Study: Save Money With HR Outsourcing Through Vendor Management

July 20, 2005 ( - A new study has found that companies that consistently realize lower costs through outsourcing invest in adequate vendor management, but also spend significantly on their internal benefits administration tasks.

A news release from the Chapel Hill, North Carolina-based Best Practices, a benchmarking consultant, said that top quartile companies employ about 3 FTEs less for the same participant base in their savings administration process. Those companies have 3,885 active employee participants per savings administration FTE.

The study examines outsourcing levels, internal staffing levels and volume of work in four sectors of benefits administration including savings, pension, stock options, and health & welfare administration

Study findings include:

  • 83% of the benchmark class relies on one vendor for stock options administration, while other benefits processes use greater numbers.
  • Companies with highly complex systems deal with a greater volume of customer service cases that are escalated to internal staff from vendors. Companies in the top quartile have only one escalated complaint per 1,000 active employee participants, compared to 10 escalated complaints for the weighted class average.
  • Companies that minimize the number and complexity of their benefits processes consistently achieve lower costs and higher staff efficiency.
  • Lower costs are possible by focusing internal resources on vendor management rather than on administration.

More information about the study is here .