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"The HRO market is set to grow to $3 trillion over the next five years, and just over a third of HRO potential has been currently delivered," reported Dr. Anthony Hesketh, CRF Project Researcher.
Outsourcing the HR Function: Possibilities and Pitfalls, published by the Corporate Research Form, is one of the most important and independent reviews of the outsourcing market for human resources functions.
The Corporate Research Forum is a center of expertise in organization development and performance, with more than 100 large organizations as members. Sponsors of Corporate Research Forum have no control over the content. This particular report is sponsored by Accenture.
"In HR Outsourcing, there are complex people and performance issues which HR professionals need to understand. They must understand not just the importance of good HRO metrics—but how HR can contribute to business performance."—Dr. Anthony Hesketh.
The increasing focus on HR's contribution to the performance of the wider business has led to more emphasis on cost reduction. Human resources outsourcing (HRO) has grown out of this debate—from re-engineering and cost reduction on the one hand, to a potential transformational capability to the other.
HRO is an evolving industry. It is also a strategic tool aimed primarily at chief executives. Although organizations' strategies and performance models may differ, HRO will nearly always have some relevance, for example in order to:
There are ongoing strategic debates among users, organizations and providers around the issues relating to HRO.
Some of these issues include:
Some organizations believe the HR function is an integral business success factor, but others view HR as over-resourced, inefficient and thus vulnerable to the cost reduction possibilities of HRO.
This Corporate Research Forum research identified six trends that will dominate the future of HRO:
The report makes recommendations, in particular pointing to areas where mistakes have been made:
The report also offers guidelines for HR practitioners, third-party providers and HRO advisers in making best use of HRO and constructing effective working relationships.
July 26, 2006
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