Deloitte consulting has released an excellent paper on outsourcing HR called Making HR Business Process Outsourcing Work (Jason Geller, Principal, Deloitte Consulting LLP). Terrible name, but an excellent paper (thanks to Bill Ives and Portals and KM).
A recent Deloitte HR study (Calling a Change in the Outsourcing Market) that organizations that do not consider and plan for pitfalls and outsourcing troubles are likely to be hurt by the results. The study of 25 large companies found that 70% had "significant negative experiences" with outsourcing projects and now use greater caution in ousourcing deals.
The benefits off outsourcing are many including ROI benefits:
- Headcount reductions of HR, HRIS, and payroll staff
- Reduced spending on technology licenses and maintenance
- Reduced spending on third-party vendor services
- Greater use of self-service for managers and employees
- Basic efficiencies realized from centralization of processes
Of course, as the study participants can tell us, the process of moving to an outsourced model is fraught with pitfalls and requires a lot of planning. Deloitte offers a well-thought approach:
1 Making HR Business Process Outsourcing Work
In particular, the report emphasizes the requisites for hiring an outsourcing vendor. Deloitte recommends that the HR outsourcing contract with the winning vendor should cover the following elements:
- Scope of work
- Service levels and performance management
- Pricing
- Gain sharing
- Required documentation from all involved parties
- Software and hardware provided by the vendor; technical
- infrastructure; telecommunications
- Service locations
- Key staff
- Implementation plan, critical milestones, process redesign
- Termination fees and termination assistance
- Security
- Disaster recovery and business continuity
- Personnel conduct policies
- Relationship management and governance
- Change control procedures
- Quality management and improvement
- Subcontractors
- Regulatory Requirements