Human Resource Outsourcing

Outsourcing of HR services is a growing segment of business process outsourcing, powered by companies seeking more efficient, cost-effective and harmonized processes to support the administration of human resources.  And there are rewards for the bottom line: outsourcing has the potential to decrease baseline costs of delivery, to convert fixed costs to variable, and to reduce the need for the customer to use scarce capital on new systems to deliver HR processes.

HR outsourcings range from specific separate processes (such as pensions administration) to comprehensive process sets that cover HR functions from benefits administration to training and recruitment through to severance.  Realization of the potential benefits demands sophisticated risk analysis and commercial structures, and depends upon a careful balance of risk and reward that incentivises superior performance from the service provider.

The HR outsourcing deal experience of the members of Morrison & Foerster’s Global Sourcing Group includes advising:

• a consortium including PwC Consulting (now IBM Global Services) and McKesson on the outsourcing of the payroll and benefits systems for all UK National Health Service Trusts.
• a large international chipmaker in outsourcing benefits administration, including the handling of employee leaves of absence. 
• a U.S. nationwide financial services company in outsourcing staffing and recruiting functions. 
• Exult on its contract to provide most of BP Amoco’s US and UK HR functions and services.
• Korn Ferry International, Inc. on a number of domestic and international IT and HR outsourcing transactions.
• Oberman, Tivoli, Miller & Pickert dba Media Services, one of the largest entertainment industry payroll service providers, in connection with its services agreements with motion picture studios, television networks and television, music video and commercial production companies’ outsourcing of their payroll administration services.
• The Metropolitan Police Authority on the outsourcing of its benefits and retirement plan administration services.