Industry News

Nearly 42% of mid-sized companies, which tend to employ 1,000 to 10,000 workers, expect to expand their HR outsourcing in the next year, according to NelsonHall, a Massachusetts-based research and consulting firm. According to the report, mid-sized employers realize the decision to outsource an HR function is a big investment and are very calculated and thorough in their evaluation. It's not a hasty move, but one that often needs to be made to keep the company competitive.

The June NelsonHall report is based on interviews with members from 60 organizations that represent U.S. mid-market employers in the manufacturing, retail and transportation sectors. It also surveyed HR vendors who cater to the middle market.

The report showed that mid-size employers are driven, in part, to outsource HR functions because of the "increasing cost associated with benefits coverage, combined with a need to provide health care and related benefits comparable to those offered by larger organizations in order to attract and retain employees."

Other Findings:
Mid-sized employers have to decide what their priorities are.
They need a view as to what they want to do with their HR department. And within those priorities, they have to decide what they want to keep internal and which transactional or mundane services they would like to outsource.

There any new issues emerging regarding benefit administration outsourcing.
In the mid-market, people actually feel that there is too much going on in benefits, which means they can't get their heads wrapped around it. The shape and complexity of the services are changing. The combination of health benefits and offering flexible benefits have made it horrendously complex to do in-house benefits administration.

Principal benefits mid-sized organizations want from outsourcing:
- Improved quality of service
- Reduced costs
- Less internal management involvement in the running of day-to-day HR activities
- Improved processes
- Ability to handle greater volumes
- Access to better IT systems
- Improved management control

Source: NelsonHall, Mid-Market HR Outsourcing in the US, Market Assessment, June 2006