Public Sector HR Reported Happy with Outsourcing

December 13, 2006 (PLANSPONSOR.com) - The overwhelming number of public sector HR officials in a recent survey said they were satisfied with the results of outsourcing HR functions.

A news release from ADP National Account Services, provider of outsourced HR services, said 94% of HR officials in federal, state and local US public sector agencies were happy with their outsourcing experience.

In addition, 53% said the transition process for moving to outsourcing was relatively easy for the organization, and 53% of organizations said they are likely to outsource additional functions in the future.

Fifty-five percent of survey respondents reported using full or partial shared services solutions and 17% now outsource some HR-related functions. According to the news release, workers’ compensation is currently the most common HR function to be outsourced, followed by retirement plan management and benefits programs.

The survey report asserted that the biggest roadblocks to HR outsourcing for many public agencies may be internal issues.

“The results of this study indicate that a public sector HR organization’s ability, or appetite, to break out of the norm and move toward non-traditional and innovative solutions may be the most important step,” the report on the survey results said. “Overwhelmingly, organizations are pleased with results when utilizing alternate models like outsourcing and shared services. Based on this success, these organizations are very likely to pursue these types of models for other functional areas or move additional processes into these models in the future even if they do not have immediate plans to do so.”

According to the announcement, the survey also found that:

  • Shared services and outsourcing remain unrecognized but often effective tools for improvement and transformation within public sector HR.
  • Satisfaction levels with shared services and outsourcing arrangements within public organizations are “overwhelmingly positive.”
  • Cost remains a key factor in considering an alternate model such as shared services or outsourcing.
  • Performance measurement and measuring success in general – both for HR overall and for specific shared services and/or outsourcing arrangements – remain a challenge for public sector organizations.
  • Current satisfaction with alternate models and solutions does not necessarily translate into future plans to further incorporate these models in additional business function areas.

The study was conducted online by the International Public Management Association for human resources and advisory firm EquaTerra during June and July 2006. More than 100 public sector HR executives responded. Seventy-seven percent of respondents were affiliated with a local government, municipality, city, county or town/township. Other respondents included federal and state entities, not-for-profits, school or special districts and other public organizations.

A copy of the survey report is here . A free registration is required.

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