HC Global

News of a couple of big HR outsourcing contracts that have gone back in house recently may send a shiver down some of the HR outsourcing fraternity.

Starbucks (US and Canada) have ended their contract with Convergys which started in 2007. It doesn't matter who or what but the fact that the arrangement has been terminated. (By the way Convergys are one of the first generation outsourcers).

This comes on the back of a recent announcement re Wachovia ending its contract with Hewitt.

Those of you who regularly read my blog know of the questions that I keep posing regarding these deals. Comments recently in the press suggested that HR outsourcing would increase as companies look to cut back-office costs. I'm not so sure. The economic argument for HR outsourcing is questionable other than for particular process pieces.

HR outsourcing commentators have for the last decade been continually talking up and over-playing the size of the market to the extent that we seem to have more vendors than contracts going around. Investment has poured in.

Remember Exult (who did the original BP deal) - the big HR outsourcing hope?
I remember reading the big merger in 2004 between Hewitt and Exult - the 'HR outsourcing powerhouse' as it was referred to then. Since then, Hewitt has struggled.

However, HR outsourcing will be here in some form, but these recent announcements coupled with questions over Midland HR in the UK, for example, suggests that there is still more glam in this area than reality indicates..........