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Next Level Why & How To Outsource Hr
- 1. HR Solutions HRO,Why & Who should Outsource HR
- 2. Agenda : HR Outsourcing Overview : Impact on Companies : Impact on HR Profession : Impact on Your Career : Selecting, Managing, and Measuring Outsourcing Providers : Helpful Resources
- 3. What is Outsourcing?The performance by outside parties, on a recurring basis, of tasks that would otherwise be performed in-house.
- 4. Other Definitions : In-sourcing : Off-shoring : Co-sourcing : Geo-sourcing : Outplacement
- 5. Types of Outsourcing: Business Process Outsourcing : Information Technology - 28% : Human Resources – 16% : Sales & Marketing – 15% : Finance – 11% : Administrative – 9% : All Others – 22%
- 6. How Common isHRO? : 58% of companies outsource some HR function : 91% of companies with $1 billion+ annual revenues are now considering HRO
- 7. The HRO Market: In next 5 years, global spending on HRO will double – from $40 billion to $80 billion : From 2008 to 2010, 44% increase in large firms that would consider HRO
- 8. Why Outsource? : Allow HR to focus on core competencies : Creates strategic opportunities for HR professionals : Improve quality, efficiency, and effectiveness : Relief from administrative burdens : Reduce operating costs
- 9. Other Benefits toHRO : Access to outside HR expertise : Greater diversity of HR services : Leverage vendor investments in technology rarely available to HR organization : Limit fiduciary, audit, and litigation risks and liabilities : Upgrade level of customer service : Ease time pressure demands : “Better, faster, cheaper”
- 10. When to Outsource: High HR service delivery costs : No further investment in technology : End administration of transactions and focus on strategic work : Improve quality of HR services : Strong business case : Other business reasons
- 11. Considerations : Core Competency? : Best in Class? What is your vision for your HRM business? What metrics will measure progress toward vision? What business outcomes are needed from the HRM aspects of the business?
- 12. Poor Reasons toOutsource : Do not outsource just because you are frustrated : Do not outsource as a last resort, just because you have tried everything else
- 13. Outsourcing Myths : Outsourcing is just a fad : Outsourcing can be kept secret from employees : Outsourcing is only for the largest companies : Messes must be fixed before outsourcing : Outsourcing is for everyone
- 14. Trends in HROutsourcing Market : Specialization : Globalization : Standardization : Regionalization : Consortia Buying : Mid-market Mania : Utility Model Evolution : Consolidation and Partnering
- 15. The Future ofHRO Growth-Maturation of HRO market Increasing weight of non-cost drivers “ Commodization” of HR functions New roles for internal HR departments New career opportunities for HR professionals
- 16. Impact on Companies: Employee reactions : HR executives taking part in operational and strategic decisions : Elimination of bureaucracy : Customer service improvements
- 17. Impact on Companies(cont’d) : Growth of self-service platform : Slimming down staff : Cost savings : Model will serve to guide other organizational functions
- 18. Satisfaction Recent surveyof 129 large companies representing 2 million employees: : 89% satisfied with outsourcing arrangement : 85% achieved hoped-for benefits : Additional 20% achieved unexpected benefits
- 19. INDIA Corporate Office- New Delhi The Polkas E-5, Defence Colony New Delhi-110024 E-mail: corporate@nextlevelhr.in India (Noida Office) Block No A Sector 61 Noida-201301 +91-120-4214632 E-mail: contact@nextlevelhr.in For all enquiries, please contact: USA Global Office - Norwalk 12052 E. Imperial Hwy., Ste. 200 Norwalk, Greater Los Angeles CA 90650 Phone:+1-562-301 5515 Fax: +1-562-863-3863 E-mail: usa@nextlevelhr.in
Editor's Notes
- #5 Definitions: In-sourcing: foreign companies establish jobs in the United States; the process of retaining a business function internally Off-shoring: the relocation of business processes to a lower cost location, usually outside the company’s home country Co-sourcing: a business function is shared by mutually dependent internal staff and external resources with specialized knowledge of business function. Based on a long-term relationship with an emphasis on values traditionally associated more with "partnering" Geo-sourcing: the process of seeking expert skills in the best geographical location – whether internal or external – for each business function
