Deloitte consulting has released an excellent paper on outsourcing HR called Making HR Business Process Outsourcing Work (Jason Geller, Principal, Deloitte Consulting LLP). Terrible name, but an excellent paper (thanks to Bill Ives and Portals and KM).
A recent Deloitte HR study (Calling a Change in the Outsourcing Market) that organizations that do not consider and plan for pitfalls and outsourcing troubles are likely to be hurt by the results. The study of 25 large companies found that 70% had “significant negative experiences” with outsourcing projects and now use greater caution in ousourcing deals.
The benefits off outsourcing are many including ROI benefits:
- Headcount reductions of HR, HRIS, and payroll staff
- Reduced spending on technology licenses and maintenance
- Reduced spending on third-party vendor services
- Greater use of self-service for managers and employees
- Basic efficiencies realized from centralization of processes
Of course, as the study participants can tell us, the process of moving to an outsourced model is fraught with pitfalls and requires a lot of planning. Deloitte offers a well-thought approach:
1 Making HR Business Process Outsourcing Work
In particular, the report emphasizes the requisites for hiring an outsourcing vendor. Deloitte recommends that the HR outsourcing contract with the winning vendor should cover the following elements:
- Scope of work
- Service levels and performance management
- Pricing
- Gain sharing
- Required documentation from all involved parties
- Software and hardware provided by the vendor; technical
- infrastructure; telecommunications
- Service locations
- Key staff
- Implementation plan, critical milestones, process redesign
- Termination fees and termination assistance
- Security
- Disaster recovery and business continuity
- Personnel conduct policies
- Relationship management and governance
- Change control procedures
- Quality management and improvement
- Subcontractors
- Regulatory Requirements
One element of a vendor evaluation that should not be overlooked: company financials. Though most companies would likely hire a Watson Wyatt or Towers Perrin or another big firm where corporate financials are less of a concern, the decision-making
Great article of HR Outsourcing for large companies. However it woudl be interesting for someone to review the HR Outsourcing options for small and medium sized companies. Many of them are moving to a Professional Employer Organization or PEO. Some information about the PEO option for these sized clients can be found at http://www.staffmarket.com or at napeo.org.
Many thanks for the comments and thoughts (anonymous). Do you have or know of a good case study that would be worth me citing or writing up as an article? Regads, Toby
I was actually patiently waiting for such facts, I know that HR outsourcing is a recent term that works very well for many companies. Many of us need to be aware by the reality and start acting accordingly.
The PEO is really getting a lot of attention – a lot of PEO related articles at PEOinfo.com.
Outsourcing and offshoring are used interchangeably in public discourse despite important technical differences. Outsourcing involves contracting with a supplier, which may or may not involve some degree of offshoring servicii programare
Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider Arizona seo
Thanks for the source, I am still not convinced about the outsourcing advantages and many small and medium sized companies still have serious reviews to complete before making this step.
Gordwick, PEO consultant
I agree with a lot of these comments. Check out our Human Resource Outsourcing
Companies that can afford it should invest a fair amount of their budget towards their HR processes. Consulting a specialist could get you the expertise of market veterans plus it reduces the headache of the whole hiring process.
Good list on what a PEO can do for you. Getting relief from payroll hassles, employee benefits and HR headaches is what makes a PEO worthwhile to work with. For a small to mid-size business a PEO will free you up so that you can go about the business of doing business.
HR Outsourcing focuses on running and developing your business.It provides you with the freedom of hiring highly skilled staff either temporarily or permanently.You will only pay when they do the hiring for you.
They do have their limitations,but HR
firm always works for the people,getting their work done.
HR Outsourcing