The UK's 100 biggest companies are all considering outsourcing their human resources work, with many of the jobs likely to end up abroad, experts have warned.
Market analyst Amit Badami told Personnel Today that 2008 could see a huge explosion in HR outsourcing and offshoring.
Badami, director of the Emerging Markets Research Group, is in talks with many leading UK companies about outsourcing.
"Every FTSE 100 company is looking at outsourcing HR. One in 10 of them will do so within the next 12 months," he said.
"They are doing it to cut costs, to become more agile and because it is best practice - they have done it with other departments."
Badami added that many HR jobs outsourced to UK-based companies would eventually be subcontracted to low-cost countries.
"Lots of HR outsourcing will be done locally, but on contracts requiring cost reductions every year," he said. "Within three years, that work will go abroad, perhaps through the back door."
National Outsourcing Association director Nigel Roxburgh said that lazy HR in UK companies was driving a boom in outsourcing.
"In many organisations, once something is up and running and appears to be ticking along reasonably well, they think: 'It ain't broke so don't fix it'," he said. "Organisations need change, so sometimes that encourages outsourcing.
"HR outsourcing providers will promise in their contract to deliver certain things, and this can be measured using metrics," Roxburgh added.
He said that the high-tech nature of most outsourcing firms meant they could offer more web-based inductions, training courses and employee engagement surveys, which were attractive to chief executives.
"In many companies, appraisals do or do not happen, but with IT metrics, you can ensure that it happens and measure it."
Europe's biggest HR outsourcing event, the HRO World Europe conference, takes place in Brussels, Belgium, this week.
This methodology and thinking pattern has been unfolding now for some years and there are many underlying reasons, as follows,
a) HR/Personnel Management had in many areas become non cost effective over recent years and apart from dabbling in Policies and Procedures did little else that helped an Organisation's Bottom Line.
b) Many departments had even drifted away from being seen as the listeners and carers and the ones who would hold the flag for what was reasonable and proper treatment.
c) Proper viable advice to Senior Management had also drifted in many areas and most Personnel People were not prepared to argue any real case with Management on hardly any subject, they had in fact ecome non effective and subservient.
d) When it came to major Recruitment and Costs where in the past Personnel Management had carried out some exemplary cost effective work, this had changed and Agencies and massive placement fees became the norm, adding even further costs to many faltering company economics.
e) HR Departments not being seen by Employees any more as the place to go to have a way of unloading their stresses and concerns either of a personal or work nature as no one seemed to care.
All of this and much more could have been avoided if HR people mainly starved of Cost Effective Business Ideas and gradually sinking into oblivion were seen by Management as just not on the ball at all and ideas were then generated as to what could be done to create cost effectiveness and there waiting in the wings were hosts of "Outsourcing Groups" offering many financial incentives where some savings could be seen ! But I have seen through all of this with other factors outweighing any promised marginal savings.
If HR Departments had thought through areas such as what can we do to make real savings, How can we give a superlative service to our Employees, how can we advise Management in such ways that Business Problems are lessened, how can we get all levels of management on our side, how can we motivate the whole of the work force and make ideal Employee Relations and most of all how can we motivate and get the HR Department thinking along positive Business Methods and Lines.
If all this had been done and HR was on the same wave length as Management why would any ridiculous levels of Outsourcing be taking place to Groups whose only interest is making profits out of an even more reduced HR Budget. Do we really see this as the answer to a country such as the UK who should be held up as a Beacon to the World as we once were in our methods and ideology.
Yes, Lazy HR sums it all up, "let the work that is not easy out and then one can lay back and shout" but for how much longer if all we ever do is to abdicate our real responsibilities to otheres really less able ? Where have the real Personnel Management gone whom I joined when first starting out ?
Lazy or overstretched? Either way outsourcing the function to another counrty fails to take account of cultural and legal differences. Working for a global company I am only too aware of the nuances that must be adhered to when operating within different countries to achieve effective obectives. Taking these considerations into account, I do not believe the decision to ask an HR function based in one country, to provide an effective HR service for employees based in another is a sound, effective business decision.
Knee jerk cost saving measures usually pre-empt costly reparation excercises. If HR departments are under preforming training and internal restructuring may provide a more effective, less costly, less disruptive answer.
I was interested to read that the top FTSE top 100 companies are considering outsourcing their HR function (Personnel Today 27 November 2007). Does this mean that employees will ring a call centre and press 1 for an appraisal, press 2 for booking annual leave and press 3 to make a claim of bullying and harrassment?
It would seem that in the quest to get HR taken seriously by 'the board' and align it with business objectives HR have managed to put themselves out of business.
This is a function that deals with people and outsourcing it will take the 'human' element out of Human Resource and the 'person' out of Personnel.
XpertHR - Online HR Intelligence