Thisdocumentisprintedonrecycledpaper.©2002byTheConferenceBoard,Inc.Allrightsreserved.PrintedintheU.S.A.ISBNNo.0-8237-0778-4TheConferenceBoardandthetorchlogoareregisteredtrademarksofTheConferenceBoard,Inc.TheConferenceBoardofCanada255SmythRoadOttawa,OntarioK1H8M7Tel6135263280Fax6135264857’sresearchreport,HROutsourcingTrends,whichexaminesthebenefits,challenges,andalternativestoHRoutsourcing.Basedontheexperiencesof165companies—including125surveyparticipantsandanadditional40interviewswithvicepresidentsofHR,CFOs,andCEOs(primarilyfromtheUnitedStatesandEurope;seerespondentsprofile)—thereportasks:HowprevalentisHRoutsourcing?Whatchallengesarecompaniesfacing,andhowaretheseovercome?Whatbenefitsarecompaniesachieving,andaretheseinlinewiththeirexpectations?Andwhatlessonshavecompanieslearnedthusfar?FullResearchReportcontents…HROutsourcingTrendsbyLisaGelmanandDavidDellKeyFindingsHROutsourcingComesofAgeChoicesandChallengesLessonsLearnedToobtainthefullResearchReport…MEMBERSofTheConferenceBoard.Foranelectronicversionofthefull24-pagereport,gotoourMembersOnlyWebsite,@conference-board.orgNON-MEMBERS.Topurchaseanelectronicversionorprintedcopyofthefull24-pagereport,gotoourpublicWebsiteat(formerlye-peopleserve),providesoutsourcedpeoplemanagementservicestoglobalenterprises.Employingadvancedtechnologyandbest-of-breedHRpractices,Accenturecollaboratescloselywithitsclientstoaccommodatetheuniquecharacteristicsandneedsoftheirbusinessoperationsandpeople.Thecompanyleveragesitspeople-friendlytechnologyforday-to-dayroutineinquiriesandtransactions,whileitsspecialistHRprofessionalshandlesuchcriticalsupportservicesasrecruitment,training,learning,andoverallpeopledevelopment.AccentureHRServicesaimstoenableitsclientcompaniestoconcentrateonoptimizingtheircorebusinessactivitieswhilereducingtheircostsandachievingthegreatestpossiblevaluefromtheirassets,includingtheirpeople.Formoreinformation,pleasevisit(c)(3)tax-exemptstatusintheUnitedStates.ACKNOWLEDGMENTSTheauthorsthankAccentureHRServicesforunderwritingthestudy.ThanksalsotothefollowingConferenceBoardstaff:HenrySilvertforoverseeingthestatisticalanalysis;TamsenHernandezandLeahAverreforassistingwithprojectlogistics;andthesemembersoftheBoard’sPublishingGroup:ChuckMitchellforsupervisingthepublicationprocess;andJohnLumeaforediting,PeterDrubinfordesigning,andSamPerezforproducingthefinalreport.JohnLumeaeditorPeterDrubindesignSamuelPerezIIIproductionTheConferenceBoard845ThirdAvenueNewYork,NY10022-6679Tel2127590900Fax2129807014(anadditional40wereinterviewed),nearlytwo-thirdscurrentlyoutsourceamajorHRfunction.Mostoftheseareseekingtoexpandwhattheyaredoing.Indeed,rarelyhasanycompanystoppedoutsourcingafunctiononcehavingstarted—fewerthan1percentofoutsourcedHRfunctionshavebeenbroughtbackin-house.Transactional,oradministrative,HRfunctionsarethemostcommonlyoutsourced:80PERCENTdosofortheir401(k)programs;70PERCENTdosoforpensionbenefitsmanagement;and69PERCENTdosoforhealthbenefitsmanagement.Astheymovetowardamorecomprehensiveapproach,companiesareexpressinganinterestinoutsourcingthestrategicfunctions—suchasemployeecommunications,humanresourcesinformationsystem(HRIS)assessment,andrecruiting—thatarepresentlyamongtheleastcom-monlyoutsourced.OftheU.S.companiesthatoutsourceHR,sometwo-thirdsfullyorpartiallyoutsourcefiveormorefunctions.Andwhileonlyhalfasmany—one-third—oftheircounter-partsintheUnitedKingdomandcontinentalEuropeout-sourcethatmuch,outsourcingisgainingmomentumthere,too.Infact,thesecompaniesare50percentmorelikelythantheirU.S.counterpartstohaveplanstooutsourcesomeoftheirHRfunctionsoverthenextthreeyears.CompaniesinJapan,thePhilippines,andAustraliaareoutsourcing,too,althoughtoalesserextent.Benefits(Mostly)MatchExpectationsWhencompaniesinitiallyconsideroutsourcingHRfunc-tions,themaindriversarereducingcost,improvingserv-ice,andmaximizingtheavailabilityofresources.HRdepartmentsinparticulararelookingforwaystobalancethesegoalswhilecontinui