Why HR outsourcing continues to expand: Successful companies excel by focusing on what they do best

Abstract

Purpose

To highlight that human‐resource outsourcing (HRO) arrangements have proved to be strategic partnerships that help to put people matters at the top of corporate strategic decision‐making.

Design/methodology/approach

On the basis of a survey by The Conference Board, produced in partnership with Accenture HR Services, the article demonstrates the key motivating factors in the decision to outsource. The article presents a case study of a mid‐size American chemical producer that, because of human resource outsourcing (HRO), can now more effectively perform financial analyses because of better HR reporting. Additionally, the company now pays 99 percent of employee claims within two weeks and manages every service request within 48 hours.

Findings

The article demonstrates that HRO is about the best use of company resources, not a means for cost savings or job cutting. By fully understanding the economics and opportunities of HRO, executives can help their companies to achieve new heights of performance.

Practical implications

The article demonstrates that the key advantages of HRO include lower costs, better insights, greater control over the HR function and improved customer services.

Originality/value

The article contains plenty to interest top managers who are considering outsourcing their HR functions.

Citation

Davidson, G. (2005), "Why HR outsourcing continues to expand: Successful companies excel by focusing on what they do best", Human Resource Management International Digest, Vol. 13 No. 3, pp. 3-5. https://doi.org/10.1108/09670730510594941