HR Outsourcing Trends and Insights 2009

Aug 12, 2009

Author: Hewitt Associates

HR Outsourcing Trends and Insights 2009

At a time when the majority of companies are under increasing pressure to reduce costs due to the weakened economy, HR departments expect to maintain their current strategies toward outsourcing HR services, according to Hewitt's HR Outsourcing Trends and Insights 2009 survey.

Hewitt recently surveyed 104 companies on how they are using outsourcing to improve the delivery of their benefit and HR programs and also how their strategies might be affected by the current economic environment.

From the survey results, it's clear that outsourcing does play an integral role in HR's ability to deliver programs to employees. Overall, 82 percent of companies that have measured their outsourcing programs said they realized the benefits they had hoped to gain by outsourcing.

There are a number of reasons why companies choose to outsource HR services, including:

Reducing costs: Sixty-five percent of organizations that indicate cost savings is a primary outsourcing objective reported they achieved their expected cost-reduction targets through their outsourcing programs.

Gaining access to outside expertise: In addition to needing specific domain expertise, companies also want to be relieved of the burden of making large investments in technology to maintain in-house systems and dedicating resources to meet challenging regulatory guidelines.

Improving service quality: Considered the most common measure of success for outsourcing, 81 percent of respondents indicated that they met or exceeded their service quality targets.

Realigning/focusing on strategic HR priorities: Outsourcing helps remove the day-to-day administrivia of managing HR programs so HR can focus on supporting on their most important business challenges.

by Hewitt Associates

Return to previous page

Human Resource Outsourcing Outlook 2009

Aug 12, 2009

Author: Vendorseek.com

Human Resource Outsourcing Outlook 2009

In a recession, all arrows point to outsourcing. The Human Resources Outsourcing (HRO) industry projects growth at five percent in 2009 amid the most severe economic downturn since the Great Depression. Some of the industry changes driving this growth promise to translate into improved ROI for HRO clients. Find out which behind-the-scenes strategies will save you money in 2009.

To reach a projected $3.2 billion in sales, HRO intends to drive new business through several strategic initiatives.

A La Carte Service

Industry analysts are predicting more componentized deals, allowing companies to select specific services to outsource while retaining others in-house. HR outsourcing suppliers are building greater flexibility into service agreements, allowing clients on-demand service changes and pay-as-you-go pricing. With cost reduction a top priority, new clients will target transaction-intensive processes for outsourcing. Human resources outsourcing services include:
- Payroll and benefits
- Recruiting
- Performance management
- Compensation
- Learning

HRO clients can trim expenses by accessing available resources only as needed, scaling outsourced services to meet changing needs. In a volatile economy, this sort of flexibility is crucial to maintaining a lean business.

Human Resource Management System (HRMS) Technology

Human resource management system (HRMS) technology has hitherto served as something of a competitor to HRO. HRMS facilitates in-house human resources, providing a global view of human capital and automating tasks such as payroll, benefits, recruiting, training, and performance tracking. A technological solution can increase in-house efficiency, rendering outsourcing unnecessary.

In 2009, however, analysts predict an increased adoption of HR technology by outsourcing providers. By making this technology available to clients on a Software as a Service basis, HRO suppliers present an attractive proposition for companies looking to avoid a large capital outlay. Clients benefit from subscription-based access to both the state-of-the-art technology and the providers outsourced human resources team.

Consolidation in the HRO Industry

Consolidation among HRO suppliers will bring better value to clients outsourcing multiple processes or implementing a large-scope human resources solution. Industry analyst Everest Research Institute expects to see consolidation via mergers and acquisitions as well as via partnerships among independent suppliers. Providers will consolidate in order to broaden their expertise into new processes and technology; widen their geographical footprint; and expand their market share.

For HRO clients, consolidation promises greater efficiency and access to broader services, as well as a reduction in the cost of multi-process service contracts. Continuity between services alone produces greater value. For example, a global HRO supplier might partner with a specialized Recruitment Process Outsourcing (RPO) provider to deeper recruiting services in specific geographies. Their clients benefit from both the reach and economy of a global HRO and the local recruitment relationships of the partner.

The coming year offers a promising outlook for human resource outsourcing suppliers and clients alike. As the market for outsourcing human resources matures, the industry will drive growth by increasing the efficiency and breadth of its services. In a climate of pessimism and gloomy forecasts, companies finally have something to cheer about.

by VendorSeek.com

Return to previous page