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[sws_pullquote_left]”80 percent of companies now outsource at least one HR activity, and the number is swiftly growing.” [/sws_pullquote_left] As long as there are employees, there will be people to manage those employees, or to put it in industry terms, human capital. Collectively, this function is best known as “Human Resources”. These HR professionals are tasked with several functions, making it virtually impossible to manage effectively without the use of tools and services which create value for an organization.
Any and all aspects of HR, transactional or strategic, can be outsourced. In fact, according to research by Gartner, Inc., 80 percent of companies now outsource at least one HR activity, and the number is swiftly growing. In fact, in a given year an estimated $785 billion is spent on employee benefit products and services alone (Thomas Weisel Partners).
Thus the HR marketplace has become a highly competitive and fragmented industry, encompassing tens of thousands of suppliers selling hundreds of different products and services, including recruitment and staffing, employee benefits, payroll, HR technology, co-employment, training and development, and performance management, just to name a few. It is poised for enormous growth in the next 10 years as companies and countries around the world invest in their human resources infrastructure.
While outsourcing makes sense for many reasons, the primary benefit is containment/reduction of costs of routine transactional and administrative work. Another key reason is the belief that a company should outsource all non-mission critical aspects of its business.
Understanding the Human Resources Marketplace
Trying to grasp the ever-changing marketplace or make sense of what flavor of outsourcing will work best for any given organization is virtually impossible as HR vendors continue to rapidly expand their service offerings in response to market demand. In addition, thirty-six key acquisitions or mergers among major HR outsourcing players occurred in 2012 alone.
To simplify the HR Marketplace, CCG has created a common methodology for categorizing each functional area.
[sws_toggle1 title=”Recruitment and Staffing”] This includes searching for and hiring new employees and a wide variety of services from job boards to staffing and relocation firms, testing and assessment technologies, applicant tracking technologies, executive search/placement firms, background checking services, on-boarding etc. For the most part, this category ends when the employee is hired. [/sws_toggle1]
[sws_toggle1 title=”Compensation/Payroll”]This includes everything from payroll processing companies to companies specializing in specific payroll and compensation services, compensation design, and salary statistics services. [/sws_toggle1]
[sws_toggle1 title=”Employee Benefits”] This category encompasses a wide variety of employee benefit and related services from traditional health and welfare benefits to worksite/voluntary products, pharmacy benefit programs, benefits administration and communication software, third-party administrators, retirement plan services, and workers’ compensation/disability insurance services. [/sws_toggle1]
[sws_toggle1 title=”Talent Management/Employee Relations”]This category includes all the human resources services related to managing the individual once they are hired as an employee—appraisal, evaluation, recognition, promotion, retention, and succession planning services. [/sws_toggle1]
[sws_toggle1 title=”Training and Development”]This category includes the many products and services related to training and developing employees, from instructor-based training to eLearning solutions. [/sws_toggle1]
[sws_toggle1 title=”Compliance”]This category includes all the services related to complying with and managing the various aspects of labor laws, labor relations, legislation, litigation, alternative dispute services, OSHA, HIPPA, etc. [/sws_toggle1]
In addition to these specific human resources categories, it is also important to highlight services that are cross-functional in nature and relate to one or all the HR pillars:
[sws_toggle1 title=”Cross Services”]This cross-functional category includes the thousands of consulting firms that can help HR departments with one or all aspects of human resources management and process improvement. [/sws_toggle1]
[sws_toggle1 title=”HR Technology Solutions”]At one time, this might have been considered a separate pillar within HR, but today technology is integrated with and impacts all aspects of HR from applicant tracking to eLearning. The Internet and other technologies are fundamentally changing the human capital marketplace as companies strive to become more efficient. Technology allows HR to automate processes and eliminate many of the more labor-intensive transactional and administrative processes that have burdened HR professionals for years. [/sws_toggle1]