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Focus In to Farm Out Krell, Eric . HRMagazine ; Alexandria  Vol. 56, Iss. 7,  (Jul 2011): 47-49.

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ABSTRACT Cost savings drove the human resources outsourcing gold rush of the early 2000s. Today, as many agreements

come up for renewal, saving time trumps saving money for leading practitioners. Saving money is not necessarily

the primary objective at this point, notes Ron Gier, VP of human capital planning and employee relations for Sprint

in Overland Park, KS. Outsourcing is about concentrating where you are going to put your energy, where you are

going to build competency as a company and where you can use a partner to perform activities that are not core to

your business. One of Sprint's top strategic objectives is to provide excellent customer service. To meet that goal,

Gier and his colleagues realized that they needed more time to focus on training, developing and retaining call

center representatives. About three years ago, this need led to the outsourcing of most, but not all, recruiting,

interviewing and onboarding processes for call center representatives. He emphasizes that Sprint's agreements

are made in conjunction with the company's supply chain and contract management functions. FULL TEXT  

Headnote

Effective HR outsourcing requires strategically selecting tasks that vendors can do better to allow you to focus on

key functions.

Cost savings drove the human resources outsourcing (HRO) gold rush of the early 2000s. Today, as many

agreements come up for renewal, saving time trumps saving money for leading practitioners.

"Saving money is not necessarily the primary objective at this point," notes Ron Gier, vice president of human

capital planning and employee relations for Sprint in Overland Park, Kan. Outsourcing "is about concentrating

where you are going to put your energy, where you are going to build competency as a company and where you

can use a partner to perform activities that are not core to your business."

Cost remains a key consideration, but it should take a back seat to organizational strategy, according to Gier and

other HR practitioners. These HR professionals, along with HRO advisors and researchers, describe a maturing

market that is becoming better suited to delivering on buyers' desire to focus their decision-making squarely on

value.

"You generally decide to outsource for one of two reasons," says Lou Cimini, vice president of human resources,

the Americas, for Mansfield, Mass.-based Samsonite Corp.-either "to increase the value of your function and

maintain costs" or "to reduce costs and protect your value."

Cimini says outsourcing HR administrative and data management functions allowed him "to free up my high-value

team members to focus more time and energy on addressing strategic organizational issues." For example, Cimini

could support the development of new customer programs and products during open benefits enrollment season-

formerly "a brutal time for HR." HR previously was not involved in such innovation.

Zeroing In

One of Sprint's top strategic objectives is to provide excellent customer service. A related HR function objective is

to train and develop top-notch service representatives in the call centers "as quickly as possible," Gier says.

To meet that goal, Gier and his colleagues realized that they needed more time to focus on training, developing and

retaining call center representatives. About three years ago, this need led to the outsourcing of most, but not all,

recruiting, interviewing and onboarding processes for call center representatives. Gier and his HR colleagues

continue to conduct some call center recruiting to understand this part of the onboarding cycle. By partnering with

a recruiting company, Gier notes, "We are now able to focus much more diligently and effectively on how we can

take our new hires and make them productive."

Sprint's approach illustrates one facet of the maturation of HR outsourcing.

"We see more companies moving toward a 'right-sourcing' model, in which they focus on finding the best providers-

not the best provider-for each HR domain area they are considering outsourcing and then determining if they can

find a provider who fits their needs," reports Glenn Nevill, the Dallasbased North American practice leader for

Towers Watson's HR service delivery practice. HR professionals "then want to make some strategic decisions

around how they source. They are not automatically looking to bundle all of their HR functions with a vendor who

can give them a good price."

Lessons learned during multiprocess, multiyear relationships drive the evolution of this market. Most contracts are

five, seven or 10 years in duration. Peter Ackerson, SPHR, a specialist leader in Deloitte Consulting's HR service

delivery practice, points out that large HRO providers have learned numerous lessons from clients and from

smaller, single-process providers. These insights include the following:

* Service cost, while important, is "just the price of admission."

* Clients want higher-quality service and continuous improvement backed by measurable commitments.

* Buyers want precise yet flexible contracts that support high service levels and quick responses when their needs

change.

Single-process outsourcing arrangements tend to be more easily monitored, Ackerson notes, particularly in their

approaches to customization and expansion of services.

Nevill says vendors define their offerings and services better than they did five years ago, simplifying buyers'

decisions and selection activities. "If you are a large organization and you're looking at outsourcing multiple

processes, there are no more than four or five vendors that you're really going to look at," he notes. "Six to eight

years ago, before a lot of consolidation occurred, there were more than 10 options."

Rajesh Ranjan, New Delhibased research director for outsourcing advisory and research firm Everest Group in

Dallas, has observed a rise in the "componentized approach." Buyers first outsource a few highly transactional

processes, such as payroll, and then outsource more "judgment-intensive" processes such as recruiting or training

and development. This is not to say that large, multiprocess contracts are a relic of the 2000s. Globally,

multiprocess HRO activity- agreements involving three or more HR processes covering 3,000 or more employees-is

projected to increase by 8 percent to 10 percent this year over the 46 new large deals that were signed in 2010,

according to a recent Everest Group study.

More Face Time

Not all agreements in the past decade produced mutually beneficial partnerships. This helps explain why "HR

buyers are becoming more aggressive in researching their options when it's time to renew their outsourcing

agreements," according to Diane Youden, Dallas-based HR transformation leader with PricewaterhouseCoopers.

