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US, European cos vow to continue outsourcing
Seema Hakhu Kachru in Houston | April 20, 2004 12:06 IST
Majority of the executives at large North American and European companies that currently outsource one or more major human resources functions said they would do so again, a survey has indicated.
Some 76 per cent of respondents surveyed said their organisations currently outsource one or more major HR functions, and 80 per cent of those said they would do so again, the survey released by The Conference Board and sponsored by Accenture said.
In addition, 71 per cent of the surveyed companies that currently outsource human resources functions said they will extend or renegotiate contracts with their current outsourcing providers and 29 per cent said that they will put their existing outsourced services out for a new bid but none said they plan to take services back in-house. The 'HR Outsourcing: Benefits, Challenges and Trends' is The Conference Board's second study to track the benefits of human resources outsourcing and changes in the HR marketplace.
Based on the results of a survey of executives at more than 120 companies in North America and Europe with annual revenues of at least $1 billion, the new study found that outsourcing is now firmly embedded as part of HR service delivery.
About 91 per cent of respondents reported either having achieved or partially achieved their HR outsourcing objectives. Only 9 per cent of respondents said they are entirely against outsourcing some or all of their major human resources functions, compared with 23 per cent in the previous year's survey.
The survey revealed notable regional differences regarding the acceptance of HR outsourcing, with US companies being the most accepting.
For instance, 87 per cent of executives at US companies surveyed said they currently outsource major HR functions, compared with 71 per cent in Canada and 57 per cent in Europe.
However, European firms lead in outsourcing non-HR functions, with 70 per cent of European respondents indicating that they outsource a significant business process other than HR, compared with 65 per cent in Canada and 52 per cent in the United States.
"European companies are more likely to be confronted with challenges in standardising processes across national borders due to differing in-country legislative requirements," said study author David Dull, a former research director of human resources strategies at The Conference Board.
David Clinton, president of Accenture HR Services, said many companies view outsourcing as one of the best options to save money and improve services while also making strategic contribution to the business.
"The most compelling indicator of outsourcing's high approval rating is the fact that none of the survey respondents plans to bring that activity back in-house."The study also found that more than 77 per cent of companies do not plan to consolidate their HR services under one outsourcing provider in the near term, although nearly 23 per cent of respondent companies have already done or are planning to do so within the next three years.
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