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Dispelling the Myths of HR Outsourcing

"it is better for HR directors to proactively assess alternative strategies, from the creation of internal shared services to outsourcing."

21 January 2011

Blog (1)

In the first of four articles, a PA expert in HR transformation, outlines how HR Directors should consider their options for sourcing HR services, and not blindly succumb to commonly-held beliefs about HR outsourcing.

HR cannot be immune to the pressures that today apply to every other part of an organisation, and there is a need to find the right way to deliver the required services for the best value for money. The reality is that if HR doesn’t assess its own options, in this climate, someone else will probably do it for them. Rather than having a sourcing strategy forced upon the HR department from elsewhere, it is better for HR directors to proactively assess alternative strategies, from the creation of internal shared services to outsourcing. HR can get ahead of the game and present its own strong opinion on the best way forward.

Key to success is to have clear goals

This might sound as if outsourcing is being advocated for use in all situations; in fact the opposite is true. Outsourcing is not something that should be done lightly. Do it well, and it is a great way to achieve strategic goals that might not be otherwise available. Do it badly, and it has the potential to cost you more money and more grief than you ever thought possible. 

Being realistic, outsourcing will not solve all the issues facing an HR organisation; and it is rarely possible to achieve every requirement in one outsourcing solution. Outsourcing cannot deliver lower costs and better service and new systems and lower risk; but, done well, it can deliver one or two of these goals and provide quantifiable value to the organisation. Good outsourcing involves trade-offs, and HR directors need to be honest about their true objectives, so that they can understand what they have to play with. 

So how to move forward? The outsourcing market is awash with ‘bumper sticker’ advice about the pros and cons of various approaches. From impossibly over-optimistic return on investment figures to dire warnings about loss of control, these simplistic and ill-founded myths are adding unnecessary confusion.

In fact, despite the perceived complexity, HR outsourcing is a relatively simple thing.  The HR director has to determine the strategic goals; and the organisation must decide whether or not it is prepared to have a third party working to support the delivery of those goals.  Taking the outsourcing route is not a software selection exercise or something to be worn as a badge of honour.  Deciding whether or not to outsource HR should be a sound, sensible decision taken with all of the necessary facts at your disposal.


To visit PA's pages on shared services and outsoucing, please click here.

To read the blog online, please click here.

To read the second blog, please click here.

Contact the sourcing and procurement team

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