Lect. Univ. dr. Cătălin CLIPA [614847]

1
UNIVERSITATEA ”ALEXANDRU IOAN CUZA” IAȘI
FACULTATEA DE ECONOMIE ȘI ADMINISTRAREA AFACERILOR

THE IMPACT OF HUMAN RESOURCES
OUTSOURCING PRACTICE S IN THE
ORGANIZATIONS

Coord. Științific:
Lect. Univ. dr. Cătălin CLIPA
Student: [anonimizat], 2018

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CONTENT

Introduction 3
Chapter I: Understanding the use of HR outsourcing by organizations
1. History of outsourcing the HR;
2. The relations between organizations and HR companies;
3. The impact made by outsourcing in organizations; 6
7
13
18
Chapter II: The main challenges that European organizations face when they collaborate with
HR outsourcing companies
1. The leading HR outsourcing companies in Europe;
2. What are the provocations that European organizations are facing when collaborating
with HR outsourcing companies?
3. How can HR outsourcing improve the company prosperity?
24
24

34
38
Chapter III: European organizations and HR outsourcing companies (Case Study)
1. Accounting Ace and a Comparative Study of Italy and the UK (Case 1);
2. European Organization for Quality – an organization without outsourced HR? (Case
2)
3. How the HR outsourcing can improve the organization [prosperity? (Strategy) 44
45

55
59
Conclusion 63
Bibliography 65

3
INTRODUCTION

In recent years, outsourcing has increased in both scale and scope. This has several related
causes. First , the advent of new transportation systems, such as the growth of maritime, rail, and road
logistics and the advent of new information and communications technologies have facilitated
ordering, monitoring, and delivery of products and services. Second , as markets have extended and
become more competitive, firms increasingly seek to save costs through focusing on their core value –
maximizing activities, handing other activities over to suppliers. Third , the relaxation of trade barriers,
emergence of new marke ts, and expansion of a more highly skilled labor force in Asia have increased
the ease and cost savings of outsourcing to these regions. Fourth , in the public sector, organizations
have been prompted by politicians to look to outsourcing as a way of cuttin g costs and introducing
greater flexibilities. Fifth , management fashion has played an important role in popularizing
production and service models, as firms watch and imitate their competitors .1
The Human Resources outsourcing is not a new concept or an ideal, no, sharing human
resources is as old as time. But what does outsourcing mean? How does it adapt to the present? And
how can we transform and improve the HRO? By definition, outsourcing means “the contracting or
subcontracting of noncore activities to free up cash, personnel, time, and facilities for activities in
which a company holds competitive advantage. Companies having strengths in other areas may
contract out data processing, legal, manufacturing, marketing, payroll accounting, or other aspect s of
their businesses to concentrate on what they do best and thus reduce average unit cost. Outsourcing is
often an integral part of downsizing or reengineering. Also called contracting out. ”2 Or, as technopedia
affirms, “o utsourcing is a business practic e in which certain functions required by the business are
performed by outside parties on a contract basis rather than the business’s employees. Outsourcing is
often perceived as referring to contract work being done overseas, but it refers to all contract work.
Many companies outsource important functions, including IT work, as a way to control costs. ”3

1 Virginia Doellgast and Howard Gospel, Outsourcing and Human Resource Management , Link:
https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi? article=2234&context=articles (seen on June 26, 2018).
2 Outsourcing, Link: http://www.businessdictionary.com/definition/outsourcing.html (seen on June 26, 2018).
3 Outsourcing , Link: https://www.techopedia.com/definition/8728/outsourcing (seen on June 26, 2018).

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The reason I chose this subject to study is its vast application and its actuality in today’s work
industry. The first chapter of this Paper is about the understanding of using the HR outsourcing by
certain organizations . From the earliest times training in craft skills was organized to maintain an
adequate supply of craft work ers. Craft guilds supervised quality and methods of production and
regulated conditions of employment for each occupation. The craft guilds were control led by the
master crafts worker and the recruit entered after a period of training as an apprentice. The craft system
was best suited to domestic industry, which the master operated on his own premises, with his
assistants residing and working in the same house. The Human Resources Outsourcing is a process in
which the human resource activities of an organization are outsourced. Meaning that by outsourcing
the HR to an organization i t will enhance their effectiveness by focusing on what that organization is
best at; i t will also improve the flexibility of the organization to the ra pidly changing business needs.
The second chapter of the current paper goes deeper and explain the more complex nuances of
HRO in collaboration with any organizations – its client. The main challenges that European
organizations face when they collaborate with HR outsourcing companies are data security, language
and culture. Followed by: post-contract proces ses and decision rights misunderstood – clients and
service providers are not operationally prepared to work t ogether after contract signing; this problem
occurs if new processes and decision rights have not been well -designed or socialized. Little or no
support f rom client leaders receiving s ervices – this can result in active or passive resistance to the
entire outsourcin g model; create the desire for special treatment or opt -out from the outsourcing
services, and results in business case deterioration. Poor mutual u nderstandi ng of the c ontract. After
signing the initial contract, both the client and service provider have multiple team members who are
trying to manage the initial implementation ac tivities and ongoing operations without working in
harmony . Client retained team not in place or too s mall. Clients tend to put off maki ng decisions
about the retained team for different reasons and the client retained team l acks the required s kills –
most clients only consider existing staff within their organization and usually want to keep people
with the best technical and/or business process experience etc.
The final chapter studies the HRO in some of the European companies and organizations. For
this case I studied Accace – outsourcing and advisory i n Europe; European Organization for Quality
– which is an autonomous, non -profit making association – and a comparative study of Italy and the
UK. Can we affirm with a certain of surety that any modern organization use the Human Resources

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Outsourcing? If s o, how do the use this tool in business? And is this a well -known and accepted truth
in the European business? The European Organization for Quality is a different kind of organization
that uses volunteered – can we call them HR outsourced? – personal and its purpose is not to make
money, but to try and “give” equality to all Europeans.
Finally, I mention that I took the information needed for this paper’s case study from the
official websites of the respective organizations and that I tried to show a clea r image of the European
outsourcing human resource market.

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IMPACTS OF HR OUTSOURCING IN THE EUROPEAN ORGANIZATION S

Chapter I: Understanding the use of HR outsourcing by organizations
It’s easy to observe how much the business environment around us changed through times and
it can be seen more clearly in the recent years. In every instance organizations have tried to identify
more truly the focus on factors that impact positively on their success. One factor that seems to be
receiving more attention than any other are the people who work for those organizations; the
businesses observed that their sustained success is most dependent on learning to get the maximum
out of their employees. Such a realization has had a significant impact on the practice of human
resources management (HRM). Thus, individuals entering the business environment today require
both an understanding of the importance of human resources and an effective HRM for organizational
success. Organizations have started to realiz e that their success is dependent on their ability to attract,
develop, and retain talented employees. The long -term, sustained success of an organization in today’s
changing and challenging business environment involves top management’s commitment to desi gning
and implementing HRM programs geared to developing both high -performing employees and
organizations. Only by anticipating and working toward the development and retention of the right
type of employees can any organization expect to be successful in a global, dynamic and continuously
changing competitive environment.4 HRM needs to be closely integrated with managerial planning
and decision making and it has to be aware that the time to consider organizational HRM strengths or
limitations is when strat egic organizational decisions are being formulated, not after critical policies
have been decided.5
What does Human Resources means and what is their role in organizations? Are the HR a
means to an end, or are they an important resource in the wellbeing of an organization? As affirmed
by Johnson, HR in contemporary organizations, is usually prescriptively conceived as an interrelated
set of activities aimed at systematically enhancing the task performance of employees in a manner
commensurate with the strat egic aims of senior management6. In other words, the role of HR in

4 Sims, Robert R., Organizational Success through Effective Human Resources Management , Quorum Books, London,
2002, pp. 1 -2.
5 Ibid, p. 4.
6 Johnason, Phil. HRM in changing organizational contexts . In D. G. Collings & G. Wood (Eds.), Human resource
management: A critical approach , London, Routledge, 2009, p. 19.

