Increasing Complexity of HR’s Role Is Sparking a Need for HR Outsourcing, IDC Says

FRAMINGHAM, MA – FEBRUARY 21, 2001 – Human resources (HR) responsibilities at many companies are becoming increasingly complex. New technologies, globalization strategies, and lack of a skilled employee pool are some of the factors complicating HR’s role. To help deal with these challenges, many companies are outsourcing some of their HR functions, according to IDC.


"HR departments are working to shed themselves of the tactical, transactional activities they handle so they'll have more time to focus on strategic, value-add activities and to better align the department with the goals and objectives of the organization," said Marc Pramuk, senior analyst for IDC's eHuman Resources research program.

HR has two types of major responsibilities. The first set centers around the design of the organization and culture, and the second is related to the acquisition, management, and development of human talent within the organization. Some of HR’s many activities are as follows: policies and procedures development, corporate communication and employee relations, staffing, recruiting, and succession management, payroll and compensation, benefits administration, and training and development.

According to IDC, when deciding which of these activities to outsource, companies need to consider how HR can create and deliver the greatest value to the organization.

"The activities that are more transactional in nature or that tend to be consistently handled from one company to another are most easily outsourced," Pramuk said. "Activities related to reinforcing the culture and the values of the organization are usually kept in-house."

IDC believes companies are moving toward outsourcing several HR activities rather than just one or two. As a result, they are looking for service providers that can offer comprehensive HR outsourcing solutions. To address this need, many HR outsourcing service providers are turning to partnerships and alliances.

"Partnerships and alliances are helping HR outsourcing providers deal with clients’ increasing demands," Pramuk said. "They give service providers access to the skills and capabilities they need to deliver quality services while allowing them to focus on their own specific core competencies."

IDC recently published HR Outsourcing Marketplace: Key Trends and Competitors Shaping the eHR Space (IDC #B23242). This bulletin analyzes trends in HR outsourcing and examines how technology advances are affecting the competitive landscape and the service offerings of HR outsourcing providers. The bulletin outlines HR activities and the challenges and opportunities HR departments face. It examines factors driving and inhibiting HR outsourcing and looks at outsourcing needs by company size. The bulletin also segments and describes the type of players competing in this space.

To purchase this bulletin, contact Jim Nagle at 1-800-343-4952, extension 4549, or at

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies and the financial community. Additional information can be found at

IDC is a division of IDG, the world's leading IT media, research and exposition company.


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