HR Tech Issues Sent Out Selectively

June 24, 2008 ( - Outsourced retirement plan administration is a key focus for many companies, with one in four planning to change defined benefit administration and delivery in the next two years, a new survey found.

A Watson Wyatt news release about its 2007 HR Technology Trends survey reported that most companies are satisfied with HR delivery in the retirement and health and welfare areas but are not as satisfied in the talent management arena. The study also found the majority of self-service Web transactions are in the health and welfare area rather than in compensation/payroll decisions and retirement plans that do not take place over the Web.

According to the news release, tasks currently outsourced and those planned to be outsourced within 24 months included:

  • Defined Contribution Retirement Administration – 75%, 1%;
  • Health and Welfare – 52%, 6%;
  • Defined Benefit Retirement Administration – 50%, 5%;
  • Stock Administration – 40%, 6%; and
  • Deferred Compensation -36%, 3%.

The poll of 182 U.S. companies found that many companies expect to do more outsourcing, in areas such as health and welfare programs, but generally, the key word to describe HR technology outsourcing is selective. Few companies (21%) automatically look to outsource programs and the majority (63%) turn first to internal or enterprise functions to deliver HR services.

“Selective outsourcing is growing so popular because it can be tailored to meet an organization’s exact needs,” said Richard Hubbard, director of Watson Wyatt’s U.S. technology and administration solutions practice, in the news release. “For most organizations, this means outsourcing routine, transaction-oriented processes while refocusing the HR department on strategic planning. Many companies report that selective outsourcing best meets their needs for access to leading-edge technologies, while improving employee experience and service levels.”

The survey also found:

  • Fewer than 25% of companies direct their HR function to outsource whenever possible.
  • While companies cite internal process improvement as the primary goal for their sourcing strategy, 31% report missing that goal.
  • Many companies are looking to implement technology solutions for their talent management programs.
  • Most companies have HR call centers and strongly prefer that employee inquiries be handled in the United States.
  • Satisfaction with call centers is tied to the use of case management systems.

More information on Watson Wyatt’s 2007 HR Technology Trends survey can be found at .

HR Functions Outsourced or Likely to be Outsourced in Near Future

Currently Outsourced Plan to be Outsourced

This Year or Next

Defined Contribution

Retirement Administration 75% 1%

Health and Welfare 52% 6%

Defined Benefit Retirement

Administration 50% 5%

Stock Administration 40% 6%

Deferred Compensation 36% 3%

Payroll 22% 8%

Recruiting 9% 6%

Performance Management 4% 5%

Source: Watson Wyatt