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organizations is to maximize employee performance in service of their employer’s strategic
objectives; how people are managed within organizations, focusing on policies and systems, includi ng
employee recruitment, training and development, performance appraisal, and rewarding. HR is also
concerned with industrial relations, meaning, the balancing of organizational practices with
regulations arising from collective bargaining and governmental laws.7
1. History of outsourcing the Human Resources
Before going on the path of discovering the starting point of HR outsourcing, we should
understand the beginnings of HR. How did people from the Antiquity managed its employees (also
known as slaves, in t hose times)? And how did the French organize d its troupes in the Napoleons
Wars, or how w ere the human masses – the workers – seen in the Middle Ages? By answering this
kind of questions we can understand a part of HRs’ roles. For us to truly understand th e need and
importance of HR, we have to go back to its beginnings and to try and find a pattern in their
management of HR and in our management of HR. The history of the world is, after all, our history
and this is something that reflects on us as a society and as a part of the same race.
Historical facts. During pre -historic times, there existed consistent methods for selection of
tribal leaders; they had to meet certain expectations – it could’ve been strength, health and cleverness.
The practice of safety and health while hunting was passed on from generation to generation. From
2000 BC to 1500 BC, the Chinese used employee scree ning technique, while Greeks used an
apprentice system; these actions recognized the need to select and train individuals for jobs. Early
employee specialists were called personnel managers or personnel administrators . Personnel
management refers to a set of functions or activities often performed effectively but with little
relationship between the various activities or with overall organizational objectives. More advanced
technologies and equipment improved the production systems and enabled products to b e
manufactured more cheaply than before. This process also created many jobs that were monotonous,
unhealthy or even hazardous, and led to divisions between management and the working class . The
concentration of workers in factories served to focus public attention upon conditions of employment,
and forced workers to act collectively to achieve better conditions. In 1900s the potential conflicts

7 Tubey, Ruth; Rotich, Kipkemboi -Jacob and Kurgat, Alice. History, Evolution and Development of Human Resource
Management: A Contemporary Perspective , European Journal of Business and Management, Vol.7, No.9, 2015, p. 139.

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between employee and employer about the interests in modern industry, became more evident and
more profound.8
From the earliest times in Egypt and Babylon, training in craft skills was organized to maintain
an adequate supply of craft workers; b y the thirteenth century craft training had become popular in
Western Europe too. Craft guilds supervised quality and method s of production and regulated
conditions of employment for each occupation. The craft guilds were control led by the master crafts
worker and the recruit entered after a period of training as an apprentice. The craft system was best
suited to domestic indus try, which the master operated on his own premises, with his assistants
residing and working in the same house. The field of HRM further developed with the arrival of the
Industrial Revolution , in the latter part of the eighteenth century, which laid the b asis for a new and
complex industrial society; this began with the substitution of steam power and machinery for time –
consuming hand labor. Working conditions, social patterns, and the division of labor were
significantly altered; farther on, the need for a new kind of employee – a boss, who wasn’t necessarily
the owner – was felt. With these changes also came a widening gap between workers and owners. As
early as the 1890s, in some companies, a few specialized personnel activities were grouped into larger
departments. In response to the growth of trade at the turn of the century, a few organizations created
the position of welfare secretary , which were supposed to assist workers by suggesting improvements
in working conditions, housing, medical care, educat ional facilities, and recreation; they acted as a
buffer between the organization and its employees.9
As businesses grew increasingly large, they began to create specialized units to cope with more
than just their hiring needs; between the 1930s and 1940s these units began to be called personnel
departments . They were usually set up as special, self -contained departments charged with the
responsibility of hiring new workers and administering basic human resources activities like pay and
benefits. The recog nition that human resources needed to be managed and the creation of personnel
departments also gave rise to a new type of management function – personnel management . During
World War II, both the military and its major suppliers developed an interest in m atching people with
jobs, namely, organizations wanted to optimize the fit between the demands and requirements of the
jobs that needed to be performed and the skills and interests of people available to perform them.

8 Ibid, p. 140.
9 Sims, quoted, pp. 9 -10.

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Psychologists were consulted to help d evelop selection tests, for example, to assess individual skills,
interests, and their abilities. During the 1950s the wartime lessons were adapted for use in private
industry. With the growing of this field, managers began to focus more and more attention on
understanding the human character of their employees; it was during this era that Abraham Maslow
popularized his hierarchy of human needs .10
Human Resources. It is a fact well known that before, long before our time, if someone
wanted a job, he had only to ask at an employer for that job, and, if he could do it, it was enough. In
those times you didn’t need mountains of papers to prove your worth – not the green kind, nor the
black -on-white variety paper. As time went by and the business men realized tha t they could make
more money with less people costs and less jobs, but with more quality employees, the applying for a
job became something that people had to seek out with all their qualifications, in the hope that one
application would be successful. The next step in this process was the possibility to choose from a
wide range of potential employees the best one of them; for this they needed someone to work out
who was best for this and that position. This led to other people being involved in the hiring of staf f
for their organization; this also leading to the formation of communication routes within businesses
and to the need for a staffing officer . As the process of hiring and being hired, transformed and became
more diverse and complex, the legislation around workplace entitlements also expanded and
requirements to keep records and employee details came in for consideration. Businesses had also
realized that they needed to educate people in the way they were expected to work, and in line with
reorganiza tions and relocations of staff, these people needed appropriate training and so training
departments evolved or training resources were identified externally. It was around the middle of the
1980’s that Human Resources began to establish itself; the strate gic direction of the business needed
to consider and reflect the people as the largest asset of any business. This is how the Human
Resources Management and HR directors came into being, providing executive level interaction or
even higher and the establis hment of Human Resources was fully accepted by the 1990’s and taken
forward since to include all aspects of a business that applies to the people within that business. In the
latter part of the 1990’s and into the early 2000’s there has been a further evol ution to take the HR
role back to the business managers. HR Business Partners and internal HR consultants are now the

10 Ibid, p. 11.

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more prevalent model, with the HR administrative actions being undertaken at the front line of the
business.11
It has long been noted that bureaucratic forms of organization arose on a large scale in Western
Europe and the USA during the late nineteenth and early twentieth centuries, and replaced earlier
forms of work organization. One of the most distinctive features of these bureaucratic ad ministrative
systems was a framework of intentionally established and impersonal rules to govern task
performance. These rules are designed by hierarchical superiors who occupy their posts on merit
because they have more knowledge, experience and expertise than their subordinates. The creation of
a body of rules and procedures, backed up by various means of monitoring, evaluating, rewarding and
sanctioning members’ compliance, serves to pre -programs members’ task performance, remove from
operatives any choi ce or discretion with regard to how to do their work, and increase the probability
that perceived organizational requirements dominate that behavior. It is this dependency upon
hierarchically imposed rules, grounded in rational -legal authority as an episte mologically legitimate
means of command and control that defines bureaucracy as an ideal type of organizational form.12
HR Outsourcing. With the stabilizations of the rules in HR department, the landscape of HR
needed more exact classifications; thus we see three approaches to accomplishing the administrative
work of HR more effectively. First, there are organizations using service centers – this service centers
emerged in the 1990s as a way to get administrative tasks done more efficiently in a centralized
standardized way. For example: call centers are used to answer employee questions in a standardized
way; service centers usually do routine and standard transactions better, faster, and cheaper. Secondly,
is doing the HR administrative work through self-service IT –based systems ; technology allows a big
part of administrative HR work to be done by employees themselves: self -reliance, self -sufficiency,
and employee self -service are becoming increasingly popular – for example: changing benefits or
applying for jobs. Thirdly, the HR transactional and administrative work is outsourced . Outsourcing
is not new.13 As can be seen in the next Table 114, some HR services, such as employee assistance and
benefits, are already outsourced by a significant number of firms. T he HR has been growing on a

11 A brief history of Human Resources , Link: http://www.richardbatchelor.com/Resources/BriefHistoryHR.htm (seen on
June 11, 2018).
12 Johnason, quoted , p. 21.
13 Edward E. Lawler III, Dave Ulrich, Jac Fitz -enz and James C. Madden V . Human Resources Business Process
Outsourcing. Transforming how HR gets its work done . Jossey -Bass Print, 2004, p. 35.
14 Ibid, p. 36. This Table shows the outsourcing of HR between 1995 and 2001.

