Cloud-based HR systems vs. On-site HR systems

November 20, 2022

Cloud-based HR Systems: The Way Forward

With the rapid advance of cloud computing technology in the 21st century, the adoption of cloud-based HR systems has increased significantly. In contrast, on-site HR systems have been around for much longer, and some companies regard it as the better option. The truth is that both cloud-based and on-site HR systems have their benefits and drawbacks, and it’s essential to consider both before making a decision. In this post, we will provide a factual and unbiased comparison of cloud-based HR systems and on-site HR systems to help you make a choice.

What Is a Cloud-based HR System?

A cloud-based HR system is hosted on servers located off-site and accessed through a web browser or mobile app. These systems store HR data in the cloud, where it can be accessed by authorized users from any device with an internet connection. The allocated resources are flexible, and the potential for unlimited storage makes it the preferred choice for most HR departments.

What Is an On-site HR System?

An on-site HR system, also known as an HR information system (HRIS), is software installed on-premises and operated by the company’s IT department or a third-party contractor. Data is stored locally in the organization’s servers and can only be accessed from within the company’s network.

Benefits of Cloud-based HR Systems

  1. Cost-effective: Cloud-based HR systems have lower upfront costs and lower maintenance costs than on-site systems. No need to worry about server maintenance or pricey software upgrades.
  2. Scalable: Expanding your cloud-based HR solution is easy, with minimal resource requirements. You can add as many users as necessary without any disruption to the day-to-day running of the system.
  3. Flexibility: You can access cloud-based HR systems from anywhere with an internet connection, making remote work possible. In contrast, on-site systems require an on-site location to access data.
  4. Security: Cloud-based HR systems have robust security protocols, with regular backups and built-in disaster recovery options. Data stored locally is susceptible to a disaster, and the recovery process could take hours, causing costly downtime.

Benefits of On-site HR Systems

  1. Customizable: The features offered by on-site HR systems can be modified to cater to specific needs, which is not possible in cloud-based HR systems.
  2. Data control: An on-site HR system provides complete control over data, so no third-party vendor can access it.
  3. Reliability: With an on-site HR system, you can keep track of, maintain, and troubleshoot your HR systems regularly to prevent outages, minimizing downtime.

Comparison between Cloud-based HR Systems and On-site HR systems:

Criteria Cloud HR System On-site HR System
Cost Low upfront costs with pay-per-use pricing models High upfront cost with customized pricing models
Scalability Scalable with minimal resource requirements Limited scalability
Accessibility Accessed from anywhere with an internet connection Accessed locally on-site
Data-control Data accessed and stored on third-party servers Complete data control over HR data
Maintenance Maintenance-free with automatic updates IT teams responsible for software and hardware maintenance
Integration Easily integrates with other apps through APIs Difficulty in integrating with other apps
Reliability No hardware failure concerns, fast disaster recovery options Hardware concerns, longer downtime in the event of a crash

As you can see from the table, both cloud-based HR systems and on-site HR systems have their advantages and disadvantages. Still, it’s vital to consider your organization's size and specific needs before choosing which system to adopt.

Final Thoughts

In conclusion, the choice between the two types of HR systems will depend on your organization's specific requirements. Cloud-based HR systems are preferred by small to medium-sized businesses that prioritize low upfront costs, scalability, flexibility, and security. In contrast, larger companies may choose on-site HR systems for their customizability, data control, and reliability. In any case, choose an HR system that suits your needs best, and let it work wonders for your organization.


  1. Forbes. (2020). The Pros and Cons of Cloud vs On-Premises HR Systems. Retrieved from
  2. HR Technologist. (2021). Cloud-based HR Software vs. On-premise: Pros, Cons, and a comparison chart. Retrieved from

© 2023 Flare Compare