Outline of Hr Outsourcing

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HR Outsourcing
Reasons Why:
* Small Organizations
* 40% of their day spent on these task (Usually don’t have someone devoted to this) * Expertise is not there
* 700 Professional Employer Organizations out there
* Costs are usually 2-11% of yearly salary
* Or $500-1500 a year
* Also flat service fees for employees under $25 for $150 HR Outsourcing: Benefits, Challenges, and Trends
* 2002 Study of large firms ($1bn & over)
* 23% already outsource HR
* Single provider has been better
* Harder to manage multiple providers
* Large firms are outsourcing multiple HR functions
* 53% employ consultants
* 33% hire outside counsel
* Resistance
* HR reps are concerned about their job
* Tech cost are significant
* Companies want the benefits of new tech w/o capital investment * Some companies do not want to be burdened by over integration * 77% hard dollar savings over the life of the agreements * Currently most have a blended outsourcing practice – combining internal and external capabilities with multiple providers * Although 77% do not have a single vendor this is the trend that may happen over the next 3 years * Using a single vendor

* Companies would consider this if they were able to get a customized fit to their needs * It is a difficult task to manage 15 vendors w/i a complex benefits schedule * Benefits of centralizing would also give the benefit of efficiency * Improve the costs by 20% (when using one vendor)

* Would be able to reduce 60% of HR workforce
* Ex. Scotiabank – Outsourcing payroll, benefits processing, outsource disability claims, pension processing, employee share ownership processing * Mid-Cap Perspective
* 24 firms with rev. under a $1bn
* 75% have cost production
* Their costs will be the same as larger companies * More interested in service levels
* Line managers are less worried about cost than larger firms * Objectives in HR Outsourcing
* Top Mgmt
* Cost reduction is more important than service improvements * Line Mgmt
* Greatest concern is cost reduction and service improvements * Service improvement is much more important
* HR Mgmt
* Equal importance of cost reduction and service improvement * Limiting capital investment for technology is moderately strong driver for HR as well as for top mgmt. * Companies have recently become more comfortable with outsourcing and they are looking for innovative ways to choose vendors * Cost savings are the #1 driver to outsource

* Companies must remember this doesn’t mean they can stop managing a vendor * Need to do Quality Monitoring
* Contracts with penalties when not meeting targets * Metrics on monitoring cost savings
* Technology – is 53%of the criteria for service provider selection * Would like to see the efficiencies through improved applications of technology. * “outsourcing growth will stem from technology development, which will make it easier to outsource.” ( pg 14) * Ensuring Buy-in

* Ensure top mgmt commitment upfront
* Work more with line managers
* Better define the implications of change in the outsourcing decision (cost benefit) * Anticipating Employee Response
* HR is resistant to outsourcing
* Use this as a chance to provide additional training for HR and refocus them on to strategy * Encourage a Job redesign and show how this is a possible growth opp.

LinkedIn Revenue (2012)
http://seekingalpha.com/article/375201-earnings-analysis-why-linkedin-is-still-a-hold For the Hiring...
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