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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 planning process.
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 delivered in-house.
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 e-mail