"The outsourcing industry has done well in 2001 and I think that will continue as the perception of outsourcing shifts from a cost-savings service to a business value service," reports Spherion's President and Chief Executive Officer Cinda Hallman. The Fort Lauderdale, Florida outsourcing supplier specializes in three areas of outsourcing: contact center/customer development, administration and recruiting.
Hallman says both human relations (HR) and finance and accounting have been the fastest growing sectors of the BPO world. "These are the processes that companies are most comfortable outsourcing," she observes. Last year, companies "were more willing to let go of non-core areas." Spherion found executives were more willing to listen when suppliers explained they could leverage a non-core process and teach them new ways of doing business, she observes.
Companies were able to let go of integral areas like HR because they realized they only needed to outsource the transaction part of the process that is routine and repetitious. Hallman says few companies only outsource 100 percent of their HR needs to a supplier. Crucial aspects of the company's HR, like succession planning, never leave the building.
The slowing economy has helped companies understand they need to concentrate on their core businesses to survive and thrive during the slowdown. At the same time, falling sales have made limited resources like capital and time even scarcer. "One of the most effective places to reduce corporate energy is around non-core processes," explains Hallman.
Outsourcing Leads To Innovation
The new economic climate is also forcing companies to focus on reducing costs. Hallman says outsourcing "is a valuable tool" to help companies lower their direct costs. "Even more importantly, companies realize they have to do something different and innovate in this economy. Outsourcing is becoming a good choice," she says.
With most companies rethinking how they do business, Hallman predicts few will be quick to add back costly resources and expansive infrastructure. Many will partner with an expert to outsource key business processes.
At the same time, they receive better service because the supplier has invested in both technology and people to a much greater extent than they would internally. "Companies will be more aggressive about shifting important, non-core functions to outside experts who can do the job with higher productivity to ensure management is focused on core areas, where they can directly impact company performance," Hallman continues.
Hallman predicts this year HR outsourcing will continue to grow as executives turn to outsourcing to help them manage change and transform their businesses. She says "older, bigger companies today are looking at ways to change their corporate culture. Outsourcing is an expeditious way to do that."
Hallman predicts remote workforce support will become a more important segment of outsourcing this year. With rapidly growing numbers of remote and mobile workers, companies are struggling to meet increasingly complex requirements to enhance worker productivity and customer responsiveness as well as provide support in the mobile environment. Outsourcing remote workforce support can:
- Result in more customer face time.
- Significantly reduce infrastructure costs.
- Improve productivity.
In one outsourcing engagement, Hallman says Spherion reduced client costs 30 percent and boosted workforce productivity almost 20 percent.
Recruitment process outsourcing is another promising area in 2002. As difficult as it was to find good talent before, the greatest struggles may lie ahead. With clear bottom-line impact, recruitment process outsourcing results in more qualified candidates, lower turnover, improved customer service, greater productivity and reduced costs.
Lessons from the Outsourcing Journal:
- Executives were more willing to listen to outsourcing's advantages as the economy slowed.
- As resources like capital and time become scarcer, executives turned to outsourcing to help them cut direct costs.
- Companies only outsource the non-core aspect of non-core processes. Mission critical aspects like succession planning remain in-house.
- Older companies look to outsourcing to help them manage change.
- Remote workforce support and recruitment process outsourcing may increase in importantance this year.