Workforce.com

Full-scale Outsourcing Saves Money But Doesn’t Cause a Revolution

April 7, 2004
Outsourcing all of human resources is saving money for corporations, but not meeting their “transformational objectives,” according to a Towers Perrin survey of 32 companies that have adopted broad-scale outsourcing.

More than three-quarters of the survey respondents said they had met short-term cost savings goals. But Towers Perrin consultants say that if a company expects to transform its workforce-management practices by outsourcing, it may be expecting too much, too soon. While 59 percent of respondents said the ability to eliminate some of their paper-pushing helped them refocus on more strategic work, just 11 percent said they were fully successful in this effort. Only 35 percent said they improved service quality beyond what they could have done on their own.

Interestingly, Towers Perrin said the arrangements work best when companies either hand over to the outsourcers a really well-designed process--or a really bad, disorganized human resources process. What doesn’t seem to work is when companies have the outsourcing vendor take over some chaotic functions and some strong ones; these arrangements are resulting in low degrees of satisfaction.