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HR OUTSOURCING
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The evidence supporting HR outsourcing is compelling, as the following research illustrates.
Presidents Spend too much Time on
Administration Presidents Spend too much Time on AdministrationPresident’s and CEO’s of small companies spend 45% of their time on employee related matters, according to a report by the Small Business Administration (SBA), with up to 25% on employee administration alone. Healthcare Savings over the WebAccording to a recent survey by Risk Insurance Magazine, insurance carrier bills are frequently up to seven-percent inaccurate. These inaccuracies quickly add up. For example, the savings for a company with 200 employees is $80,000 a year. A similar study conducted at TRW found over three million dollars in excess charges a year. By centralizing benefit enrollment processing over the Web, companies not only save time processing enrollments, they realize savings through increased accuracy. Cost Savings through Better People ManagementBetter management of people costs and HR processing can have a significant effect on the bottom line. The Saratoga Institute, estimates that people costs represent 43% of the average corporation's total operating expenses. PeopleSoft claims that a large corporation is likely wasting 2.3% of its total revenue on ineffective HR processing. HR outsourcing over the Web can generate considerable savings for the organization. A recent white paper from Cedar eWorkplace Research Group shows that self-service applications reduce HR costs by anywhere from 44% to 80%, depending on the application. CFO Magazine concurs with the assessment, stating that HR administrative outsourcing can save up to 80% of the cost of some processes. See CFO Magazine's chart below for an analysis of savings by key HR processes.
Increase Shareholder Value by Outsourcing
Nine
out of ten U.S. CFOs believe using outside resources to perform non-core
functions of their business increases shareholder value, according to a study by
Hewitt Associates. Seventy percent of the CFOs report that they decided to
outsource a company function to tap outside sources of talent or expertise that
does not exist within their company. Meanwhile, nearly two-thirds (64%) say concentrating their resources on the core business is most
important, followed by more than half (53%) who say that reducing
headcount and related expenses is also an important factor. Midsized Companies Benefit more from HR OutsourcingA study conducted by the Institute of Management Accountants (IMA) showed that mid-sized companies spent almost twice as much as large companies per employee in maintaining an HR head count. The HR headcount was also proportionately twice the size of bigger organizations. It was discovered that more than 87% of the funds mid-sized companies budgeted for finance and HR were going towards routine processing transactions, rather than policy making strategies and analysis that could actually impact the business, enabling it to gain efficiencies, improve productivity and the bottom line Therefore the potential improvements realized through HR outsourcing can be even more dramatic for small and medium sized companies. Increased Profitability through Human Capital ManagementAccording to Dataquest, a division of Gartner, the market for HR outsourcing is growing at 22% annually as more employers take advantage of employee administration outsourcing. For more information, see Choosing the Right HR Outsourcer |
10 Reasons to Consider HR OutsourcingOutsourcing employee
administration appeals to
an organizations
that:
Any one of these could be a reason for a company to consider the HRSB. If you identify with one or more of these reasons, please contact us for more information or a demonstation. |
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