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process -by-process basis for years; the bellow Table 1 shows a number of significant increases from
1995 through 2001. The result is that HR executives are increasingly being put in the role of vendor
manager.15

Human Resources Outsourcing (HRO) – is a process in which the human resource activities
of an organization are outsourced; by outsourcing the HR to an organization it will enhance their
effectiveness by focusing on what that organization is best at. It wil l also improve the flexibility of
the organization to the rapidly changing business needs; usually the companies that outsource HR are
typically small to midsize firms (with number of employees from 25 to 1500). With time, the HRO
became more complex and p ersonalized as to meet an organization`s HR requirements; some HR
outsourcing firms are generalists, offering a wide variety of services, while others are specialists,

15 Ibid, p. 37.
Table 1

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focusing on specific areas. Some of the services provided by HR outsourcing firms are: recruiting,
training, and development ; overseeing organizational structure and staffing requirements; tracking
department objectives , goals, and strategies or employee orientation programs .16
Advantages. The main positive point of HRO is that through them the cost of managing
employees is visible reduced and they are workers of a better quality, meaning that the outsourced HR
is more prepared to the work they are outsourced to do. Small businesses save mo ney and time by
hiring HR firms;17 also they can offer a wider range of these benefits:
 Health insurance options (these include as Health Maintenance Organizations, Preferred
Provider Organization and Health Savings Accounts);
 Dental, vision, and health ins urance plans;
 Retirement plans and credit unions;
 Voluntary benefits, such as cancer, travel, and long -term disability plans;
A study from 2012 (see Annex 1 ), found that businesses that outsourced grew 7-9 percent faster than
firms that didn't. They also h ad 10 -14 percent lower employee turnover and were 50 percent less likely
to go out of business. Their administrative costs were $450 lower per employee. Another study
showed that companies saved from 24 -32 percent the cost of hiring the HR staff in -house. Shell Oil18
cut their HR budget by 40 percent in four years; companies that expand overseas look for HR firms
with global expertise.19 Outsourcing personal is an effective way to ensure the employees
confidentiality. Research demonstrates that many employees are more comfortable talking with an
outside agent than with a colleague. Also, employees often appreciate having the freedom to contact
the outside agency whenever they want to ask benefits -related questions.20
Disadvantages. The most significant drawback in outsourcing companies is poor internal
communication; the outsourcing company doesn't have a good sense of it’s’ culture. When employees
feel like they are an essential part of the whole, they are more likely to share knowledge. Organizations

16 HR outsourcing, Link: https://www.mbaskool.com/business -concepts/human -resources -hr-terms/7268 -hr-
outsourcing.html (seen on June 11, 2018).
17 Human Resources Outsourcing: Effect on economy . Link: https://www.thebalance.com/human -resources -outsourcing –
effect -on-economy -3306 256 (seen on June 11, 2018).
18 Link: https://www.inc.com/fiscal -times/human -resources -big-savings -for-small -business.html (seen on June 11, 2018).
19 Human Resources Outsourcing: Effect on economy, quoted.
20 Linda K. Stroh and Deborah Treehuboff , Outso urcing HR Functions: When – and When Not – to Go Outside . In
Journal of Leadership and Organizational Studies, Volume 10, No. 1, 2003, p. 25.

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must adap t quickly to changes in today's tech nology -oriented business world, for e mployees may start
to mistrust management and other departments may wonder if they, too, will be outsourced. A poorly –
run outsourcing company could create disasters: it could accident ally leak sensitive company
information, or it may not deliver adequate services and, in the worst case, it could go bankrupt and
leave the client without any HR services. Also, an unethical firm could betray sensitive information
about their clients and t heir personnel. Withal, if an outsourcing firm became too powerful, it could
hold the client hostage by demanding a much higher fee then previously agreed, or, if the company is
sold, the new owners might demand a higher return to cover their acquisition c osts.21
Outsourcing. Organizations have contracted for years with external suppliers to provide an
array of services. However, a number of studies indicate that outsourcing is growing in both the
number of companies outsourcing and the number of functions outsourced. Attracting, retaining and
developing workforce, and keeping abreast of the latest technology can prove difficult and costly for
many organizations. Almost all businesses can benefit from some kind of outsourcing, but, the
challenge is to decide which HR function to outsource and which to retain. Outsourcing has emerged
as a new economic strategy for HR. Further the changing business scenario with many mergers,
acquisitions, layoffs have made the road clear for HR outsourcing.22

2. The relations bet ween organizations and HR outsourcing companies
Before 1980s, a spiring HR director only needed to have an industrial relations posting on their
CV, however, after 1980s they had to present their business credentials and skills in management
development and organizational change. That’s how the need for a human resource management in
the late 1980s came about, and it coincided with this cha nge of role and work content. HRM appeared
to offer a distinctive philosophy of people management. It placed a general emphasis on maximizing
the contribution of people resources to the success of the organiz ation and on strategic integration of
people management initiatives to deliver organizational benefits – all should work towards a common
business purpose, emphasizing the legitimacy of management’s right to be the author of change for
the good of the orga nization. Following this, an emphasis on developing managerial skills and

21 Human Res ources Outsourcing: Effect on economy, quoted.
22 Uttamkumar M. Kinange, Murugaiah V., Human Resource Outsourcing: A New Mantra for Business Sustenance ,
Procedia – Social and Behavioral Sciences, Elsevier Ltd. Publisher, 2011, p. 227 -228.

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competencies, especially communication skills, was more and more needed. At this critical stage in
HRM evolution, their issues centered on organizational structures and people.23 Mean ing that,
organizations needed more and more professional workers, more quality, rather than quantity; this is
where HRM role was the most urgent and visible .
Changes in HRM. In a study, from 2001, Lawler and Mohrman used the survey as metho d of
observation, to analyze if there were any changes taking place in the HR department of major
organizations. The survey was mailed to 966 HR managers who were in director or above positions,
with corporate wide visibility of the HR function. This study used a three -step data collection
procedure: first, the survey was mailed; second, four weeks after the initial mailing, the firms that had
not returned completed surveys, where mailed a reminder letters to them; and third , sixty days later,
to the firms that had not yet responded, was sent a second questionnaire to. For the study from 2001
was a response rate of 15.5 percent, meaning, a 150 usable questionnaires.24 The next Table 2 reveals
the percentage of time spent by HR personal on various roles in the management department; it shows
the difference of time spent on HR roles between 2001 and 5 to 7 years earlier (1994 -1996).

As it can easely be seen from the Table above, maintai ning records and doing internal operations point
out to a significant decrease in the time spent in doing „ground” work; at the opposite pole, the time
spent on developing HR systems and practices and on strategic planning, shows a significant increase.

