Benefits Execs Say Outsourcing Pays Dividends

March 18, 2003 ( - Finance and benefits executives consider human resources (HR) and benefits administration outsourcing to be a good investment for their organizations.

While only half of CFOs, COOs and other senior benefits executives have conducted any formal cost/benefit analysis of their outsourcing activities, at least 85% – depending on the plan outsourced – said they consider outsourcing to have been a good investment, according to an outsourcing report, “HR and Benefits:   The Next Outsourcing Wave” from Fidelity Investments.

Broken down by the plan outsourced, 97% responded positively to the outsourcing of defined contribution plans as a good investment.   Similar high marks were given to the good investments for outsourcing:

  • 91% – health and welfare programs
  • 89% – defined benefit plan administration
  • 89% – alternative compensation programs, such as stock plans
  • 85% – payroll

Outsourcing Value

The vast majority of respondents (92%) agreed that a vendor’s capabilities and expertise delivered significant benefits for their organization, particularly in terms of improved services and better access to information.   Further, a very similar nine out of 10 executives and managers agreed that outsourcing facilitates data transfers via better Web-based technology and reduces administrative burden by giving employees direct, self-service access to HR/Benefits information via technology.

Overall, the bulk of executives and managers indicated that it would be too burdensome (88%) and/or too costly (86%) for their organizations to provide comparable HR/benefits capabilities internally. However, more than three-quarters (83%) said they believed that the value of outsourcing could not be measured in dollars alone.

Richard Day Research, Inc conducted the Fidelity study during the fall of 2002 among finance executives and HR/Benefits decision-makers at companies with 5,000 or more employees.   Of the respondent companies, 48% had 10,000 or more employees and 54% had revenues of more than $1 billion.

A full copy of the report can be found at .