- #6 BPO expenditure likely to grow worldwide by 10% a year – from $140 billion in 2005 to $200 billion by 2010 Source: LogicaCMG, August 2005 HRO is fastest growing sement of the BPO industry. (SHRM 2005 Research Quarterly – HR Outsourcing: Reaping Strategic Value for Your Organization by Leslie Weatherly) ¾ of US companies outsourced some or all of their IT activities in 2004 – that number is likely to increase for 2005 Source: Global Outsourcing Report, March 2005 Going forward, it is projected that HR will be among fastest growing outsourced services. (SHRM 2005 Research Quarterly – HR Outsourcing: Reaping Strategic Value for Your Organization by Leslie Weatherly)
- #7 SHRM Human Resource Outsourcing Survey Report: Almost 6 out of 10 organizations practice HR Outsourcing BUT 1/3 of organizations did not outsource any function ½ of organizations partially outsource an HR function (organization co-manages function with vendor) 2/3 of HR professionals predicted that level of outsourcing would remain same over next 5 years 1/3 expected organizations to increase level of HR Outsourcing Outousrcing favored in large-staff sized organizations – almost twice as many indicated increase in next 5 years
- #11 HR service delivery costs high and cannot be managed down Continuing investment in technology no longer feasible Strong desire to end administration of transactions and focus on strategic work Desire to improve quality of HR services through process redesign and access to self-service platforms Strong business case can be built Other business reasons – example:geographic setup – centered vs. spread
- #12 Is this function a core competency? Is is the best in its class? If not, it should be considered for outsourcing. Nothing is sacred. You also must have a strategic vision going into outsourcing, specified metrics to measure progress toward the vision, and real business outcomes planned to justify the outsourcing costs with benefits.
- #15 Specialization – HRO buyers want a provider that considers them “special” and every provider has a “specialty” Globalization – global is the new trend, with even small firms having global HRO needs; global HRO providers will find a thriving market Standardization – Not all processes are unique and not all jobs are custom jobs. Standardized process and performance metrics are becoming more common and will consequently lead to better service, lower costs, and buyers that are free to focus on core competencies Regionalization – aka “Hubbing Up”; creation of corporate hubs which are the center of all activity (ex: FedEx hubs is Nashville and all packages travel through Nashville on their way to final destination) Consortia Buying – buying groups are banding together to buy BPO services; as high volume groups, they receive highly standardized services which drives continuous cost reductions Mid-market Mania – The 500-1500 employee market will continue to grow more rapidly than the Fortune 500 (20%+ annually in North America and around world) Utility model Evolution – BPO provider use will become as common as utility (gas, water, electric) use. Just as most individuals do not drill own gas or water wells, so will companies look to BPO providers to manage their utilities. Consolidation and Partnering – Extremely large trend toward provider partnering (Ex: Aon HRO’s deal with CSC for IT and Ultimate Software for mid-market payroll)
- #16 Trends that are expected to gain momentum within next 2-5 years. Continued growth-maturation of HR Outsourcing – organizations increasingly use outsourcing as strategic business model in order to remain competitive Increasing weight of noncost factors as decision drivers – reasons behind outsourcing are strategic; companies outsource in order to gain expertise not simply to save money Continued “commodization” of many HR functions – HR services are “commoditized” and susceptible to marketplace competition s; companies engage in HRO in order lower costs/remain competitive Development of new roles for internal HR departments – HRO has changed amount and types of activities handled internally; opportunity for HR to become strategic participant within executive suite Emphasis on new career opportunities for HR professionals – more opportunities for HR to play strategic role and there are increased external HR career opportunities