The Human Resources (HR) profession is going through possibly the most significantperiod of upheaval since it became established as a distinct organisational function.The principle reason for this is the impact of Human Resource Outsourcing (HRO),part of a widespread move to outsource business processes.The HRO market is predicted to grow rapidly, from $23 billion in 2005 to $31.7 billionin 2009. Market analysts are not always right, however. This briefing takes a closerlook at the prospects for the HRO market – a key segment of the business processoutsourcing market. Will HRO grow as predicted, and, if it does, in what way will itgrow, and what impact will that growth have on end-users and the HR profession?Initially, the motivation for HRO was the immediate cost savings produced fromswitching internal spending on various HR processes into investments with externalproviders. However, some organisations are now looking at HRO as a means oftransforming and improving the entire HR function, and not merely a means of gettingrid of non-core transactional processes such as payroll or benefits administration,for example.As an approach to HRO, our research shows that organisations tend to adopt one ofthree paths to facilitating transformational HRO: they create a shared services centre(SSC) internally before outsourcing the ownership and management of the SSC;they outsource the existing processes first to a vendor, which in turn makes processimprovements; or they outsource and transform HR processes at once, in a ‘big bang’approach. Each has its own merits and challenges.[...
