Should Companies Outsource HR to be More Strategic, or to Save Money?

i4cp study finds that high-performance organizations outsource HR functions to provide a significant business impact vs. just cutting costs.

Seattle, WA (June 9, 2010) - Outsourcing some or all HR functions is widespread among businesses, but the reasons for doing so vary widely when comparing the practices of higher-performance organizations to their less successful counterparts.

A new study from the Institute for Corporate Productivity (i4cp), conducted on behalf of one of its member organizations, revealed that standardizing processes and reducing costs are the most common factors considered when deciding to outsource HR functions. In stark contrast to these overall results, however, high-performance organizations - companies that have outperformed their competitors in profitability, revenue growth, market share and customer satisfaction over the last five years - place these factors among the bottom three considerations when making outsourcing decisions, joined by "improving self service."

"High-performance organizations are more likely to select outsourcing solutions that will make a significant business impact, where other companies are still more concerned with basics like cutting costs or simply making things easier," said Jay Jamrog, SVP of Research at i4cp. "In other words, i4cp research shows that the best companies use HR outsourcing to make a strategic impact."

When considering whether to outsource human resource functions, high-performance organizations tend to look for solutions that will improve productivity above all other factors. Sixty-two percent say they do this to a high or very high extent, while only 47% of lower-performing organizations say the same. In addition, higher performers outsource HR functions to achieve better ROI (58%), compared to only 34% of lower performers.

The biggest gap between high and low performers, however, involved improving the strategic position of HR. Fifty-two percent of high-performance organizations outsource HR in order to place greater focus on strategic HR initiatives, compared to only a quarter of lower-performing organizations.

The HR Outsourcing Pulse Survey was conducted in April 2010. The full findings are now available to i4cp members, and provides insight into the functions that high-performance organization are most likely to outsource as well as their satisfaction with the most common HR outsourcing vendors in 401(k) administration, COBRA administration, compensation, payroll and several other core HR functions.

About i4cp, inc.

i4cp is the fastest growing and largest corporate network focused on the practices of high-performance organizations. Through a combination of peer networking, human capital research, tools and technology, we enable high performance by:

• Revealing what high-performance organizations are doing differently
• Identifying best and next practices for all levels of management
• Providing the resources to show how workforce improvements have bottom-line impact

With more than 40 years of experience and the industry's largest team of human capital analysts, i4cp is the definitive destination for organizations seeking innovative ways to improve workforce productivity. For more information, visit https://i4cp.com/