Outsourcing, US, Europe

Outsourcing now widespread in US, Europe

16 Apr 2004 | (Survey)

Outsourcing of key professional services such as human resources is becoming almost universal among large US and European companies, according to a study due to be published by the Conference Board.

The New York-based research group found that 76 per cent of companies polled delegate one or more HR tasks to external providers, showing how entrenched the practice has become.

Services regularly outsourced include providing pension and benefit schemes, running employee helplines and call centres and handling routine tasks such as payroll and stock options administration.

In many cases, such work is done by contractors who still work on site or near existing company headquarters, but those involved in the research say clients are increasingly open to such work going offshore.

Diane Shelgren, chief operating officer of Accenture HR services in North America, which sponsored the report, said: "A lot of clients want to keep things on site or close by, but then they see how this works and location begins to become a less important part of the buying decision."

The maturity of the outsourcing industry within developed countries has been somewhat overshadowed by recent political controversy over "offshoring" but the growth of sectors such as HR services show just how widespread the underlying practice has become.

Only 9 per cent of large companies have ruled out HR outsourcing, says the Conference Board, compared with 23 per cent who were sceptical at the time of its last survey in 2002.

David Clinton, president of HR services at Accenture said: "The most compelling indicator of outsourcing's high approval rating can be seen by the fact that none of the survey respondents expect to bring that activity back in-house."

The survey of 122 large companies also revealed notable regional differences. While interest in outsourcing HR functions is strong across large corporations in North America and Europe, the United States still leads. The vast majority - 87 per cent - of US companies surveyed outsource important HR functions, compared with 57 per cent in Europe.

However, European companies lead in outsourcing non-HR functions with 70 per cent of respondents outsourcing a significant business process outside of HR, compared with 52 per cent in the United States.

"European companies are more likely to be confronted with challenges in standardising HR processes across national borders due to differing in-country legislative requirements," said David Dell, author of the study.

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