According to new research from the Society for Human Resources Management (SHRM), the growing complexity of HR Management is one of the top reasons for outsourcing HR.
Amongst the top 500 companies worldwide, more than half specifically outsource HR — a number that is growing.
The top reasons for outsourcing HR, according to an SHRM survey of hundreds of companies were, in order, were:
- Outsource HR Management to save money: 26% of respondents
- Outsource HR Management to allow re-focusing of internal resources to executive strategy or HR strategy: 23% of respondents
- Outsource HR Management to improve compliance and minimize risk: 22% of respondents
- Outsource HR Management to improve accuracy: 18% of respondents
- Outsource HR Management due to lack of internal experience or to bring in expertise: 18% of respondents
- Outsource HR Management to exploit technology and improve data analytics: 18% of respondents.
Types of services outsourced
In the survey, respondents could choose more than one reason for opting to outsource or service the outsource for in their organization. Some, of course, outsource most of the HR Management functions, while others outsourced some of the services. Of those who did outsource:
- 84% outsource employee assistance and counselling
- 74% outsource retirement planning
- 73% outsource pension administration
- 68% outsource background checks
- 57% outsource management development programs and staff training
- 54% outsource coaching and executive development
- 53% outsource employee benefit administration
- 49% outsource payroll management.
The specific services highlighted in the survey as a “waste of time” for internal resources were:
- developing engagement initiatives and benefits programs
- administering benefits programs
- any form of employee counselling.
Other HR functions outsourced (see chart) included:
- risk management
- executive staffing
- employee relocation
- comp and incentive plans
- policy writing and drafting
- comp plan administration
- wage and salary administration.
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