Large enterprises can cut costs by twenty percent by outsourcing human resources, according to a study by technology research and consulting firm Yankee Group. But the numbers only tell half the story. The real benefit of broad-based HRO for businesses with over ten thousand employees lies in the strategic advantage of a streamlined system.

The Enterprise Human Resource Outsourcing Advantage

But human resource outsourcing in an enterprise context introduces benefits beyond these basics. Many enterprises come for the cost savings, but stay for the critical strategic advantage outsourcing provides. The Yankee Group predicts precipitous growth for enterprise HR outsourcing as providers demonstrate the strategic value their services add. Yankee Group vice president Philip Fersht identifies as a major driver of HRO acceptance the suppliers ability to demonstrate that their solutions arent simply offering their customers cost savings, but adding real value.

Case Study: Whirlpool

For Whirlpool Corporation, this strategic value is the number one benefit of human resource outsourcing, trumping even the considerable cost savings the company enjoys. David Binkley, senior vice president for global HR at Whirlpool, explains: We have positioned our platform globally for the companys strategy of growth. That is the largest benefit. It doesnt minimize all those other things [that HRO brings].From the beginning, Whirlpools focus was on driving a global platform and having the right global technology solutionandNumber 8230;in order to meet and exceed our strategic initiatives. The company, which implemented its human resource outsourcing solution in the midst of its merger with Maytag, was able to create a better, faster, and smarter HR department by relying on the services of an external HRO partner.

Streamlining Enterprise HR

It doesnt take much for an enterprise-level human resource infrastructure to become unwieldy and inefficient. When Whirlpool acquired Maytag, its smaller rival was managing seventy different benefits programs to support its 20,000 employees and 12,000 retirees. Whirlpool, which manages a workforce of 80,000 employees in 40 countries worldwide, adds another order of complexity to HR administration. Combine the two and you have a formidable bureaucratic challenge.

In such a complex environment, an external managed service facilitates a unified and optimized HR infrastructure. Among the particular benefits of an outsourced enterprise HR solution are:

• A single platform integrating key processes and data
• Self-service features for greater efficiency
• Better and more reliable performance metrics
• A scalable system to accommodate both organic growth and mergers andNumber 38; acquisitions

In the case of Whirlpool, outsourcing the human resource solution was the key factor in its successful merger with Maytag. Binkley comments: Our effectiveness in the acquisition and ultimate integration was enhanced by the HRO work we were doingandNumber 8230;I am convinced that we would not have been able to do the people integration without it.

Human resource outsourcing cuts costs and streamlines HR processes for businesses of all sizes. But its in the enterprise space that HRO really shines. Managing work forces in excess of 10.000 employees, large enterprises face an uphill battle to optimize their processes. An external HRO provider offers the scale and resources to bring order to the HR operation, opening doors to better talent management and a solid growth strategy.

Sources

Outsourcing Center

HRO Today