IDS HR StudyPlus (Study 746), Spring 2003

Outsourcing HR administration

• Examines the business case for outsourcing a wide range of HR administrative and transactional activities to a single supplier
• Reports on how a variety of organisations, from major oil and telecommunications companies to local councils, have implemented such an arrangement
• Includes a Directory of suppliers featuring ten leading players in the UK outsourcing market

The business case for outsourcing HR administration centres on the potential for cost savings to be delivered by investment in e-enabling HR transactions and processes. The delivery channels for such arrangements typically include e-HR self-service routes and HR service centres. Through this web-enabled technology, the cost of HR transactions can be dramatically reduced by standardisation and automation of processes. Outsourcing to an external supplier is often the best way for an employer to gain access to the technology that enables it to achieve a step change in HR service delivery.

Outsourcing HR administration is a major project for any organisation and requires careful planning. The starting point is usually a feasibility study where compatibility with the preferred partner can be assessed and any potentially difficult issues anticipated. The complex implementation phase that follows often sees the transfer of some HR staff to the supplier and usually requires personnel data to be verified. Once the service is up and running, progress towards the partners' objectives can be monitored through service level agreements and key performance indicators. Freed from the HR administrative workload, a company's newly streamlined HR function can act more strategically both in policy formulation and in business partner roles.

Although growth in outsourced HR administration contracts is steady rather than spectacular, more suppliers are entering the market with some targeting small to medium-sized companies rather than the big multinationals. Our Directory of suppliers describes in detail the services offered by ten active players in the field, examines how they would approach the feasibility and implementation stages of an outsourcing project and outlines their service delivery models. We include a checklist of key issues to consider when selecting a supplier.

What's in this StudyPlus

The 64-page StudyPlus contains the following sections:

Overview

Making the business case and overcoming potential difficulties

Analysis

From feasibility to implementation:

• the rationale for HR outsourcing
• feasibility studies
• the implementation phase
• range of administrative activities typically outsourced
• delivery channels
• contract management
• monitoring service performance
• payment arrangements

Company practice

Seven detailed case studies of outsourced HR administration in practice: BAE SYSTEMS; BP; BT; Bedfordshire County Council; Blackburn with Darwen Borough Council; Liverpool Victoria; Opus Holdings

Directory of suppliers

Choosing a provider of outsourced HR administration:

• a checklist of key considerations
• comprehensive details of the services offered by ten specialist suppliers.