HR outsourcing on the rise: Research
14/07/2011 | 

The broad adoption of HR outsourcing across Asia-Pacific has emerged as the main finding of regional research conducted by Talent2. The 'Talent2 APAC Market Pulse Study', was commissioned by Talent2 and conducted by Galaxy Research to understand the current state of the HR industry across Asia Pacific.

579 senior HR and C-suite executives from Australia, China, Singapore and Hong Kong participated in an online survey to share their views of the challenges in the HR industry and their current business practices.

The study found that across Australia, Hong Kong, China and Singapore the majority of the HR executives (80-90%) are now considering HR outsourcing as a solution to key challenges cited, including search and recruitment (64%) and employee retention (50%).

Commenting on these findings, John Rawlinson, CEO of Talent2Group, said: "This research reinforces that ongoing skills shortages are hampering organisations across Asia from finding the people they need to drive top line business growth. What's interesting here is that HR executives are focusing on different ways to address these challenges - namely through outsourcing, and investment in learning and development.

"The fact that the overwhelming majority of HR executives are outsourcing HR functions (or are considering doing so) represents a massive shift in the industry - even compared to five years ago. Nelson Hall's June HR Outsourcing Index backs this up with the industry reporting a 10% increase in confidence in the HRO sector over the last quarter. It clearly shows that outsourcing is now being considered as a strategic solution, rather than a cost-cutting tactic in response to the GFC," Rawlinson continued.

A summary of key findings for Australia are as follows:

Outsourcing:

  • In the case of search and recruitment, 71% of HR executives outsource all or part of this function. Employee learning and development (41%) and HR consulting (37%) are other functions likely to involve an element of outsourcing.
  • Specialised knowledge of the outsourcing company (67%) is the most commonly cited benefit of outsourcing. Another key benefit of outsourcing was that it enables businesses to free up resources and play to their strengths by focusing on their core competencies (58%).
  • Outsourcing also offers stability to many businesses, with 45% finding it to be a benefit in relation to coping with peaks and troughs in business activity.
  • Some drawbacks are associated with outsourcing, with the main one being that external providers lack detailed knowledge about the business (63%). Cost (49%) and a lack of consistency from outsourcing companies (46%) are also considered drawbacks by some HR executives. Interestingly, in China, security and confidentiality issues were cited as an obstacle for considering outsourcing (44%).
  • As many as 53% of HR executives would consider starting to outsource or increasing their commitment to outsource some HR functions in the next 12 months. Search and recruitment (33%) is the function most likely to be considered for outsourcing, followed by employee learning and development (15%) and payroll (12%).
  • For many (33%) outsourcing has either been an improvement on the old systems or exceeded expectations. A further 56% acknowledge, however, that service delivery has been inconsistent.

 Source Human Capital July 14 2011