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The cost-saving myth of outsourcing
There are no surprises in the extract from the Outsourcing Trends Report
(globalhr, December/January 2002). Far too many organisations approach
outsourcing from a purely cost-saving perspective rather than carefully
considering which aspects of HR would be better handled by a third party and
which should be kept in-house.
Expecting a high-volume, ‘vanilla’ service delivered from a large
call-centre servicing multiple clients to provide sophisticated human resources
services is a mistake. Often, the claimed ‘economies-of-scale’ cost-savings are
only deliverable with a reduction in service levels – a recipe for mismatched
expectations and a falling-out between customer and supplier.
The key to successful outsourcing is in the definition of the service. If a
reduction in service is appropriate then there will undoubtedly be cost
savings. If, however, an increase in service is the objective then clients
should expect to pay for it. Crucially, the costs of a carefully defined
outsourced service will be a known quantity. This greatly helps the financial
Outsourcing has been working effectively for years in areas such as payroll,
recruitment and training. It works because the service providers have
specialist capabilities, a clearly defined remit and add value in delivering
the service. Indeed, the service is frequently better than that which could be
Michael Richards, CEO, Snowdrop Systems Limited, Oxfordshire, UK
Poor appraisal for ‘headcount’ honcho
The article by Denis Barnard
(globalhr, December/January 2002) is typical of most finance executives who are
more interested in ‘headcount’ accounting than maximising the return on
investment on a company’s only renewable asset.
He must have had his performance appraisal lost at one time
during his career and blamed HR instead of his manager.
Gary L. Howard, By