UK companies on the fence when it comes to HR outsourcing

Outsourcing is often a popular term across business functions, but research finds that UK companies find themselves in a love/hate relationship with outsourcing in the HR department. The study of 3,000 international companies across 11 countries was conducted by HR and payroll specialist, SD Worx, and found that many UK businesses are now considering whether to manage the majority of HR projects in house following the pandemic.

When asked about plans for managing HR projects following the coronavirus crisis, 34.4% of UK business boldly say that they would rather go it alone and outsource fewer tasks. This left only under a quarter of businesses (23.8%) choosing to continue with the majority HR projects being outsourced. This ratio was reflected throughout Europe, with only Germany, Belgium, Austria and Switzerland remaining as the most outsourcing-orientated countries within the region.

However, despite many looking to take the reins into their own hands, most companies agreed that some HR tasks lend themselves better to outsourcing than others. When asked what specific tasks they’d prefer to outsource to external specialists, UK companies placed the following as their top five: (1) HR process automation, (2) Digital transformation, (3) Socio-legal regulations, (4) Wage costs and (5) Rewards. Amongst all 11 countries, the UK’s top three ranked tasks also remained on top overall, however Payroll and Wage costs took 4th and 5th position respectively.

Cathy Geerts, Chief HR Officer at SD Worx says, “The pandemic caused many businesses to recalibrate and weigh up the importance of certain HR functions to ensure business survival. However, despite some businesses choosing to outsource fewer HR functions, there is a clear understanding that going in house may not be the best route for all processes. 

“Now is the time when businesses are looking at ways to refine the survival skills learnt from the past year, and outsourcing tasks that require automation may be the missing piece of the puzzle.”

Striking the balance depending on requirements

The study also highlighted that for all the HR tasks listed above, excluding ‘socio-legal regulations’, there is a level of technological support required to be able to fulfil the tasks. However, employee centred tasks such as Learning, HR services for employees, Wellbeing, Work-life balance and Performance management, all ranked as the top five processes that companies would prefer to manage mostly or fully in-house.

Overall, findings show that technology-based outsourcing is more appealing than consultancy-based outsourcing. With the past year putting more emphasis on the need for a focus on the workforce and wellbeing many businesses have and are choosing to manage such functions by themselves. However, this has not entirely diminished the need for external support when it comes to automation, digital transformation, payroll and wage costs. 

The study finds that amongst those that that are choosing to partially or fully outsource HR tasks, the reasons for doing so come down to (1) lightening the admin burden on personnel; (2) the ability to push HR activities forward without the added pressure; (3) more time for staff to focus on value adding tasks; (4) an improved service for employees; and (5) added expertise and know-how.

Cathy Geerts, Chief HR Officer at SD Worx alsosays “Ultimately, outsourcing is a way to hit various targets at once. Not only can it allow personnel to focus on tasks that they wouldn’t have had time for previously, but it also allows the department to learn from and gain additional expertise from an external party. 

“Take payroll, for example – ever-changing legislation, international payroll demands, technology and security costs can be a real pain for businesses who do not have the expertise. Outsourcing your payroll can take the headache away and allow HR teams to focus on important initiatives such as company culture, wellbeing and performance.”

Author: Editorial Team

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