outsourcing july 2015

All you want to know about HR outsourcing

by Toronto Training and HR

July 2015

CONTENTS3-4 Introduction5-6 Definitions7-10 Research from 201411-13 Key trends for 201514-16 HR outsourcing17-18 Factors affecting HR outsourcing decisions19-24 Criteria to determine core HR processes from

non-core25-26 How HR is changing27-28 Metrics for HR outsourcing29-33 Cost-benefit analysis of HR outsourcing34-37 Selecting a HR outsourcing provider38-39 Traps to avoid with HR outsourcing40-43 A three phase process44-45 Outsourcing service efficiency46-47 Areas to consider with outsourcing48-49 Outsourcing around the world

50-51 Conclusion, summary and questions

Introduction

Introduction to Toronto Training and HR

Toronto Training and HR is a specialist training and human resources consultancy headed by Timothy Holden 10 years in banking15 years in training and human resourcesFreelance practitioner since 2006The core services provided by Toronto Training and HR are:

Training event designTraining event deliveryHR support with an emphasis on reducing costs, saving time plus improving employee engagement and moraleServices for job seekers

Definitions

Definitions• Outsourcing• Subcontracting

Research from 2014

Research from 2014 1 of 3

• 12-26% growth• IT outsourcing• E-discovery services in

legal outsourcing• Asset and lease

management services in real estate and facilities management

• Billing in finance and administration

• HR administration and HR reporting in HR


• Respondents not in favour of legislation

• Expanded data privacy regulation could reduce outsourcing

• India continues to represent the primary destination for offshoring

• Technology advancements will diminish but not remove the importance of location of service delivery


Drivers of the decision to outsource services• G7• BRIC• Global

• Obstacles to outsourcing

Key trends for 2015

Key trends for 2015 1 of 2

• It’s no longer primarily about cost

• Nearshoring is becoming more prevalent

• Outsourcing is increasingly applied by function

• Outsourcing is expanding among mid-sized operators

Key trends for 2015 2 of 2

• Outsourcers and clients are competing with each other over top talent

• Structures and processes are becoming more formal

HR outsourcing

HR outsourcing 1 of 2

• What could be outsourced

• Advantages of HR outsourcing

• Disadvantages of HR outsourcing

HR outsourcing 2 of 2

Making outsourcing a success• Rethink the cost

mindset• Establish trust• Trust vendors as

partners• Explore the idea of a

reverse service-level agreement

Factors affecting HR outsourcing decisions

Factors affecting HR outsourcing decisions

• Employer size• Financial pros and

cons• Strategic issues

Criteria to determine core HR processes from

non-core

Criteria to determine core HR processes from non-core 1 of 5

• Tacit knowledge• Core-related

specificity• Strategic criticality• Social complexity• Causal ambiguity


Types of HR activity• Ancillary activities• Routine activities• Activities containing

the potential for achieving economies of scale

• Activities requiring specialized knowledge

• Activities requiring broad organizational knowledge


Types of HR activity (cont.)• Activities requiring

high confidentiality• Activities requiring

specific management decisions


HR competencies• Performance

capabilities• HR technical acumen• Business acumen

• Competencies required by HR professionals

• Soft skills• Business skills• Technical skills


Unbundling HR activities• Activities aligned with

business units• Activities of

overarching corporate interest

• Activities that can be placed anywhere

How HR is changing

How HR is changing

• Traditional v future• Nature of HR

program and function

• Creation of HR strategy and policy

• Organization of the HR function

• Profile of the HR professional

Metrics for HR outsourcing

Metrics for HR outsourcing

• Traditional quantitative

• Current qualitative

• Next generation

Cost-benefit analysis of HR outsourcing

Cost-benefit analysis of HR outsourcing 1 of 4

Satisfaction• Efficiency level

of employee satisfaction with the planning, implementation and follow-up of the applied personnel integration methods


Learning• Achievement

efficiency level of the intended learning objectives of the implemented staff integration method


Typical valuation criteria• Introduction

brochure• Checklists• Initiation rituals• Orientation

meeting• Mentoring• Storytelling• Action learning


• Hard costs• Opportunity costs

Selecting a HR outsourcing provider

Selecting a HR outsourcing provider 1 of 3

• Understand the existing HR service provision including the cost base, responsibilities and level of service

• Understand the organization’s own future requirements

• Establish a shortlist of preferred suppliers


• Communicate with other organizations with which the outsourcing providers currently have contracts

• Consideration of ‘fit’ with provider organization, which might include cultural as well as geographical factors

• Identification of the ‘actual’ person who will be the key relationship manager


• Determine preferred contract length

• Build in contractual flexibility where possible

• Stay involved in the contracting process

• Identify metrics (including benchmarks of acceptable and unacceptable ranges) to be included as part of any service level agreement

Traps to avoid with HR outsourcing

Traps to avoid with HR outsourcing

• Get recommendations• If you don’t like your

service, change• Have a

communications plan• Know the risks• Don’t rush

A three phase process

A three phase process 1 of 3

Preparation• Create business

case for change• Assess industry

landscape• Write the RFP• Launch the RFP


Selection/negotiations• Review the bids• Conduct due

diligence• Review and select

the vendor• Negotiation and

contract signing


Implementation /governance• Communication• Transition• Governance

Outsourcing service efficiency

Outsourcing service efficiency

• Assess• Prepare• Evaluate• Commit• Transition• Optimize

Areas to consider with outsourcing

Areas to consider with outsourcing

Benefits and risks• Flexibility• Cost• Service

Outsourcing around the world

Outsourcing around the world

Top ten• India x 8• Philippines x 2

Top in the Americas• San Jose, Costa

Rica

Conclusion, summary and questions

Conclusion, summary and questions

ConclusionSummaryVideosQuestions

outsourcing july 2015

Business

hr page

hr outsourcing provider

hr reporting

core hr processes

hr toronto training

outsourcing india

function outsourcing

prevalent outsourcing