Chapter 13

Outsourcing

BEST PRACTICES

MOST OFTEN OUTSOURCED: HUMAN RESOURCES, FINANCE, AND INFORMATION TECHNOLOGY

An IOMA survey, Best Practices in Outsourcing, Downsizing and Use of Consultants finds that payroll and a range of human resources (HR) and finance/accounting functions lead the list of outsourced functions (see Exhibit 13.1). Payroll is the most commonly outsourced function (50% of companies), tax compliance (41% overall) is in second place, claims administration (32.9%) in third, benefits management fourth (31.5%), and training (24.8%) sixth.

Exhibit 13.1 Top Outsourced HR Functions

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The survey polled hundreds of companies coast-to-coast on their outsourcing practices, and also asked respondents what principal strategic values they expect to obtain from outsourcing. The respondents represent a wide range of industries, with 28% in manufacturing, 17% in business services, 13% in health care, 12% in wholesale/retail, 9% in financial services, and the balance in a variety of other sectors. When it comes to company size, nearly 59% of the respondents are firms with fewer than 500 employees; 31% employ more than 500 (10% did not specify their number of employees).

By the same token, far fewer companies are outsourcing the entire HR or finance/accounting operations. HR as a whole, for example, is outsourced by only 9.5% of these respondents, and finance/accounting by just ...

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