HR Outsourcing Addresses Global Needs

While cost savings remains the main driver behind HRO deals, vendors say that as more companies expand globally they are becoming concerned that they do not have the expertise or resources to handle their human resources business processes abroad, and are turning to outsourcing to fill the gap. The Yankee Group estimates that in Europe, the Middle East and Africa, HRO business will more than double to $2.4 billion by 2009.

Companies want services that can be up and running immediately, says Naomi Bloom, managing partner at Bloom & Wallace. This becomes particularly challenging when a company has a presence in different countries with different regulations, cultures and languages.

Pepsico’s recent deal with Hewitt Associates and Procter & Gamble’s agreement with IBM are examples of how multinational companies with well-known brands are choosing HR outsourcing to handle global capabilities, Bloom says. “More will follow because they know that these companies wouldn’t do it if they thought it was a risk to their brands,” she says.

Having a standard for human resources processes is particularly important for companies that develop talent by giving employees international experience, says Bryan Doyle, president of Hewitt’s outsourcing division. “If you are going to move key leaders around the world, you want to have the infrastructure in place to support them.”

—Jessica Marquez