Letting Go: Outsourcing HR

By Donna J. Bear

There's no denying the trend toward HR outsourcing. In fact, most of the U.S. companies currently experiencing rapid growth 83% are outsourcing at least some or even all of their HR functions, and they say they plan to continue to do so for at least the next two years (Almost All, 2005). But organizations must outsource in a thoughtful way. Before spending countless hours reviewing vendors' offerings, they should consider the following points.

First, know your reasons

Whether and what to outsource will be influenced by the reasons for outsourcing. Companies often share similar motives. Below are some of the top reasons mentioned in recent surveys conducted by Hewitt Associates (Stopper, 2005), Towers Perrin (2005), Mellon Financial Corporation (2005) and PricewaterhouseCoopers (“Almost All,” 2005):

  • achieving cost savings and freeing up capital for use elsewhere
  • allowing HR professionals to focus on the core business of the company
  • improving business processes
  • improving services to employees
  • providing access to leading-edge technologies
  • shedding the burden of navigating through the complexities of regulatory compliance
  • focusing on strategic HR
  • improving quality of service.


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