Ghazi Turkistani | HR Consultant

Outsourcing is a term that is being used more frequently as increasing numbers of organisations are exploring this as a potential delivery option for some of their activities. It can be defined as ‘the delegation of one or more business processes to an external provider, who then owns, manages and administers the selected processes based on defined and measurable performance metric’1. Within the context of HR outsourcing, the specific processes that are included within any outsourcing arrangement will vary from organisation to organisation. Some organisations may outsource virtually all of their HR processes where others select specific components such as payroll or resourcing. Our recent survey HR outsourcing and the HR function identified that 29% of respondents are outsourcing some of the HR function. The most commonly outsourced activities reported are legal activities (69%), payroll (66%) and pensions (64%). So far, very few organisations have outsourced their entire HR function. In large organisations it is most common to have outsourced the operational elements of delivering HR activities whilst retaining control over HR strategy and decision-making. There are a number of well-publicised examples of large, mainly global organisations that have outsourced large parts of their HR operational activities, often in contracts for between five and ten years, for example BT, Boots The Chemist, Procter & Gamble and Unilever. Interestingly, small organisations often do the reverse, effectively outsourcing their strategy (to HR consultants and other professional advisers) and keeping the delivery of HR processes internal. This picture of a somewhat complicated landscape of the extent of outsourcing was also confirmed by our 2007 survey The changing HR function in which only 4% of respondents with an HR shared services operation said that they wholly outsourced it. Around a quarter outsourced part of their shared services activities. The vast majority of organisations maintain their shared services operation in-house. Looking ahead, 11% of the survey participants expected HR shared services to be outsourced in three years, and half expect to partly outsource some of their shared services. [CIPD]