HR Outsourcing: Big companies are making the shift from in-house to outsourcing
According to a new study, the world’s largest companies were more inclined to outsource HR functions in 2003 than in 2002. And if they weren’t outsourcing at the time of the latest survey, most were thinking about it. Another finding: Those who are outsourcing are, for the most part, happy in their choice. However, while outsourcing increased in many areas, such as 401 K plans and call centers, it decreased slightly in recruiting. In this article, MedZilla interviews the survey’s author and reports on its findings.
Marysville, WA (PRWEB) May 28, 2004 -- For the world’s biggest companies,
outsourcing has, for the most part, become a standard practice in human
resources departments, according to a new study. Companies are more prone to
turn over their 401K programs, call centers, pension programs, health benefits,
and other HR functions, but less apt to call on outside recruiters, according to
the study, HR Outsourcing: Benefits, Challenges and Trends.
Large
companies surveyed
The report’s author David J. Dell, PhD, surveyed 122
companies in North American and European companies—all with annual revenues
exceeding $1 billion—about their outsourcing practices and perceptions. He
defines outsourcing as having other companies contracted do work for you that
you might have had a team of people or your own department doing previously.
Conducting the survey on behalf of the Conference Board, a nonprofit
organization sharing best practices of leading corporations, Dr. Dell compared
this latest 2003 survey results with a similar study he did in 2002. The
outsourced functions he looked at range from benefits management, payroll, call
centers, IT function for HR, training and learning management and employee
communications to recruiting.
Outsourcing is a trend, in most HR
functions
The survey found that most companies are outsourcing or thinking
about it. At least 76% of respondents currently outsource one or more major HR
functions. Only 9% of the large companies surveyed in the most recent report
have ruled out the practice of outsourcing HR functions entirely, while 23% of
companies ruled it out in 2002. “In the U.S., that figure is only 4%. In other
words, more than 95% of U.S. companies are outsourcing something,” he says.
Dr. Dell attributes the change to momentum. He says there weren’t many
choices a few years ago but today vendors have gotten “quite good.” The economy
might also have had something to do with the up tick, he says. “Obviously many
companies had a tremendous cash squeeze over the last couple of years and there
wasn’t very much money to invest in the kinds of things that would make HR more
productive so the outsourcing alternative got more and more
attractive.”
While outsourcing in areas such as 401K programs rose from
last year, with 53% of companies saying they fully outsource the function,
recruiting feel. In 2002, Dr. Dell reported that 3% of companies fully
outsourced their recruiting function and 41% partially outsourced it. In 2003,
only 1% of companies fully outsourced the function and 37% partially outsourced
it. Dr. Dell asked companies in the most recent survey if they planned to
outsource and, when it came to recruiting, 7% said they planned to turn to
outside help.
“Recruiting has to be an anomaly. Certainly outside of the
health area, most companies cut way back on hiring the last couple of years; so
it’s hard to tell how much outsourcing they’ll be doing when they ... staff up,”
he says.
Frank Heasley, PhD, president and CEO of MedZilla.com, a leading
Internet recruitment and professional community that serves biotechnology,
pharmaceuticals, healthcare and science, agrees with the finding that the
outsourcing of recruiters had dipped somewhat. He says these “recessionary
times” are largely to blame, but adds there has been a slight up tick of late.
“It depends on supply and demand,” Dr. Heasley says. “When you have
candidates lined up at your door, you’re less likely to seek outside assistance.
But when you’re hiring in a very specialized area or in a field like
nursing—where there are not enough candidates to satisfy the demand—you're more
likely to retain a recruiter. The problem for recruiters is that areas like
nursing, pharmacy and radiologic technology tend to be infertile grounds because
there are so few of these professionals looking for jobs.”
During
recessions, Dr. Heasley says, recruiting tends to take a “double hit” because
not only are more people are looking for jobs, creating less need for outside
recruiters, but there are more recruiters competing against one another for the
contracts.
“Quite a few recruiters got started when they were laid off,”
he says.
There’s more…
Dr. Dell found that the companies surveyed are
for the most part happy with outsourcing the functions that they do. None plan
to take outsourced functions back in house, according to the report.
“It
confirms the findings. That’s one reason why there is growth—people keep adding
things and nothing is coming back,” Dr. Dell says.
According to the
survey, 80% of respondents would outsource again based on their current
experience. In addition, those who do outsource are more satisfied with their
current practice than those who do not. “That tells us that people are at least
as happy if they outsource, if not more so, and they’d do it again,” Dr. Dell
says.
Other findings include:
Just over half of the companies that
outsource employ consultants and only 33% hire outside counsel to structure and
manage outsourcing transitions.
There are signs of resistance to
outsourcing within HR departments. HR representatives tend to be more concerned
than top management about using outsourcing to improve service, and not just as
a tool for cost reduction, according to the survey. “Obviously right now, a lot
of the reason that people will go through the effort and transition to move to
outsourcing is that they believe that it will be worthwhile economically. What
many HR departments are saying is that you might be able to save money but let’s
make sure that we’re getting at least as good practices as we are, if not
better,” Dr. Dell says.
The successful use of outside HR resources
requires a lot of in-house education and involvement, Dr. Heasley says. “It’s
one thing to outsource more; it’s quite another to get the most out of these
vendors.
“The best outsourced recruiters are those that have solid
relationships with HR and management and understand the business. The most
successful recruiting relationships are built on communication and understanding
of each other’s roles. In other words, the HR team has done its research on the
most experienced recruiters in specific career fields, it understands what the
recruiter does and why, and it uses that recruiter’s expertise
completely.”
Becoming good at outsourcing is well worth the effort. The
basic message, Dr. Dell says, is “outsourcing is here to stay, and there is
plenty of it.”
About MedZilla.com
Established in mid 1994, MedZilla is
the original web site to serve career and hiring needs for professionals and
employers in biotechnology, pharmaceuticals, medicine, science and healthcare.
MedZilla databases contain about 10,000 open positions, 13,000 resumes from
candidates actively seeking new positions and 71,000 archived
resumes.
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Source : http://www.prweb.com/releases/2004/5/prweb129528.htm