According to a recent study, firms primarily outsource their HR functions to achieve cost savings, access external skills and knowledge, and process improvements. In addition, outsourcing of such functions will allow them to focus on their core business.
The study revealed mixed responses among buyers of human resource outsourcing (HRO). According to the key findings;
- Approximately 31% of companies are expected to renew their existing HRO agreement with the vendor,
- Slightly over 17% are likely to outsource their HR functions to some other HRO services providers.
- Less than 10% agreed to end the existing contract and decided to retract HR functions in-house.
- Eight percent of the firms are likely to reduce the scope of their HR contracts
- While about 10 percent will expand the scope of their contracts.
The study revealed that in order to make an HRO deal a success, HRO service providers and buyers should work together to identify quantifiable and achievable benefits rather than quoting unachievable big cost-cutting benefits.