UpFront HR Insights | Back to UpFront Contents

Improved quality of service. Greater cost control. Increased process efficiency. Higher levels of employee savings. With results like these, it's no wonder many large companies are planning to expand their outsourcing relationships in the next three years.

When Hewitt surveyed more than 125 large companies on their outsourcing experience, nearly 90% said they were satisfied with their current outsourcing arrangement and planned to outsource more services by 2008. The most commonly outsourced HR functions include outplacement services, employee assistance programs, defined contribution or 401(k) plans, COBRA administration, and defined benefit plans. Areas planned for expansion include absence management, learning and development, payroll, recruiting, health and welfare, and global mobility.

The survey reconfirmed that outsourcing gives companies many advantages, including access to outside expertise, the ability to focus on core business, better data for decision making, relief from administrative burdens, and cost savings. Despite the pressure on HR to reduce costs, nearly half of the companies said that cost savings was not an objective in their decision to outsource.

"Companies that expand their outsourcing will open the door even wider for HR to focus on more strategic work that is integral to the business needs," explains Bryan Doyle, President of Hewitt's HR Outsourcing Group. The transition to HR outsourcing requires careful management, notes Doyle. Companies surveyed indicated that they prepared HR for outsourcing primarily by defining new roles and responsibilities, restructuring the department, developing a new HR strategy, and providing training for employees in new roles. Astute planning helped these companies avoid issues including execution, organizational resistance to change, and IT compatibility. More than 80% of the companies in the study reported smooth transitions to HR outsourcing.

The most frequently outsourced HR functions/activities today include:
91% Outplacement services
84% Employee assistance programs
83% Defined contribution plans
77% COBRA administration
68% Defined benefit plans

A full copy of the survey, HR Outsourcing: Trends and Insights 2005, is available by contacting Hewitt at 847-295-5000.

 Back to Top