you nodded along, a consultant-led model (with or without a light internal role) is likely the most cost-effective route right now.
Ready to de-risk people issues and free up your time?
Regent HR helps UK SMEs reduce risk, improve performance, and build confident managers, all without adding permanent headcount.
👉 Message Regent HR on LinkedIn or email Contact@RegentHR.co.uk to book a free consultation.
