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What is Human Resources Outsourcing Doing for You?

It appears that Human Resources Outsourcing (HRO) is finally delivering on its initial promises. This is potentially good news for organisations embarking on HR Transformation which has, to date, often failed to live up to ambitious claims of process improvements and cost savings.

In a recent survey by IT research and advisory company Gartner, (reported in the Times), asking whether outsourcing HR functions to specialist providers had saved them money, 78% of respondents said they had saved at least 10% by outsourcing in 2007. In 2006, only 32% of firms reported similar savings. The rise suggests that organisations and providers (both private and government organisations are quoted in the research) are learning from the mistakes some made when HRO was still a new approach.

So what are the reasons for this apparent improvement? The research suggests that chances of success are improved where organisations go down the HRO route for reasons not limited to cost reduction. The choice of and relationship with an external partner is key to HRO’s success. Centers of excellence specifically in the areas of regulation and employment law also appear to be driving cost out of organisations by providing effective specialist legal skills.

Technology also has a role with remote networking technologies playing an important role in cutting down lead times and the option of “renting” technology becoming an increasingly important alternative to expensive in-house IT provision.

This is good news for HR professionals looking to increase their influence on their organisations and represents a welcome change from all the HR bashing that goes on out there.

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