The New Era Of Outsourcing: Why Web-Based Human Resources Has Come Of Age


By Fenil Shah


• Application service providers offer a type of outsourcing that increasingly answers requirements to control and secure company data while experiencing, the convenience of minimal technical overhead.
• The hosted model allows a company to outsource the maintenance and overhead of a technology platform and software, yet maintain full control over the sensitive data and management of the process.
• According to research by Price-Waterhouse Coopers, "Total Cost of Ownership: Warning Signs of Hidden In House System Costs," companies can shave up to 80 percent of the time it takes to complete payroll simply by automating the process.

Qutsource or insource? It has never been an easy question to answer. HR directors love the security of running their systems in-house, and yet the expenses of maintaining the infrastructure, licenses and technical staff are often prohibitive. Yet with traditional outsourcing, the potential lack of control can be a concern. In addition, many more traditional HR practitioners are becoming more of a key element in the business and total rewards strategies. This allows little time for getting involved in the day-to-day administrative functions. While outsourcing may not be the solution for all companies, this article provides information on its potentially cost-saving and time-saving benefits.

Application service providers offer a type of outsourcing that increasingly answers requirements to control and secure company data while experiencing the convenience of minimal technical overhead. According to the Nov. 4, 2004, Forrester Research report, "Trends 2005: HR Management Systems" by Paul Hamerman, Web hosted HR applications are becoming more popular because the hosting model is simply more cost-effective.

Why Go to the Web?
When several companies are using the same infrastructure - provided by the application service provider (ASP) - economies of scale extend the promise of the best and most robust systems at the lowest price point to each individual client company. Hosted applications provide a blended model that captures the best of in-house HR administration with the best of outsourced HR administration. The hosted model allows a company to outsource the maintenance and overhead of a technology platform and software, yet maintain full control over the sensitive data and management of the process.

Easier to Expand
Fast-growing, Wisconsin-based Paragon, which helps companies with their IT needs, and SRP Federal Credit Union, based in South Carolina, froze the number of people in their HR departments despite adding 70 and 125 employees, respectively. That's an annual savings for each of $45,000 to $65,000 in salary savings by outsourcing several HR functions. Additionally, these firms are seeing significant return on investment (RO!) from automated time collection. According to the 2003 Price Water house- Coopers report, "Total Cost of Ownership: Warning Signs of Hidden In House System Costs," companies can shave up to 80 percent of the time it takes to complete payroll simply by automating the process. Those with 500 employees can save $2,600 per pay period by moving to an electronic system, according to figures compiled by iEmployee in the 2005 white paper "Online Pay Stubs." "We have a heavy workload, but it's not overwhelming," said Valerie Comparetta, an HR specialist for SRP

ABOUT THE AUTHOR:
Fenil Shah is CEO at iEmployee, which offers Web-hosted HR applications. Shah can be reached at Fshah@iemployee.com. Or Human Resource Workforce Management Solution


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