Most companies are satisfied with outsourcing and plan to outsource more in the next three years.
These are the findings from HR consultant and outsourcing provider, Hewitt who say that HR outsourcing is on track to continue record growth in the United States.
The most commonly outsourced HR functions include:
- outplacement services (91%)
- employee assistance programmes (89%)
- defined contribution (83%)
- COBRA administration (77%)
- defined benefit (pension) (68%)
By 2008, companies plan to expand outsourcing into the following areas (listed in order): leave management, learning and development, payroll, recruiting, health and welfare, and global mobility.
Bryan Doyle, president of Hewitt’s HR outsourcing group commented: “The growth of HR outsourcing will continue to gain momentum as organisations reap the benefits, including significant cost savings, new capabilities and services for employees, and enabling HR to focus on more strategic work that is integral to the business.
“For most organisations, HR administration is not their core area of expertise, so by turning it over to an HR expert, they can focus on critical business needs.”
While most businesses are clear in their reasons for outsourcing which include cost savings, relief from administrative burden and access to HR expertise, many still have concerns including:
- losing control of key processes
- employee reactions to an external service provider
- difficulty in building a business case
Demonstrated HR process expertise was cited by the biggest majority (95%) as the most important criteria when choosing an HR outsourcing business, closely followed by prior experience/ track record (93%), service level agreements in contracts (83%), cost savings guarantees in contracts (65%), and leading-edge technology (65%).
“It’s important to understand that HR is unique from other areas that companies typically outsource, so it’s critical that they conduct a thorough evaluation to ensure they select a provider with the HR expertise, experience and capabilities needed to manage people issues and deliver the quality service and results they are looking for,” said Doyle.
A total of 129 large businesses, representing nearly two million employees were quizzed as part of the survey.