Applying greater rigor to decisionmaking and selection, she adds, helps ensure that vendors are providing the

value and services that buyers need.

Youden says buyers are focusing on what she describes as "partnership capacity"-the potential for the two

organizations to work together to achieve mutual benefits and address problems and changes. Some buyers run

through scenarios with potential partners in a workshop setting before making final selections.

Before Samsonite's Cimini decided to outsource employee self-service to ADP Inc. in 2010, he took two actions

that he says bolstered his decision-making. First, Samsonite's HR department worked to improve employee

relations and benefits processes that had been disrupted as a result of a previous enterprise software

implementation. "Once we had our processes under control, I could map our performance gaps and I could justify

any differences in cost in hiring an outsourcing provider to handle the processes."

Second, Cimini visited ADP's Augusta, Ga., service center. The purpose of the one-day meeting was to "get to know

the people on the team and who would be answering the phones," Cimini explains. "I also wanted to make sure that

they had a learning environment down there. If one person on their team asked us a question or escalated an issue

to me, I wanted to make sure that everybody on their team would learn from it."

The face time helped lay the groundwork for a partnership. "You want to treat your outsourcing group as a partner,

and you cannot run away from your responsibilities in that partnership," Cimini says.

Cost and Time Savings

More HR professionals could achieve HRO happiness by focusing more on value and less on cost, notes Charlotte

Anderson, SPHR, GPHR, managing director of Amethyst and Iris, a consulting firm in Hillsborough, N.J.

"Within companies that view HR service delivery as a commodity," Anderson observes, "HR outsourcing decisions

are almost entirely related to costs."

In the past, Gier agrees, "HR outsourcing was really all about finding an activity that existed within your group that

you could give to somebody else and get a cost savings." Today, Sprint's HR leaders prefer to "decide where we

want to go from a strategy perspective and then seek out partnerships if they can help us get there," Gier says.

"This is where a lot of companies got caught up-somebody comes in and portrays a significant savings that you

can't ignore, but you really have not figured out how it is going to help you accomplish your core objectives."

He emphasizes that Sprint's agreements are made in conjunction with the company's supply chain and contract

management functions. Their input helps ensure that most partnerships generate a positive financial return, Gier

says. In other words, cost savings mark a secondary outcome.

"Besides the basic dollars and cents, how will the organization benefit?" asks Richard Oyen, SPHR, vice president

of human resources for SumTotal Systems in Mountain View, Calif. If an outsourcing agency does your recruiting,

"will they understand the business needs and manager preferences enough to continually send good candidates?"

When outsourcing HR operations and information systems data, "will a call center give your employees the 'touch'

your employees need to feel that their issues and questions are being properly addressed?"

These types of strategic questions are factors that Youden says HR executives should weigh in decision-making.

Specifically, she suggests that HR leaders determine whether outsourcing can help "ensure that the HR function is

better positioned to provide the business with the organizational capabilities it will need to deliver against its

strategic initiatives."

That approach defines how Sprint tackled another strategic objective: improving employee wellness to hike overall

business performance and reduce employee medical costs. HR leaders decided that the best use of resources

would not involve running a wellness facility, but understanding, identifying and nurturing strong links between

specific wellness programs and bottom-line measures such as medical costs, employee engagement and

employee productivity. They decided to outsource the staffing of a new on-site health care facility and the

administration of wellness programs.

"We did not want to hire doctors, nurses and pharmacists," Gier explains. "We really wanted to concentrate on how

[wellness programs] improve the health of our people [and] the performance of our organization, and reduce time

away from work. That's where we put our energy."

Sidebar

Online Resources

For more information on current trends and data about outsourcing, see the online version of this article at www

.shrm.org/hrmagazine/0711Outsourcing Agenda.

Buyers want precise yet flexible contracts that support high service levels and quick responses when their needs

change.

AuthorAffiliation

The author is a business writer based in Austin, Texas, who covers human resource and finance issues.

DETAILS

Subject: Call centers; Customer services; Human resources; Cost control; Human resource

management; Employees; Outsourcing; Agreements; Decision making

Business indexing term: Subject: Customer services Human resources Cost control Human resource

management Employees Outsourcing; Industry: 56142 : Telephone Call Centers

Location: United States--US

Classification: 9190: United States; 6100: Human resource planning; 5120: Purchasing; 2400: Public

relations; 56142: Telephone Call Centers

Publication title: HRMagazine; Alexandria

LINKS Linking Service

Volume: 56

Issue: 7

Pages: 47-49

Number of pages: 3

Publication year: 2011

Publication date: Jul 2011

Section: Outsourcing Agenda

Publisher: Society for Human Resource Management

Place of publication: Alexandria

Country of publication: United States, Alexandria

Publication subject: Business And Economics--Management

ISSN: 10473149

Source type: Trade Journal

Language of publication: English

Document type: Feature

Document feature: Illustrations; Tables

ProQuest document ID: 883589327

Document URL: https://www.proquest.com/trade-journals/focus-farm-out/docview/883589327/se-

2?accountid=14872

Copyright: Reprinted with the permission of Society for Human Resource Management

(www.shrm.org), Alexandria, VA.

Last updated: 2021-09-09

Database: ProQuest One Academic

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