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Three Keys to Unlock Successful HR Outsourcing
 

By Joanne Sammer  4/21/2008

NEW YORK—As companies continue to consider outsourcing HR systems and processes, HR professionals can learn many important lessons from those that have gone before them into the realm of outsourcing.

But before beginning, “you need to answer a few questions for yourselves about what [your] company is trying to accomplish through outsourcing,” HR outsourcing (HRO) technology guru Naomi Lee Bloom told attendees during a how-to session on selecting HR BPO providers at the 2008 HRO World Conference & Exposition held here April 16-17.

Bloom, managing partner with Bloom & Wallace, a consulting firm based in Fort Myers, Fla., discussed how HR professionals can approach the outsourcing decision and the choice of a provider using three stages—introspection, investigation and consumerism.

Introspection

The process begins with introspection about why HR outsourcing is a viable solution and how well positioned HR is to help the company make the outsourcing decision and to manage the transition to outsourcing.

She recommends that HR professionals write their top objectives for the organization in general and HR specifically on a three-by-five index card. “You must be absolutely clear about these objectives because, without them, you don’t know what you’re supposed to be doing or whether outsourcing will help you accomplish anything,” she said.

It is also important to analyze how the company is currently delivering HR. “You have to identify gaps between what you need and what you have before trying to close those gaps,” says Bloom. “This is common sense, but 90 percent of companies do not have a document that explains this.” This is also the time to determine what role outsourcing can and currently does play in helping to close those gaps.

HR professionals also need to get their fingers on the pulse of what is happening within the outsourcing industry. “A lot can change in five years and there are a lot of things happening with vendors and in the marketplace that might affect outsourcing efforts.” For example, vendor consolidation has significant implications for everything from infrastructure investments to the leadership depth.

Investigation

Once HR professionals are comfortable with their grasp of what their companies need, they can begin investigating specific vendors. One of the first things to look at is the vendor’s track record and the tenure of its leaders. “If someone has changed jobs a lot, they have not been anywhere long enough to see the repercussions of their actions,” says Bloom. “This is something that is very important to watch because, if people leave the vendor, the brain trust might be gone.” Leadership turnover can also be an issue if a vendor undergoes an initial public offering (IPO) or is acquired by another company.

HR professionals should also consider the tradeoffs they may need to make when choosing a provider. For example, companies focused on cost savings might consider offshoring, but they also may need to consider efficiency and whether a vendor’s workforce has adequate English language skills. Bloom also encourages HR professionals to examine vendors’ client lists and capabilities. Although there is nothing wrong with providers with a large number of small and mid-market clients, that vendor might not be a good fit for a company with 300,000 employees in many locations. “A vendor might aspire to offer what your company needs, but they may not be ready for it,” she said.

Consumerism

When making the final decisions regarding HR outsourcing, Bloom suggests that HR professionals ask some important questions about whether the time is really right for outsourcing. “Timing does matter,” she said. Outside advisors can help make these decisions by analyzing data, financial projections and contract terms. For example, even if outsourcing ultimately saves money, there will still be initial costs from lost productivity during the transition that must be quantified and factored into any financial projections. The company should understand how the outsourcing arrangement would be affected over the long term if the vendor was acquired and the company became dissatisfied with its new vendor. “You have to think about this relationship in years and think through potential issues” such as a reduction in workforce or future dissatisfaction, Bloom said.

Successful Arrangements

In their session, “Finding the Right IT Professionals for Boston Scientific,” Scott Duhamel, Boston Scientific’s vice president of global staffing based in Natick, Mass., and Joe Collins, senior vice president for Veritude, a staffing firm based in Boston, discussed how a successful outsourcing arrangement works.

From the outset, Boston Scientific was very clear in what it wanted to accomplish through outsourcing. “We wanted to partner with a vendor for IT recruiting to free up internal resources to focus on core competencies in HR,” said Duhamel. “Bringing vendors into our organization is a challenge because we expect more of a partnership attitude from them.”

That partnership with Veritude, which began in 2006, has allowed Boston Scientific needed flexibility as its needs have changed. For example, the company was able to reduce its IT recruiting activity while it brought in a new CIO and ramp it back up quickly once the new CIO was in place, said Duhamel.

Boston Scientific has been able to access Veritude’s 24/7 sourcing model, which relies on workers in the United States and India to maintain a constant sourcing loop that has helped Boston Scientific in a competitive labor market for IT professionals. “We would not have been able to get that 24/7 sourcing capability off the ground quickly enough if we had tried to build it internally,” said Duhamel.

Veritude’s partnership model allows the staffing firm to maintain a team on site at Boston Scientific’s headquarters. “The benefit is that it allows the team to better understand the company and its culture and to have day-to-day interaction with Boston Scientific’s hiring managers,” said Collins.

Collins and Duhamel credit open communication with much of the success of the relationship. “We have an open dialogue on what is working and what isn’t,” said Duhamel. “That can get uncomfortable, but it strengthens the relationship.”

Joanne Sammer is a New Jersey-based business and financial writer. Her articles have appeared in a number of publications, including Business Finance, Consulting, Compliance Week and Treasury & Risk Management.

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