Outsourcing pioneers must clarify ownership

Moving to a shared service model of HR delivery is always going to be
painful. But the well-publicised problems that the big outsourced providers
have encountered have meant that many HR directors are now questioning whether
getting a third-party provider to do it is worth the effort?

While many believe that outsourcing shared services can reduce costs and
enable HR to play a more strategic role, there is a great deal of concern over
the pitfalls. Fortune might sometimes favour the brave, but the companies that
have boldly leapt into outsourced HR services suffered initially.

Last year, BP Amoco admitted that its international contract with
third-party provider Exult had driven up HR costs by a third. Then last week,
BT admitted that costs were escalating in its contract for HR service provision
with Accenture HR Services.

All the problems come down to culture and ownership. At BP, managers were
reluctant to embrace self-service HR delivery and duplication of effort forced
up costs. At BT, costs have gone up because managers did not realise there were
commercial charges attached to accessing HR services. HR has to educate as well
as restructure.

Ownership is also a flash point. The client needs control over the provider,
and the provider has to understand the client. The jury is out on whether
current approaches, such as joint ventures and large-scale TUPE transfers,
deliver this synergy.

Metrics can help with these problems. Unfortunately, there are not many good
methods about. BT is confident its use of performance and satisfaction metrics
with its outsourced provider will deliver HR efficiencies.

If the profession can develop tight measures that support the improvement of
service delivery, then there might be life yet in the outsourced shared
services model, and HR will be free to evolve its role further.

By Mike Broad

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