HR Outsourcers Still Smiling

A news release from Aon Consulting said that its poll of 1,071 US employers shows that nearly seven in 10 (68%) companies are very satisfied or satisfied with their HR outsourcing arrangement, while 30% are somewhat satisfied and 2% are unhappy with their agreement. What’s more, 84% of organizations say they will continue to outsource their HR function, while 14% are unsure and 2% are ready to make a change.

“This market has matured significantly during the past several years, as more organizations understand and realize the true benefits of outsourcing HR,” said Steve Lutz, executive vice president with Aon Consulting, in the news release. “As a result, companies have increased their expectations, requiring service providers to develop higher-quality and more mature service platforms. Bringing outsourced tasks back in house is not an option for most companies, so one thing is certain, only those providers that can meet the constantly changing needs of clients will survive.”

Better Service, Quality

Companies have realized a number of benefits by outsourcing their HR function, according to the study. In fact, 36% got better service from HR outsourcing, 31% enjoyed better quality and 28% realized improved productivity. This is consistent with the reasons companies cited for initially outsourcing HR in the first place, as the majority of organizations (65%) ranked the expertise gained as the most important factor influencing their outsourcing decision. Other factors include reduced costs (31%), access to leading-edge technology (27%) and more time to focus on strategic issues, as opposed to administrative tasks (27%).

In addition, the study showed that three-quarters of organizations currently outsource at least one HR function. Meanwhile, 22% of companies have no plans to follow suit, while 3% plan to outsource at least a portion of their HR function.

Other results included that:

• Approximately three-quarters (72%) of small companies (500 or less employees) currently outsource at least one HR function, while 26% have no plans to outsource HR and 2% are considering it in the future.
• Approximately three-quarters (74%) of mid-sized companies (500- 5,000 employees) currently outsource at least one HR function, while 22% have no plans to outsource HR and 4% are considering it.
• Eighty-one percent of large companies (more than 5,000 employees) currently outsource at least one HR function, while 14% have no plans to outsource HR and 5% are considering it in the future.

In January of 2006, Aon Consulting conducted its “National Employee Benefits Trends Survey” of more than 1,000 US employers to examine 2006 employee benefit trends and determine what plan design decisions employers will make in 2007. Copies of this study are available by calling 800-438-6487.