Wednesday, 9 September 2009

Another U-turn on HR outsourcing


Outsourcing much of the transactional work of the HR department has been fashionable with many organisations over the last decade, especially when combined with the transformation of the remaining HR professionals into Business Partners. But not all companies have gone down this road, and some of those that have are now reversing their decision and bringing this activity back in-house. The latest example is UK insurance group Liverpool Victoria, whose HR Director believes that by doing so he has reduced the company's costs by £3m over the last year. As the business is growing, the Chief Executive demanded a change in HR strategy, and made it clear that he didn't want an outsourced HR function run by someone else, but wanted the activities to be undertaken in-house, enabling the HR team to be fully supportive of business growth and change. The U-turn on HR outsourcing has demanded a redesign of almost all of the HR processes, with particular attention being focused on recruitment and learning and development.


  • Why did many organisations outsource the work of the HR function, and what are the reasons for this decision now being reversed?
  • Give some examples of transactional HR activities.
  • The summary refers to HR Business Partners: what is meant by this phrase, and what are the sort of HR activities that they would be involved in?
  • The first process that Liverpool Victoria re-engineered when bringing it back in-house was recruitment. What are the benefits but also the dangers of allowing an external organisation to manage a company's recruitment campaign?
  • Further research: what other examples can you find of businesses that have been involved in outsourcing HR, and also in reversing this decision? (Hint: use the subject tags on the right!)
  • Bringing the HR activity back in-house is said to have saved Liverpool Victoria £3m. Would there have still been an argument for doing this if the savings were lower, or even if by doing so it involved an additional cost?

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