Ongoing turmoil in the marketplace has created extraordinary challenges for businesses and employees around the world. But some business leaders are capturing savings even in these tough times. They're using human resource outsourcing (HRO) as a strategy to be more efficient, drive productivity and mitigate risk. HRO is one of the few actionable strategies that can deliver its most dramatic impact in challenging times -- when budgets are tight, staff levels are low and the pressure for productivity is unrelenting.  

HR outsourcing brings quick success -- especially in challenging times

Ongoing turmoil in the marketplace has created extraordinary challenges for businesses and employees around the world. But some business leaders are capturing savings even in these tough times. They're using human resource outsourcing (HRO) as a strategy to be more efficient, drive productivity and mitigate risk. HRO is one of the few actionable strategies that can deliver its most dramatic impact in challenging times -- when budgets are tight, staff levels are low and the pressure for productivity is unrelenting. 

The needs are real -- and so are the solutions 
The reasons for investigating HRO are as varied as the organizations that employ the strategy. Some business leaders want to direct human resources, payroll and benefits tasks to a service center. Many want employee-level inquiries to go to a call center, in addition to outsourcing payroll and HR functions. Others sense great benefit in integrating payroll processing with other HR functions such as benefits, HRIS, time and attendance, and recruitment. Organizations that have already outsourced technology or finance functions are also likely to investigate HRO. The impact of strategic outsourcing is already evident to the business leaders at these companies -- and they want more. Other organizations want to go beyond system administration or gross-to-net payroll processing. They're ready to improve administration of more complex human resource processes, and they know they can benefit from better management of the business requirements around back-office processing. 

HR outsourcing: A continuum of engagement options 
HRO attracts the interest of business leaders because it is a time-proven strategy for success. And as economic pressures have mounted, interest has increased. According to IDC, growth in the outsourcing of HR services is expected to continue through the year 2013, and one reason for that growth is the view of HR outsourcing as a cost-containment strategy embraced by buyers to weather the current economic climate. (IDC Market Analysis: U.S. Payroll Outsourcing Services 2009-2013 Forecast and Analysis, Lisa Rowan, 2009.) 

HR outsourcing does more than cut costs; it provides surprising benefits that extend throughout the enterprise, allowing organizations to access industry best practices -- and the best available technology -- without hiring a single person. Those who examine outsourcing solutions will find a variety of engagement options available. 

HRO generates demonstrated cost savings 
NelsonHall, an independent analyst and advisory firm, studied the impact on buyers of various HR services, from payroll processing to comprehensive HRO. The reported savings in cost serve as dramatic testimony of the impact of outsourcing: 

  • Payroll. Savings ranged from 15 percent to 30 percent, with an average of 22 percent.

  • Benefits administration. Savings ranged from 15 percent to 30 percent, with an average of 26 percent.

  • Recruitment process outsourcing. Savings ranged from 20 percent to 30 percent, with an average of 26 percent.

  • Multi-process outsourcing. Savings ranged from 15 percent to 40 percent, with an average of 27 percent.
  • ("Taking on Opportunities and Challenges of the Mid-Market," HRO Today, March 2009.)


Ceridian has been a leader in this industry for many years, so the company's HRO team has seen firsthand just how much financial impact well-executed HR outsourcing can have. And as outsourcing has become more than an operational decision -- as Ceridian clients explore ways to get better value from their investment -- they begin to see benefits that are far-reaching and substantive. Cost savings are just the beginning of success. 

Creation of an HRO business case: Best practices 
When it's time to spend money to save money, nothing holds more power than a quantitative business case. The Ceridian HRO team has played a role in the creation of many such examinations of return on investment and offers the following as best practices for business leaders who are assessing outsourced service delivery models -- regardless of scope. 

Determine the short-term and long-term ROI. Many Ceridian customers employ a five-year horizon to demonstrate the full financial power of the investment in HRO. The knowledge gained from these ROI determinations often reveals how much of your HR, payroll and benefits administration should be outsourced. 

Establish the proof points. Identify the cost factors and accounting methodologies that are most important to your finance team. 

Detail the plans. Include estimates for time lines and required resources; document milestone expectations. 

Benchmark the current state. You'll need information on the technology, people, processes, operational expenses, capital expenditures and potential risk areas for your company. This doesn't have to be difficult; Ceridian customers receive a tool to assist with the collection of this detailed information and support every step of the way. 

HR outsourcing brings quick success -- especially in challenging times. If your organization wants to create new efficiencies, drive productivity to its fullest and take action to mitigate risk, contact Ceridian. We're here to help you get started.