Outsourcing has become increasingly attractive for many organizations. In such relationships, a company contracts with a vendor that rents its skills, knowledge, technology, service and manpower for an agreed-upon price and period to perform functions the client no longer wants to do. Much attention has focused recently on the outsourcing of staffing, including temporary and contract workers, and IT professionals. A much less noticed, though growing, business has been that for human-resources business-process outsourcing, or HR-BPO.1 Starting with humble payroll processing, outsourcers now offer to take over virtually any HR activity — or even the entire function. In 2000, the HR outsourcing industry had revenues of $21.7 billion, accounting for more than 8% of total HR spending.2
Some observers see outsourcing as a key trend (perhaps even the key trend) shaping the future of HR. They envision HR departments focused entirely on strategic activities, all performed with an in-house staff consisting of a small number of high-level contributors, perhaps only internal consultants, HR systems designers and HR executives — leaving all the transactional and administrative activities to vendors for which those processes are core.3 But others doubt that the strategic and operational aspects of HR can be separated so cleanly. Ralph Kimmich, director of compensation and benefits at Southwest Airlines Co., for example, is skeptical about... To read the complete article, login or sign-up using the form below.
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