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Study: Companies selective about HR outsourcing
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WASHINGTON, D.C., June 24, 2008 — Employers continue to take a selective approach to outsourcing their HR technology and functions rather than relying exclusively on a single provider, according to Watson Wyatt, a leading global consulting firm.
“Over the last few years, we’ve continued to see tremendous growth in selective outsourcing,” said Richard Hubbard, director of Watson Wyatt’s U.S. technology and administration solutions practice. “The economic strains some companies are facing will only add to the reasons to choose selective outsourcing. Selective outsourcing provides employers a lot of flexibility and helps them keep their options open.”
Watson Wyatt’s 2007 HR Technology Trends survey of 182 U.S. companies found that many companies expect to do more outsourcing in the future, in areas such as health and welfare programs.
|
|
|
Currently outsourced |
|
Plan to be outsourced |
|
Define contribution |
|
75% |
|
1% |
|
Health and welfare |
|
52% |
|
6% |
|
Defined benefit retirement |
|
50% |
|
5% |
|
Stock administration |
|
40% |
|
6% |
|
Deferred compensation |
|
36% |
|
3% |
|
Payroll |
|
22% |
|
8% |
|
Recruiting |
|
9% |
|
6% |
|
Performance management |
|
4% |
|
5% |
However, few companies (21 percent) automatically look to outsource programs. The majority of companies (63 percent) turn to their internal or enterprise resource planning systems first to deliver HR services.
The independent technology research firm CedarCrestone has also found growth in selective outsourcing. In its 2007/2008 HR Systems Survey, 10th Annual Edition the firm found that selective outsourcing is preferred to total business process outsourcing in most HR categories. In the study, the firm forecasts that selective outsourcing will continue to grow in 2008, particularly as small and medium-sized organizations adopt the strategy.
“Selective outsourcing is growing so popular because it can be tailored to meet an organization’s exact needs,” Hubbard said. “For most organizations, this means outsourcing routine, transaction-oriented processes while refocusing the HR department on strategic planning. Many companies report that selective outsourcing best meets their needs for access to leading-edge technologies, while improving employee experience and service levels. The key to successful outsourcing is finding the solutions that fit the organization’s needs and culture.”
More information on Watson Wyatt’s Changing Strategies in HR Technology and Outsourcing – 2007 Technology Trends Survey can be found at www.watsonwyatt.com/techtrends.