Responses to recently completed HR Outsourcing (HRO) survey showed that buyers are only experiencing moderate benefits from their HRO agreements. But while HRO hasn't borne out to be the panacea some had hoped for, many buyers believe improvements can be made to help them and their service providers still meet their original individual and mutual objectives.
The study was conducted in the second half of 2006. It included an online survey and interviews with more than 50 North American and Western European organizations that had undertaken multi-process HRO, some for over 10 years. The study yielded the following key findings:
- Top-ranking benefits sought by HRO buyers: cost reduction, (ranked highest), followed closely by access to external skills and knowledge, process improvements, and ability to internally focus on more strategic activities
- Only average success to date: on a one to five scale, with five being "benefits full achieved" and one being "benefits not at all achieved", most anticipated benefits received rankings of between 2.5 and 3.0
- Responsibility for HRO successes and problems: buyers tended to note that they share both success and problem responsibility with service providers, although they more often gave success credit to their own organization and placed blame on their provider
- Recompetes, terminations and renewals: 31% plan to renew with their current key HRO provider; 31% are uncertain of their future course on renewals; 17% plan to recompete with similar scope; 10% plan to terminate and bring work back in-house; 10% plan to recompete with expanded scope; and eight percent of respondents plan to recompete their contract with reduced scope; These percentages signal that even with dissatisfaction, most buyers will continue with some form of HRO