HR, Directors, Considering, Outsourcing

Third of HR directors considering admin outsourcing

28 Nov 2003 | (Survey)

Although UK firms can be hesitant to accept HR outsourcing as a cost solution, Captia survey finds that a third of HR directors are said to be considering the move in order to cut costs.

Almost a third (31%) of HR directors are considering outsourcing some form of their organisation?s transactional HR process, with cost control being the biggest driver for those already outsourcing, according to a new survey.

The Capita survey of 800 HR and financial directors suggests that while the vast majority are not considering the move, 54% of HR directors that have already outsourced said that the need to cut costs pushed them towards the decision:

-HR administration - everything from changing employee details to providing reports for the board - represents a huge burden for any HR department.

"As a result, companies are choosing to outsource these processes in order to control costs and to focus on other business critical areas such as work/life balance and talent management," said Capita's Edward Brooks today.

As well as costs, access to new technology and skills (31%), reduced transaction costs (15%), and enhanced capability to develop new products or services (15%) were also given as reasons from directors who had already outsourced.

The survey also suggests that HR directors are the main drivers of HR outsourcing  "35% compared to 26% of MDs" however, MDs make the final purchasing decision 35% compared to only eight per cent of HR directors.

However, convincing HR directors of the benefits of outsourcing could be another matter. Although increasing numbers of firms say they are under pressure to outsource functions, UK based employers are far more wary of outsourcing than counterparts in France, Germany or Australia.

A recent LogicaCMG survey asked firms to grade the risk of outsourcing in general from 0-100. The UK averaged a score of 35, this compared to 29 in France, 22 in Australia and in Germany the figure was under half of the UK score at 14.

Director of HR research and consultancy at the Institute of Employment Studies (IES), Peter Reilly says that HR departments in the UK can be resistant to outsourcing and the "one-size-fits-all" model it represents:

"Service providers find HR very hard to convince in the UK. It is probably willing to outsource where some advantage can be perceived, but worry over control issues and organisational uniqueness makes HR very hesitant," he told HR Gateway.

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