Benefits August 12, 2003

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.
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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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