Organisations still outsourcing HR functions for wrong reasons

A ‘snapshot’ survey, carried out by talent management specialist, Ochre House, of over 100 companies across Europe has found that the main driver behind the outsourcing of HR functions such as recruitment is still cost saving – but also that expected levels of saving are not being met.

According to the research amongst 106 organisations in the UK and continental Europe, expected levels of cost saving from the outsourcing of recruitment averaged at 37%.

However savings levels achieved in practice averaged out at 18%.

None of the organisations questioned which rated the outsourcing of their recruitment functions as ‘successful’ or ‘very successful’ marked the cost saving element as ‘very important’ in their decision to outsource.

Instead factors rated most highly by this group included more efficient recruitment processes, specialist external expertise and improvement to their employer brand.

As one specialist, Simon Patton, HR director of Somerfield, put it, “Price was, of course, a factor when we got to final negotiation stage but it wasn’t the one that got us there in the first place.

Yes, you can make cost savings through outsourcing recruitment, but this should never be your major driver.

Efficiency, simplification and added value are the three areas where you make the real wins and if you are focused purely on the bottom line you risk being disappointed.”

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“In the current economic climate there are a lot of organisations which seem to view outsourcing as a ‘magic bullet’ that can help solve their financial problems overnight and consequently end up being disappointed,” says Ochre House director, Sue Brooks.

“The outsourcing of recruitment can deliver genuine and measurable savings but only if it is part of a wider agenda. A significant reduction in labour costs doesn’t come as a ‘quick fix’ but through addressing the whole talent management spectrum from sourcing to engagement, training and development and retention.”