Years ago, HR organizations began to realize their focus on administrative activities impinged on their ability to deliver high-value services. The skills and talents of their people were being underutilized and HR was at risk of being marginalized. Outsourcing administrative activities to allow the HR organization to focus on the strategic priorities of the business was an idea whose time had come.

Today, research confirms HR outsourcing provides organizations with access to better expertise, better customer service, lower costs, and greater value. Freed from time-consuming administration, HR is more able to realize its full potential and deliver greater strategic value to the organization. The findings of Hewitt’s research study HR Outsourcing: Trends & Insights show HR outsourcing will continue to grow at a healthy rate in the coming years.

This study was conducted during the fourth quarter of 2004 and the first quarter of 2005. One hundred twenty-nine employers responded to the survey, of which 121 (94%) outsource at least one HR function. Participants’ employee populations average 15,798 employees with a median of 7,500. Just over one-third have populations under 5,000, nearly one-third have populations ranging from 5,000 to 9,999 employees, and one-third have populations in excess of 10,000 employees. Participating organizations represent a wide range of industries and have annual revenues ranging from just under $1 million to $45 billion, averaging $6.1 billion with a median of $2.2 billion.