Why Companies Outsource Pressures Facing HR/Benefits Professionals

•		Four of five study executives and managers overall (84 percent) said that lowering costs and/or improving efficiency were major pressures facing their HR/Benefits operations in general.
•		Other pressures associated with the HR/Benefits function included ensuring regulatory compliance (78 percent); satisfying internal demands for accurate and timely reports (66 percent); and maintaining currency with new technology and systems integration issues (66 percent).
•		Attracting and retaining employees (67 percent) also was identified as a major challenge, especially among the senior executives surveyed.

Cost Reductions and Other Key Motivators

•		Slightly more than one-third (37 percent) of executives and managers said "cost reduction" was the most important initial motivator for outsourcing.
•		However, fewer than one-third (30 percent) cited cost containment as the most important current benefit.
•		Companies shifted their focus over time to the other "value-added" benefits offered by outsourcing, such as: access to vendor expertise/technology; reduced administrative and regulatory burdens; and more/improved employee service offering.
•		One-half indicated that outsourcing lets their company focus more on core competencies.

Top Benefits of Outsourcing

•		The vast majority of executives and managers (92 percent) agreed that a vendor's superior capabilities and expertise delivered significant benefits for their organizations, particularly in terms of improved services and better access to information.
•		Large majorities indicated that it would be too burdensome (88 percent) and/or too costly (86 percent) for their organizations to provide comparable HR/Benefits capabilities internally.
•		The majority of executives and managers said that for most aspects of their daily jobs they felt that outsourcing actually gave them enhanced control of their HR/Benefits functions, especially in the areas where they feel the most pressure.

Fidelity Employer Services Company, a division of Fidelity Investments Institutional Services Company, Inc., 82 Devonshire Street, Boston, MA 02109.

¹ Fidelity Investments, February 2003