HR Turns To Outsourcing To Save Money/Focus On Strategy

August 12, 2003 (PLANSPONSOR.com) - The majority of human resource professionals are turning to outside vendors to handle certain HR functions, with saving money and focusing on strategy being the primary reasons.

More than half (53%) of the HR professionals polled by the Society of Human Resource Management (SHRM) indicated their organization was doing some type of outsourcing, with saving money (26%) and focusing on strategy as the primary reasons (23%). Other reasons indicated include:

  • 22% – improve compliance
  • 18% – improve accuracy
  • 18% – lack experience in house
  • 18% – take advantage of technological advances
  • 17% – offer services that otherwise could not be offered
  • 15% – focus on the core business
  • 5% – other.

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Examining what function HR professionals are turning to for their outsourcing needs revealed a dead heat between 401(k) administration and employee assistance/counseling, both being outsourced by 84% of the outsourcing respondents. Also being outsourced by more than seven out of 10 of respondents was retirement planning help (74%), pension administration (73%) and temporary staffing (72%).

More than half of the outsourcing contingent also indicated outsourcing background checks (68%), training and management development programs (57%), executive development and coaching (54%) and health care benefits administration (53%). Further, nearly half (49%) have turned to outside vendors for employee benefit and administration and payroll.

Rounding out the list of outsourced services was:

  • 46%- risk management
  • 44%- executive staffing
  • 41%- employee relocation
  • 40 %- HRIS selection, training implementation
  • 32%- recruitment
  • 17%- executive compensation and incentive plans
  • 15%- policy writing
  • 14%- administration of compensation/incentive plans
  • 11%- wage and salary administration.

The “Reasons for Outsourcing” survey was fielded during the week of July 22-29, 2003, and was based on the responses of 393 randomly selected human resource professionals. The “Functions Outsourced” survey was fielded during the week of July 29-August 5, 2003, and was based on the responses of 360 randomly selected human resource professionals.

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