23 Peter Reilly & Tony Williams, Strategic HR. Building the Capability to Deliver , Gower Publishing Limited, 2006, p. 5.
24 Edward S. Lawler III and Susan Albers Mohrman, Creating a Strategic Human Resources Organization: An Assessment
of Trends and New Direc tions , Stanford University Press, California, 2003, p. 12.
Table 2

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Likewise, in the next Table 3, business strategies focusing on quality and speed are negatively related
to providing services and positively related to strategic business partnering. This result is not
surprising because achieving quality and speed requires supportive HR systems and strategies and a
focus on nontraditional HR issues such as work and organization design. The results concerning the
relationship between the change initiatives and the HR role show three significant relationships; the
more an orga nization tries to build competency and knowledge management capabilities, the more
focus the HR organization has on business partnering. Spending time on providing services shows a
negative relationship to employee competency and knowledge management, indi cating that when
knowledge management is the focus, HR spends less time on services and more time on business
partnering. Hence, it also follows that the HR organization would be more involved in business
partnering when an organization is particularly foc used on building its knowledge and intellectual
capital.25

Organizational performance initiatives are related to outsourcing overall, as well as to the outsourcing
of Human Resource Information System (HRIS) and organizational design; when organizations focus
on performance, they seek outside help in organizationa l design and find that outsourcing is a way to

25 Ibid, p. 23.
Table 3

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improve their performance. Outsourcing is growing slowly and is likely to continue to grow. It fits
with organizations being in a growth mode and with the desire of many HR organizations to get out
of transact ion and service activities so that they can become more of a strategic business partner.
Outsourcing also allows organizations to gain access to knowledge and expertise that they do not have
and are not in a good position to develop. A potential obstacle t o the growth of outsourcing is the
number of problems associated with it, including the apparent difficulty of getting sustained cost and
quality advantages.26
Changes in organizations. Organizational change occurs when a company makes a transition
from its current state to some desired future state. Managing organizational change is the process of
planning and implementing change in organizations in such a way as to minimize employee resistance
and cost to the organization while simultaneously maximizing th e effectiveness of the change effort.
Today's business environment requires companies to undergo changes almost constantly if they are to
remain competitive. Factors such as globalization of markets and rapidly evolving technology force
businesses to respo nd in order to survive. Such changes may be relatively minor —as in the case of
installing a new software program —or quite major —as in the case of refocusing an overall marketing
strategy, fighting off a hostile takeover, or transforming a company in the fa ce of persistent foreign
competition.27 In organizations there are multiple types of change taking place in a moment or another;
this ten such changes taking place in an organization:
Mission & Strategy. All changes in an organization are aligned to the org anization's mission
and strategy; when mission & strategy change the impact may reverberate throughout the
organization.
Organizational Structure. Organizational structure refers to the objectives, roles and
responsibilities of departments, teams and individuals. Major changes such as mergers &
acquisitions are considered structural changes, however, structural changes may also be
relatively minor.
People . People changes may seem minor but taken as a whole they represent a critical focus
for change in management (for example, training is critical to the acceptance of change).

26 Ibid, p. 54.
27 Organizational Growth , Link: https://www.inc.com/encyclopedia/managing -organizational -change.html (seen on June
12, 2018).

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Culture. Culture is important to strategic objectives such as productivity, innovation and
compliance (for example: changes made to the principles, expectations, norms, working hab its
and symbols of an organization).
Knowledge . Knowledge supports every program, project, initiative, process and product.
Organizations increasingly identify knowledge as an important asset and target for change.
Policies & Legal Agreements. A change a s minor as a new rule or policy can have a big impact
on an organization. New rules aren't always popular with employees and customers –
implementation and acceptance can be a change management challenge.
Processes . Many organizations have implemented con tinuous improvement programs that
change processes on a regular basis – processes also needs to change to support new
strategies or to leverage new technologies.
Technology. Changes to technology infrastructure, systems, automations and tools. Some
firms focus on technology change, letting it drive other change within the organization.
Products, Marketing & Customer Relationships . Changes to products, marketing and sales
are also a critical focus for many organizations (for example, new product development is
often key to strategy execution).
Integration. People need to work with processes and rules apply to processes. Most changes
require integration and this is aligning things so that they support, compliment and add value
to each other. It's often the m ost complex type of change.28
Following this major changes in both outsourcing companies and organizations, is natural that the two
would intersect at one time or another. But as I said inthe tecxt above, the relation between
organizations and the concept of outsourcing is not new or only from recent years. No. Their relation
is a simple tranzaction of give -and-take based on an exchange of money, of course. The HR outsource
company is the one that gives a quallified personell to the organizations needing on e (or more qualified
peoples) and in exchange, organizations pay them a sum of money. It’s not necesarly that outsourced
people (or more exactly, their skills) have to move at the organizations’ base, they can be contracted

28 10 types in organizational change , Link: https://management. simplicable.com/management/new/10 -types -of-
organizational -change (seen on June 12, 2018).

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to do some jobs from the outsour cing company. In short, HRO companies meet a need that some of
the organizations have.

3. The impact made by HR outsourcing in organizations
In early 20th century, when researchers began to document ways of creating business value
through the strategic management of the workforce, the Human Resource Management department
took its first steps. Initially, the HRM was dominated by transactional work, such as payroll and
benefits administration; now, a century later, HRM is filled with company consolida tion,
technological advancement and further re search; its focus is on strategic initiatives like mergers and
acquisitions, talent management, succession planning, industrial and labor relations, ethical
considerations, diversity and inclusion.29 Outsourcing help s firms to stay focused on their objectives;
once a process is successfully outsourced, the management gets more effective time to explore new
revenue streams, time to accelerate other projects and time to focus on customers. Traditionally
executives spend 80 percent of their time managing details, and only 20 percent on planning and
customer relations. Outsourcing can also help companies to have access to new technologies that
might not be used in their company; this also might increase the chances of rapi d migration of these
companies to new technology.30
Impact of outsourcing. The motivations for outsourcing are evolving from a primary focus
on cost reduction to an emerging emphasis on improving business performance; thus the prime
financial driver is bein g supplemented in addressing such elements as ‘integrating’, ‘supplier
operations’ and ‘customer problems’. For some, outsourcing will be regarded as just something else
to be managed, arguing that it is little different from any other project or supplier relationship,
however, adoption of outsourcing is entirely another problem for the manager, who has to respond
with appropriate changes in his internal structure. People will be responsible for delivering a greater

29 Tubey, Rotich, and Kurgat, quoted , p. 139.
30 Economic and social impact of outsourcing and off -shoring work , Link:
https://www.ukessays.com/essays/economics/economic -and-social -impact -of-outsourcing -and-off-shoring -work –
economics -essay.php (seen on June 12, 2018).

19
proportion of the overall solution than e ver before, and thus we can argue that the shape of the
organization that supports its HR is critical.31
International fragmentation of production is given different terms in the literature, such as:
outsourcing , vertical specialization , production sharin g, intra -product specialization , and slice up the
value chain and intra – mediate trade . All these terms describe the process of breaking up the vertically
integrated production process into finer stages and relocating each stage to the most suitable locati on
across borders.32 Studies support the hypothesis that increased outsourcing has had a positive impact
on the non – production share of total wage bills, alongside technological change indicators. This
calculations suggest foreign outsourcing contributed 1 5 – 24 per cent of the total change to the non –
production wage shares associated with a shift in total demand for labor towards more skilled workers
over the period 1979 – 1990. The results suggest that increased fragmentation trade has a sizable
impact o n shifting labor demand towards more skilled workers, although the estimated magnitude of
the impact varies across countries.33 As it can be seen from the next Table 4, the impact of
fragmentation trade between diverse states has a certainly positive outcom e. Only in USA the
imported intermediate inputs from the Annual Survey of Manufactures Fragmentation accounts for
15 – 24% change for skilled workers’ wage share.

31 Gouge, Ian, Shaping the IT Organization – The Impact of Outsourcing and the New Business Model , Springer, London,
2003, pp. 28 -29.
32 Nobuaki Yamashita, International Fragmentation of Production. The Impact of Outsourcing on the Japanese Economy,
Edward Elgar Publisher, 2010, p. 6.
33 Ibid, p. 88.

