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Factsheet:

HR outsourcing

Resource summary

This factsheet was last updated in September 2015.

What is HR outsourcing?

The practice of outsourcing involves the purchasing from an external provider of one or more business services, which could include HR and/or other functions such as IT. The specific processes that are included within any HR outsourcing arrangement will vary from organisation to organisation – some may outsource virtually all of their HR processes while others select specific components such as payroll or recruitment.

In our HR Outlook Winter 2014-15 survey, we asked HR professionals whether their organisation outsources HR activity.

  • Nearly four in ten HR professionals in the UK reported that their HR function does not outsource any work. This is a fall from almost half who reported this in a similar survey in 2012. Interestingly, outsourcing of HR work is consistent across organisational size.
  • Just over four in ten HR professionals said that the amount of work being outsourced in their organisation has stayed the same, with some saying it had increased and a smaller proportion that it had decreased. Payroll is the main area outsourced, followed by providing complex advice (including case management). Other elements outsourced include recruitment and legal advice.
  • A third of SMEs outsource complex advice (including case management), a significantly higher proportion than the large organisations. SMEs are also more likely to outsource specialist advice. Large organisations are significantly more likely to report that they don’t outsource any work from their HR function.
  • Only a few respondents said they have a small, central HR function with largely outsourced HR activity which suggests that very few organisations have outsourced the majority of their HR function.

Login or register for a free account to continue reading this factsheet and to learn about:

  • What is HR outsourcing?
  • Alternatives to HR outsourcing
  • Benefits and challenges of HR outsourcing
  • Selecting a provider and managing the transition
  • CIPD viewpoint
  • Further reading

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