HR Outsourcing: The Vendor Landscape

HR outsourcing describes the activities associated with acquiring HR services from one or more external providers. During outsourcing, a client organization transfers responsibility for an HR service(s) to an external provider(s).

There are several different parties in the HR outsourcing equation:

HR Outsourcing Companies - The growth in the full-service market is inspiring the formation of new venture-capital-funded suppliers such as Exult, and its U.K. counterpart Xchanging, and attracting traditional HR outsourcing suppliers such as Mercer and Watson Wyatt.

The Consultants - The consultants include the "Big" consulting firms: EDS, Accenture, BearingPoint, Cap Gemini Ernst & Young, Deloitte Consulting and IBM Business Consulting Services.

HR Process Specialists - Companies that specialize in one aspect of the HR function, such as Elan in recruitment, Paychex, Ceridian and Rebus in payroll, are extending their reach into the broader HR services market.

Online Companies - HR is one of the areas where application service providers have thrived, with companies such as oneclickhr.com, ADP and Ceridian offering outsourced HR processes via the Internet. These firms meld Web-based service delivery - using the application service provider (ASP) model - with a BPO business focus. Examples include Administaff, Employease, and Workscape.

The Offshore Providers - include subsidiaries of the Indian application outsourcers. Examples include Infosys Progeon and Wipro Spectramind.

HR Contract Relationship - Scope and Scale
One of the key trends is that demand for aggregated HR outsourcing services is becoming more mainstream - that is, the aggregation of multiple HR processes (such as payroll, benefits and HR records management) into one large outsourcing contract.

Some of these contracts tend to be very large and complex. To get a better perspective consider the highlights of the relationship between Exult and Bank of America.

• Prompted by M&A, fragmented, decentralized HR
• Ten Year Contract
• $1.1 billion over 10 years
• 700 HR employees transferred to Exult
• Exult delivers:
  • Benefits Management
  • Accounts Payable
  • Payroll
  • HR Call center
  • HR technology
  • Regional Staffing
• Guaranteed cost savings to Bank
• Bank of America took equity share in Exult & will share in future profits

Basically Exult takes responsibility for the entire back office, specific functions or a particular business process and transforms them into fit for purpose services.