20

Table 4

21
In France, as seen in Table 4, the imported intermediate input from the trade fragmentation explains
change over 25% in decline in the less – skilled workers’ employment share for the period 1985 – 1993.
The UK is also a participant in the business of outsourcing multiple skills and trading goods; here, the
import penetration ratio i n manufacturing Low – wage imports, accounts for 40% of decline in
unskilled worker wage share and 33% of decline in employment share in textiles. Moreover, in Italy
too, the off shore Assembly Program data Fragmentation increases relative employment of ski lled
workers.34
Testimonies. It is natural for the craftsman to become an expert in a key area and for the
general populace to rely on their expertise. Bakers, cabinetmakers, hunters, dairy producers, cheese
makers, wine makers, teachers, doctors, lawyers, etc., to name just a few. Similarly, in business it also
becomes as natural to outsource the various components of product and service delivery. However,
offshoring means to outsource to foreign lands; offshoring is a subset of outsourcing and so, many
corporations are integrating Offshoring into their outsourcing strategies.35 The following stories are
real testimonies of people who had to work in management of HR and they had to decide if outsourcing
their goods would be a positive factor in the wellbeing of their firms or for the organization they
worked for.
Bahar Gidwani CFA, Chief Executive Officer, Index Stock Imagery, Inc. “Outsourcing our
bulk image -scanning to Malaysia and India has saved us hundreds of thousands of dollars. More
importantly, it gav e us two strategic benefits:
1. Our in -house staff now spends its time responding to specialized customer needs and
improving the quality of our image collection. By removing the routine burden of large
quantity scanning, we have been able to get full val ue from a group of hard -to-hire and highly
skilled employees.
2. When we have a sudden surge of new images to scan, we can do it quickly and efficiently.
Our “scale” advantage over our competitors has increased many times, through the leverage
of our outs ource vendors.

34 Ibid, p. 90.
35 Levy, Mitchell, Happy About™ Outsourcing. Over 25 Positive Impact Stories from Executives Who have Offshored and
Outsourced , Silicon Valley Executive Business Program, 2005, pp. 7 -8.

22
Outsourcing has improved the quality of life for our employees and increased our profitability and
competitive advantage. Any rules that inhibited it would damage our business and reduce our ability
to provide high -quality and satisfying jo bs.”36
Marcia Robinson, President, E -Business Strategies. “Outsourcing as a critical element of
corporate strategy is still in its early adopter stage. Many companies are talking about it, but few are
seriously incorporating outsourcing as an integrated part of their overall strategy. Internet -based
tools and technologies are the catalysts for the creation of the second generation of business process
outsourcing management models. We are beginning to see more collaboration and integration
between outsourc ers and their external partners. An outsourcing project can be daunting when you
are knee -deep in the transition period; however, once you complete it, you will see that it was all very
much worth the effort. You can outsource a task or a process without c eding control of it. In the first
generation of outsourcing, you delegated the task to the outsourcer and waited for the provider to tell
you how it was going. Today, customers can monitor and control the outsourced processes in real
time and adjust accord ingly.”37
Brad Peppard, Partner, MarketingBank. “Outsourcing increases productivity, which in turn
raises both profitability and employment. At the end of the day, it is all about how much of a return a
company can get on every dollar of investment. Some of those returns become profits, some are
reinvested in the business, and some become new jobs. One software client, globally prominent in its
niche, could not afford to hire the new team of engineers required to develop a new product. (Nor
could they afford to expand the testing department, which would also have been required.) By
outsourcing the project to India, sales were expanded, leading to additional hiring here in California,
as well as higher profits.”38
Jing Liu, CEO, EnterSuite. “EnterSuite is as e -business solution provider. On a particular
customer project, the amount of customization would have cost over USD $200k and taken 6 -8 month
to design, develop, test and rollout. We were able to work together with the customer to allow the
majority of the development work to be done offshore while the project is centrally managed here. At
the end, the project was finished in 4 months, the cost was cut in half, while delivering more feature

36 Ibid, p. 9.
37 Ibid, p. 11.
38 Ibid, p. 20.

23
and functions than we had originally anticipated. We have an offshor e development center where we
outsource most of our software projects and non -customer facing activities. We see that on average
we are able to deliver projects at a much faster rate and save at least 30% cost to our clients.
Outsourcing has brought justif iable ROI to our customers and enabled our company to respond
quickly to increasing market demand.”39
As seen in the testimonies above, the outcome of outsourcing in organizations is mostly
positive and has a great impact in their productivity. Following t his, outsourcing in firms saves time
and money, it improves their image quality, and it also provide an advantage over their competitors.
Withal, by offshoring the bulk of work in an organizations, the lives of its employees improves, thus
the firm increas es its productivity. Likewise, outsourcing a task does not mean you have to cede
control over it, you still can follow its progress easily. When the quality of an organization increases,
the demand for its products grows as well, and so the need for new em ployers will rise too. Through
outsourcing most of the work which is delegated to HR outsourcing companies, the base is free to
work on developing its designed products. Finall y, through a healthy relation between an HR
outsourcing company and an organizat ion, the organization can deliver faster and cheaper more results
and features.

39 Ibid, p. 22.

24
Chapter II: The main challenges that European organizations face when they collaborate with
HR outsourcing companies
4. The leading HR outsourcing companies in Europe
Europe accounts for about a third of the global human resource services outsourcing market –
this makes it the world’s main market for this sector. Cost reduction continues to be its main driver in
this industry, however, outsourcing also gives European co mpanies access to specialized knowledge
and the latest technological developments. Human resources are the people who make up the
workforce of an organization, the personnel. Their services consist of the administrative services for
managing and administer ing human resource processes across all areas.40 Below we will show the
first five leading HRO companies based in Europe, we’ll describe their origins, place and their
philosophy in HRO market. The ranking – numbered from 1 to 5 , where rank 1 received the most
votes – is made by vault.com . Vault provides intelligence on what it’s really like to work within an
industry, company, or profession and how to launch and build the career anybody want s.41
a. Korn Ferry Hay Group Europe . Is a consulting firm that specializes in all things related to
the workfo rce and organizational design; f rom compensation data and rewards strategy to
strategic workforce planning, employee engagement and work design consulting, the company
is a global powerhou se in its field. The firm's history dates back to 1943, with the founding of
Edward N. Hay & Associates, Management Consultants -the forerunner to the Hay Group. In
1969, Korn Ferry was founded as an executive search and recruitment firm, with the two firms
joining forces in 2015 following Korn Ferry's $452 million buyout of the Hay Group. That
move created, at a stroke, one of the world's largest HR consulting organizations.42
Korn Ferry Hay Group Europe it’s based in London, United Kingdom. This group it’s a
private organization with 7,000 employees in 2017. The Major Departments and Practices of Korn
Ferry are: Strategy Execution and Organization Design, Talent Strategy and Work Design, Rewards
and Benefits, Assessment and Succession Executive Search and Re cruitment Leadership

40 Human resource services in Europe , Link: https://www.cbi.eu/market -information/outsourcing/hr -services/europe/
(seen on June 20, 2018).
41 About Vault, Link: http://www.vault.com/about -us/company -overview (seen on June 20, 2018).
42 About Korn Ferry Hay Group Europe , Link: http://www.vault.com/company -profiles/management -strategy/hay -group –
europe/company -overview.aspx (seen on June 20, 2018).

25
Development. It also has an approximations of more than 80 offices globally.43 At Korn Ferry,
corporate responsibility is central to their vision to improve the way the world works and lives, and it
reflects their core values; all their actions to execute the organizations strategy and deliver their vision,
comes to life through the people. The people represent a wide variety of cultures, ethnicities, religious
beliefs, and languages. This rich diversity makes the company stronger, smart er and more innovative,
which is helpful to better serve the clients and communities around the Globe. Korn Ferry is partner
to 93% of “Fortune 100” companies; 100,000 people developed in their leadership programs each
month and they have working for them more than 20 million professionals; m anagement data on 110
countries and more than 50 books published.44
Their values are inclusion , honesty , knowledge and performance ; thus the following
regulations:
 Embracing diverse perspectives and backgrounds;
 Putting clients, colleagues and our work ahead of ourselves;
 Teaming with others;
 Introducing our clients to all that Korn Ferry has to offer;
 Genuinely saying what we mean and expeditiously doing what we say;
 Modeling the behavior we wish to see in others;
 Oper ating with the highest levels of integrity, ethics, and respect;
 Always making it safe for others to speak, act, and flourish;
 Applying what we learn to be recognized as experts by our clients;
 Being insatiably curious —lifetime learners;
 Striving to be bet ter today than yesterday;
 Purposely developing and mentoring others;
 Delivering superior results that best serve our clients, shareholders, and firm;
 Being market -relevant in all we do;
 Holding ourselves accountable to clients and colleagues;

43 About Korn Ferry Hay Group Europe , quoted.
44 Korn Ferry Cares 2017 – Corporate Responsibility Report , p. 6, Link:
https://dsqapj1lakrkc.cloudfront.net/media/sidebar_downloads/KF -Corporate -Responsibility -AR-2017 -Digital –
Spreads.pdf (seen on June 20, 2018).

