Gartner©2003Gartner,Inc.and/oritsAffiliates.AllRightsReserved.Reproductionofthispublicationinanyformwithoutpriorwrittenpermissionisforbidden.Theinformationcontainedhereinhasbeenobtainedfromsourcesbelievedtobereliable.Gartnerdisclaimsallwarrantiesastotheaccuracy,completenessoradequacyofsuchinformation.Gartnershallhavenoliabilityforerrors,omissionsorinadequaciesintheinformationcontainedhereinorforinterpretationsthereof.Thereaderassumessoleresponsibilityfortheselectionofthesematerialstoachieveitsintendedresults.Theopinionsexpressedhereinaresubjecttochangewithoutnotice.DecisionFramework,DF-19-1071J.HolincheckResearchNote28February2003DecidingtoInsourceorOutsourceforHumanResourcesEnterprisesmakingnewHRtechnologydecisionsareoftenconsideringvarioustypesofoutsourcing.However,theyshouldlookatoutsourcingasonlypartofanoverallsourcingstrategyforHRservicedelivery.Whenselectingnewhumanresources(HR)technology,thedecisionisoftenmorecomplicatedthanfiguringoutwhichtechnologyvendoristhebestfit.Inalmostallcases,enterprisesalsoconsideroutsourcing.Evenwithoutsourcing,differenttypesofrelationshipsarepossible,includingthoseinTable1.Table1OutsourcingRelationshipTypesTypeFunction/ProcessOwnershipTechnologyOwnershipApplicationServiceProviderIn-HouseExternalServiceProviderTraditionalPayroll/BenefitsOutsourcingIn-House/ExternalServiceProviderIn-House/ExternalServiceProviderBusinessProcessOutsourcingExternalServiceProviderExternalServiceProviderSource:GartnerResearchAnapplicationserviceprovider(ASP)hoststheHRtechnologyatitssiteandsuppliestechnicalsupport.Theenterpriseisresponsibleforperformingandowningthebusinessfunction/process.Intraditionalpayroll/benefitsoutsourcing,theexternalserviceprovider(ESP)playsamore-activeroleinthebusinessprocess.Inadditiontoprovidingtechnologyortechnologysupport,theESPalsoperformsandmanagespartofthebusinessprocess.Forexample,inpayrolloutsourcing,theenterpriseisresponsibleforprovidinginputsintothepayprocess.TheESPtakestheseinputsandperformstheremainderoftheprocess(suchascalculatingpay,performingdirectdeposits,printing/mailingpayslips,taxfiling).Inbusinessprocessoutsourcing(BPO),theESPownsthebusinessprocessorfunction,includingthetechnologyortechnologysupport.Inthiscase,theESPownstheinputsandoutputs,andtheCoreTopicWorkforceandWorkplace:HCMandB2ETechnologyKeyIssuesHowwillenterprisesselect,implementandsupporttheirhumancapitalmanagement/business-to-employeetechnologies?Howwillenterprisesuseandmanagehumancapitalmanagement/business-to-employeeprocessesandtechnologiestogaincompetitiveadvantage?StrategicPlanningAssumptionBy2005,70percentofenterpriseswillstillconsideroutsourcingonehuman-resourcebusinessprocessorfunctionatatime,suboptimizingtheirsourcingandservicedelivery(0.7probability).©2003Gartner,Inc.and/oritsAffiliates.AllRightsReserved.DF-19-107128February20032enterpriseisresponsibleforstrategy,policysettingandvendormanagement.DriversofHROutsourcingRegardlessoftheservicetype,therearecommondriversthatenterprisessharewhenexaminingHRoutsourcing,asFigure1shows.Figure1WhataClientShouldOutsourceKeepIn-HouseorOutsourceRetainInternallyHighHighLowLowOutsourceDeveloporOutsourceIn-HouseEffectivenessBusinessValueSource:GartnerResearchFocusonCoreCompetencyManyenterprisesgothoughanevaluationprocesstodeterminecorecompetencies.Muchofthisanalysiscentersondeterminingwhetheraspecificfunctionor...
