A view on HR outsourcing
Global multi-process HR outsourcing deals are; "big, complex, and can take a long time to negotiate," says Anthony Bruce, director at PricewaterhouseCoopers.
This is why, Anthony, like other observers, believes we will see a surge in single process outsourcing, particularly in the area of recruitment. This is interesting given that statistics show that outsourcing recruitment can offer lower levels of service, but lower cost. However, cost reduction is going to be key in the coming months given the current economic climate.
According to recent PwC Saratoga research, organisations that have outsourced HR services to third parties are struggling to drive cost efficiency and service effectiveness. Most of the organisations who reported higher performance levels as a result of outsourcing had documented service level agreements (SLAs) in place linked to fixed penalties where the SLAs are not met.
When negotiating a contract with an outsourcing provider, Anthony comments:
"You never transfer the reputational risk to the outsourcer, so focus on retained and supplier components of the model at contract signing and during the contract."
If you are considering outsourcing it is advisable to do the following:
- use facts to understand current performance and why an outsourcing supplier would improve it;
- embed discipline in the governance of the deal to ensure you don't drift away from the standard processes and services originally agreed; and
- understand that the delivery of the whole HR service remains the responsibility of the retained organisation.