26
 Being direct, positive and patient, but never settling for the status quo;45
Their employees. At Korn Ferry, talent truly matters and opportunities arise when people are
engaged, sitting in the right seats, developed, and rewarded. Ideas come to life. Business grows. An d
the leaders who will shape tomorrow emerge from the mass. The opportunity to learn tops the list of
motives for working in this organization. The employees are engaged in culture surveys, focus groups,
and ongoing dialogue to ensure Korn Ferry continues to be a premier career destination – a place
where the personnel is energized, developed, empowered, and able to pursue their passions.
Onboarding or mentoring is a very used method of teaching employees; the stronger their individual
capabilities are, the stronger is the firm as a whole. Korn Ferry have designed a U.S. onboarding
program to help new hires be successful as they embark on their new careers and focuses on the
organization values, purpose, and culture. Future -step Talent Academy , an enhanced learning,
development and global onboarding program, is designed to develop Search and RPO recruiters at all
levels of the Future -step organization and is the newest piece of the firm in -depth training initiative.
Future -step’s Early Career cohort program is designed for recent college graduates and individuals
newer to the workforce or recent hires new to the recruitment profession. Participants graduate from
the program and immediately begin supporting our client work around the world.46
Facts47 about some of the outside activities of Korn Ferry Hay Group Europe:

b. Mercer Limited Europe . Mercer is a global human resources consultancy that provides
consulting, outsourcing, and investment services. Mercer helps clients design and manage
their health , retirement and other benefits, and to get the most out of their employees; it also

45 Ibid, p. 7.
46 Ibid, p. 12.
47 Ibid, p. 13.

27
advises on issues related to administration, technology and benefits. The firm has more than
19,000 employees serving clients in over 180 cities and 40 countries and terr itories. Clients
include a majority of the companies in the Fortune 1000 and FTSE 100, as well as medium –
and small -market organizations. A wholly owned subsidiary of one of the United States'
largest insurance brokerage firms, Mercer consistently genera tes around 30 per cent of Marsh
& McLennan's total revenue.48
Through times . Since Mercer’s birth in 1937 as the employee benefits department of Marsh
& McLennan Companies, Inc., the consultancy has undergone several shifts in identity, although HR
concerns have remained at the core of its business. The first change occurred in 1959, when MMC
acquired a Canadian company named after its founder: William M. Mercer. In 1975, that firm became
a wholly owned subsidiary of MMC, keeping its name until 2002, when it became Mercer Human
Resource Consulting. That identity lasted a mere five years, however, as the firm's offerings expanded
ever further beyond the world of HR consulting. Accordingly, all but the first word was dropped in a
2007 rebranding, and the fi rm emerged plainly as Mercer. Mercer groups its consulting activities into
three main areas: retirement , health and benefits , and "other" – a group that is also referred to as the
"talent" field, and that includes service offerings such as human capital co nsulting, survey and product
work, and workforce communication and change. The company's extended offerings, meanwhile, also
include consulting and management on investments, as well as outsourcing and a dedicated M&A
business.49
Mercer's investment consulting business also serve fiduciaries of pension funds, foundations,
endowments and other investors on all stages of the institutional investment process, from designing
a strategy, to structuring and implementing investments, to o ngoing portfolio management.
Investment management consultants primarily focus on retirement plan assets for institutional
investors (including retirement plan sponsors and trustees) and for individual investors. Finally, the
firm's outsourcing unit helps clients streamline their benefits programs. Mercer offers total benefits
outsourcing, retirement outsourcing and standalone services for outsourcing -specific functions, such

48 About Mercer Limited Europe , Link: http://www.vault.com/company -profiles/management -strategy/mercer -limited –
europe/company -overview.aspx (seen on June 20, 2018).
49 Ibid.

28
as defined benefits administration, defined contribution administration, health be nefits administration
and flexible benefits programs.50
Offices. As it can be seen in the next image, Mercer’s offices are all over the world, from
North America to Asia, and from Europe to Australia and New Zeeland.

Only in Europe Mercer has offices in the next countries: 1 in Austria, Belgium, Finland, Poland and
Turkey; 2 offices in Denmark, France, Ireland, Italy and Norway; 3 offices in Portugal and Sweden,
Switzerland. Furthermore, Mercer has 4 offices in Netherlands, 5 offices in Spain, 9 in German y and
13 offices in United Kingdom. Thus Mercer has in total a number of 55 offices in Europe.51
c. McKinsey & Company Europe . This is a privately -owned management consulting firm.
Roundly considered to be the most p restigious company of its kind , despite a d ecades -long
commitment to confidentiality that causes the firm to shroud details of its work -and its client
list-in secrecy. In its practice areas, it addresses strategic, organizational, operational and
technological issues, always with a focus -according to the firm -of doing what is right for the
client's business, not what is best for McKinsey's bottom line. As for the range of those
specialties, the list of industrial sectors the firm serves encompasses everything from
commodities and natural resources t o the worlds of media, entertainment and high tech. While

50 Ibid.
51 Office locations , Link: https://www.uk.mercer.com/about -us/locations.html (seen on June 20, 2018).

29
it doesn't give up the names of its clients, the firm does claim to serve roughly 90 of the top –
100 corporations worldwide and more than 80 of the 100 largest U.S. -based companies. On
the public/soc ial sector side, meanwhile, McKinsey has completed almost 4,000 projects for
social -sector organizations (foundations and nonprofits), local, regional, national, and
international governments and public -sector bodies over the last five years.52
In addition to its regular consulting brief, the firm also regularly creates new initiatives that
both utilize the unique capabilities the firm has at its disposal, as well as serving to bolster McKinsey's
reputation for tackling the biggest problems around. One such example is the nonprofit
organization Generation, which focuses on making a contribution to reducing the high rate of youth
unemployment -some 75 million young people around the world are out of work and three times as
many are underemployed. Generation wo rks to help close the skills gap -identifying jobs and providing
cutting -edge training, job placements, and support. Generation began as a program of the McKinsey
Social Initiative, the firm's non -profit organization built to develop innovative approaches t o complex
social challenges.53
Origins . In 1926, James O. McKinsey, CPA and University of Chicago accounting professor,
founded the business to give local companies financial and accounting advice. Before long, he realized
that clients' financial data coul d be interpreted to help make better management decisions. Thanks to
this innovation, McKinsey is credited with the idea of using consultants, or “management engineers"
for the first time. And although the firm is his namesake, it was one of his protégés, Marvin Bower,
who is most remembered for shaping the direction of the firm. Most notably, Bower is known for
molding the McKinsey culture, mainly through a three -part code of conduct outlining certain ideals
consultants were to uphold -something that remain s in place today. Among these values are putting
client interests ahead of those of the firm, giving superior service and maintaining the highest ethical
standards. Consultants are also instructed to be absolutely truthful with the client, regardless of
whether the client disagrees. Perhaps the most infamous part of the code is to protect the privacy of
clients; to this day, McKinsey never publicizes its big -name clients, nor does it tout successful

52 McKinsey & Company Europe at a glance , Link: http://www.vault.com/company -profiles/management –
strategy/mckinsey -company -europe/company -overview.aspx (seen on June 20, 2018).
53 Ibid.

30
engagements. Despite this, the firm doesn't lack for publi city, since the secrecy surrounding its work
is itself often the focus of media attention.54
Success . Another of Bower's policies was to concentrate hiring efforts on recent MBAs from
top schools, as opposed to bringing on experienced managers from other o rganizations -an approach
that broke new ground when instituted in the 1930s and 40s. Over the next couple of decades, the firm
developed a reputation as being the MBA employer of choice. While that reputation still persists in
some quarters, it has failed to reflect the realities of the firm's composition for at least the past couple
of decades. Not because MBA students no longer want to work for the firm -they continue to apply in
droves every recruiting season -but because McKinsey seeks exceptional people, regardless of where
that talent may be, so the firm has hired more and more people with other advanced degrees. JDs,
MDs and PhDs are just as likely to be found wandering the McKinsey halls as B -school grads. As
McKinsey's client needs have evolved, it ha s also begun to hire more specialized and experienced
profiles such as people with change management expertise or digital design and development
experience. The firm's business analyst track is specifically structured to help undergraduates develop
busines s skills and knowledge before making their next career move. Common options that BAs
pursue after their initial two years with McKinsey include transferring to a McKinsey office in a
different country, choosing a career path within the firm that interests the individual, accepting firm
sponsorship to return to school, or simply continuing along the path to partnership, as grad school is
not a requirement for advancement at the firm.55

d. Willis Towers Watson Europe . WLTW is a leading global advisory, broking and solutions
company that helps clients around the world turn risk into a path for growth. With roots dating
to 1828, Willis Towers Watson has over 40,000 employees serving more than 140 countries.
They design and deliver solutions that manage risk, optimize benefits, cultivate talent, and

54 Ibid.
55 Ibid.

31
expand the power of capital to protect and strengthen institutions and individuals.56 It has
offices in most of Europe’s countries, as follow: Austria, Belgium, Bosnia & Herzeg ovina,
Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia,
Germany, Gibraltar, Greece, Greenland, Hungary, Ireland, Italy, Latvia, Liechtenstein,
Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romani a, Russia,
Serbia, Slovakia, Spain, Sweden, Switzerland, Turkey, Ukraine and United Kingdom.57
Timeline. In 1828 Henry Willis began his career as a merchant selling imported goods on
commission in the U.K. at the Baltic Exchange in London. In 1841 Willis ap plied for membership of
Lloyd’s, where he started to broker insurance for the cargoes of commodities he sold on commission.
As his enterprise grew, he became involved in the hull business, establishing himself in marine
insurance and founding Henry Willis & Company. Than in 1865 was founded the predecessor
actuarial consulting firm Fackler & Co. in New York. In 1878 Reuben Watson formed R. Watson &
Sons, the world’s oldest actuarial firm, when the Manchester Unity of Oddfellows appointed him
actuary the sam e year – Manchester Unity remains a client today. In 1889 Peter Fackler helped create
the Actuarial Society of America, a predecessor of today’s Society of Actuaries. The company’s
consulting actuaries have a long history of involvement in professional soc ieties, serving on
committees and boards, and helping shape the actuarial profession. Also in 1896 Henry Willis & Co.
developed a relationship with U.S. -based Johnson & Higgins, which provided Willis access to the
U.S. market. Than in 1898 Henry Willis & C o merged with Faber Brothers to form Willis, Faber &
Co and developed a huge marine account, reputedly the largest broking portfolio in the world. Thus
in 1928 Willis Faber & Company merged with Dumas & Wylie Limited to form Willis, Faber &
Dumas.58
After the passage of the National Insurance act of 1911, in 1910s , R. Watson & Sons became
the lead advisor to the U.K. government on national insurance programs; and then in 1920s Walter
Forster, sold one of the first major insured pension plans to Eastm an Kodak Company. In 1934
Towers, Perrin, Forster & Crosby (TPF&C) was founded. It initially operated a reinsurance and life
division, eventually specializing in pensions, reinsurance brokerage and employee benefit plans. 1943
Birchard Wyatt formed the Wya tt Company, an actuarial consulting firm, in Washington, D.C.,

56 Overview , Link: https://www.willistowerswatson.com/en/about -us/overview (seen on June 20, 2018).
57 Office locations , Link: https://www.willistowerswatson.com/en/about -us/office -locations (seen on June 20, 2018).
58 Our history, Link: https://www.willistowerswatson.com/en/about -us/our -history (seen on June 20, 2018).

32
following this, in 1950 Fackler & Co. was acquired by the Wyatt Company. Than in 1960s TPF&C
expanded its services to include health care, compensation and organizational consulting and in 1976
Willis, Faber & Dumas listed on the London Stock Exchange, signifying its status as the leading U.K.
specialty broker. Between 1970s and 1980s regulatory change and rising employee benefit costs in
the U.S. spurred a further need for actuarial expertise. In 1980s Willis’ reinsurance business expanded
and eclipsed marine broking for the first time, than in 1986 Towers, Perrin, Forster & Crosby acquired
Atlanta -based Tillinghast, Nelson & Warren. Following this in 1987 Towers, Perrin, Forster & Crosby
was re named Towers Perrin and in 1990 Willis, Faber & Dumas entered the U.S. as a retail broker
through a merger with Corroon & Black, establishing it as the world’s fourth -largest insurance broker.
Also, in 1995 R. Watson & Sons and The Wyatt Company forged an alliance, forming Watson Wyatt
and consolidating their global resources. In 1995 Willis acquired a 33% stake in French broker Gras
Savoye and in 1997 Willis Corroon was privatized by Kohlberg Kravis Roberts in a $1.4 billion deal.
Than in 2001 Willis Group was listed on the New York Stock Exchange and experienced strong
growth. In 2006 Willis Research Network was launched as the world's largest collaboration between
academic institutions and the finance sector. In 2008 Willis Group’s U.S. presence was doubled with
a $2.1 billion Hilb Rogal & Hobbs acquisition. Thus in 2010 in a merger of equals, Towers Perrin and
Watson Wyatt combined to form Towers Watson; farther up, in 2012 Towers Watson acquired Extend
Health and en tered the private health care exchange market in the U.S. Than in 2015 Willis Group
exercised its right to acquire the remainder of Gras Savoye and agreed to purchase 85% of Miller, the
leading London independent wholesale insurance broker. Finally, in 2016 Willis Group and Towers
Watson merge to become Willis Towers Watson.59
e. Kienbaum Consultants International GmbH . Kienbaum is a family business. Two
surprising assets stand at the beginning of Kienbaum’s history on 15 October 1945. Having
returned from capt ivity after the war, the graduate engineer Gerhard Kienbaum opens his
“Office for Technical Advice, Translations, and Representation” in Gummersbach to help
companies in the region recover from the effects of the war. Thus the idea of management
consulting is born . Gerhard Kienbaum traveled the region on his bike, visiting clients and
advising them on all matters of structural and procedural improvement. This evolved into a
group of companies dedicated to planning, consulting, and management services in all sectors

59 Ibid.

33
of industry, in agriculture, transport, and integrated regional development, Kienbaum rises to
the top of the German market within the space of ten years. Kienbaum’s consultants are
increasingly approached by clients looking for suitable candidate s for vacant positions. These
informal contacts develop into a new executive recruitment business for Kienbaum and lead
to the establishment of Kienbaum’s executive search operations in 1978. The idea of
integrated consulting is born . Its dedication to the people factor in business remains the
distinguishing feature of Kienbaum’s work.60
Overview. In 1957 Kienbaum und Partner operates offices in Hamburg, Frankfurt/Main, and
Düsseldorf with a team of 90 members of staff. The firm begins its international succ ess story with
the opening of the first Kienbaum office in Vienna. Cooperation partnerships expand Kienbaum’s
reach into many other countries in Western Europe, with contacts from Scandinavia to Italy, Greece,
and Spain. In 1971, Kienbaum Consultores Ltda becomes the first overseas venture and brings
Kienbaum to Brazil. Today’s Kienbaum serves clients from more than 30 offices in 18 countries
around the world. Jochen Kienbaum, son of Gerhard Kienbaum, takes over the management of the
Berlin office in 1977 a nd Kienbaum Berlin GmbH is founded in December of the same year. Eight
years later, Gerhard Kienbaum hands over the management of Kienbaum und Partner to his son and
chosen successor. The first HR development concepts are introduced, and consulting service s focusing
on the people factor are increasingly becoming a mainstay of the business. In 1998, Jochen Kienbaum
is appointed President of the BDU. In 2000, Kienbaum is ranked at the top spot of the BDU ranking
of the leading German HR consulting firms. The Japanese Corporate Business takes up its operations,
leading to the establishment of Kienbaum’s first Japanese office in 2007. Kienbaum remains
committed to its international growth strategy and opens new offices Atlanta and Istanbul in 2013. In
2016, Kien baum is again named as “Best Consultants” of the year in the industry report by brand eins
Wissen and Statista, topping the ranking in the leadership, organization, and HR consulting categories.
Kienbaum’s operating companies are reunited under the Kienbau m Consultants International brand
to offer its clients even greater added value and consulting expertise along the entire value chain. In
December, the head offices are relocated from Gummersbach to Kienbaum’s new home in Cologne.61

60 Pioneers of consulting , Link: https://www.kienbaum.com/en/company/history (seen on June 20, 2018).
61 Ibid.

34
I made the presentation of the above HR outsourcing companies believing that seeing exactly how
such an organization works, “thinks” and it’s history, will help to farther our understanding in the
necessity of outsourcing the HR, or more exactly, the need for employing outsourced HR.

5. What are the provocations that European organizations are facing when collaborating
with HR outsourcing companies?
Some of t he challenges to outs ourcing human resource services are d ata security and the
language skills. Data security is of the utmost importance to European companies. This is especially
relevant to outsourcing human resource services, as these projects often contain sensitive material.
European companies expect their service providers to be discrete and comply with ful l confidentiality.
However, European companies generally perceive offshore data security to be of inferior quality.
National regulations vary considerably – for example, according to German law, certain types of data
must be stored within the country. It’s very important to protect the clients’ data and to inspire honesty,
so the possible client would be convinced that you are the best candidate for collaboration.62
Tips
 Provide clear information about your company’s data security and privacy measures. This
reflects awareness and experience and enhances trust in your company.
 Invest in a secure, reliable infrastructure.
 Apply for security standards like the ISO 2700063 series on information security to support
your commitment to data security.
 Offer a Non -Disclosure Agreement.
 Partner with onshore (cloud) service providers, especially if you work with companies in
countries that require you to store data onshore.
 Make sure you comply with European data protection frameworks. See the requirements
section for mor e information.64
About the language skills needed, the HRO companies should provide human resource services for
European companies with good language skills, at least in English, but preferably also in the main
language of the European target country. If th e level of English in the HRO Company is not sufficient,

62 Human resource services in Europe, quoted.
63 The ISO 27000 series of standards have been specifically reserved by ISO for information security matters. This of
course, aligns with a number of other topics, including ISO 9000 (quality management) and ISO 14000 (environmental
management). Link: http://www.27000.org/ (seen on June 21, 2018).
64 Human resource services in Europe, quoted.

35
the chances of that company on the European market are limited.65 Below is a list of ten challenges
that may appear in the relation of RHO companies and their clients -organizations.
Post-Contract Proc esses and Decision Rights Not Understood . The most found problem in
outsourcing implementations is a lack of understanding of post -contract processes and decision rights.
Simply put, clients and service providers are not operationally prepared to work together after contract
signing. The results are that servic es simply aren’t performed, implementation activities get stalled,
client stakeholders and service provider staff are both frustrated, and the entire schedule for achieving
expected business benefits is delayed. The problem occurs if new processes and deci sion rights have
not been well -designed or socialized. For instance, who in the client's organization can request
services with the new outsourcing model66? Does it go directly to the provider, and if so, how? Are
new software tools or systems required? Wha t documentation or justification is required for the
service request? Does approval depend on the nature of the underlying request and/or financial cost?
Who decides? What about "emergency" change requests — are these acted on immediately, and what
constit utes an "emergency"? These and a host of other questions about financial, contractual, and
service delivery processes and decision rights must be answered and communicated to appropriate
stakeholders in the client and service provider organizations. The ou tsourcing contract is not intended
to be (nor should it be) an operations manual; therefore additional work is required to design and
communicate changes.67
Little or No Support f rom Client Leaders Receiving Services . The lack of buy -in from
senior client leaders who will be recipients of the outsourcing services is another challenge in this
department . It can result in active or passive resistance to the entire outsourcing model; create the
desire for "special treatment" or opt -out from the outsourcing ser vices, and results in business case
deterioration. Many times leaders who will receive future services do not actively participate in the

65 Ibid.
66 The new outsourcing model refers to the term Vested Outsourcing which was coined by University of Tennessee
researchers because. They found these highly successful agreements were the result of a company and its service provider
creating a commercial agreement where both parties had a vested interest in each other’s s uccess and worked
collaboratively to develop solutions that achieved mutually -created Desired Outcomes . Link:
https://www.ssonetwork. com/customer -experience/articles/vested -a-business -model -for-21st-century -outsourci (seen on
June 21, 2018).
67 The Top 10 Problems with Outsourcing Implementation, Link: https://www.ssonetwork.com/business -process –
outsourcing/articles/the -top-10-problems -with-outsourcing -implementatio (seen on June 21, 2018).

36
outsourcing evaluation or receive proactive communications regarding its status. This lack of
participation has two de trimental impacts:68
 the leader receiving services is generally unprepared for the changes to come ;
 the evaluation and negotiation team may not fully represent or understand unique services for
a particular unit in the organization ;69
Poor Mutual Understanding of the Contract . After signing the initial contract, both the
client and service provider have multiple team members who are trying to manage the initial
implementation activities and ongoing operations. The client has staff who are just lear ning the details
of the agreement, may be emotionally charged regarding the decision to outsource and also have a
personal view of what the service provider should (and should not) perform. The service provider has
team members who are also new to the tran saction, and sometimes bring a view of "this is what we
did in my last deal" without fully understanding nuances of the specific agreement that has been
negotiated. The significant number of new people combined with a high speed of implementation
impairs a requisite absorption period, leading to uninformed views on both sides of "what’s in the
contract."70
Client Retained Team Not in Place or Too Small . With many outsourcing implementations,
there is an outr ight lack of a defined retained or governance team or one that is too small. This causes
issues in implementation because there is no one "directing traffic" or the team is too small to handle
both the volume and complexity. Clients tend to put off making decisions about the
retained/governance team for mu ltiple reasons (for example: a ll energies and efforts are focused on
"the deal" in terms of contract terms, conditions, and pricing, with no time/resources devoted to post –
contract issues ).71
Client Retained Team Lacks Required Skills . Even if a client puts a retained team in place
to manage the outsourcing implementation and ongoing operations, the team may not have the right
skills required for their new roles. Most clients only consider existing staff within their organization
and usually want to keep people with the best technical and/or business process experience. However,

68 Ibid.
69 Ibid.
70 Ibid.
71 Ibid.

37
these people sometimes have a hard time making the switch between performing or managing the day –
to-day work and holding the service provider accountable.72
Poor Knowledge Transfer . Outsourcing creates uncertainty for existing employees and
contractors who provide services to the client organization. The uncertainty can cause this staff to
look elsewhere for employment and leave either before or during the outsourcing implementation,
causing a need to either backfill the resource or reduce the amount of work performed by the
organization. In addition, some of the client staff is temporarily eng aged for knowledge transfer to the
service provider during the implementation. If the staff is not properly motivated or if the service
provider does not do a good job with knowledge transfer, this can cause decreased efficiency in service
delivery and pos sibly introduce operational risk.73
Inability to Meet Pent -Up Demand for Services . If the client has limited some activities,
there is typically a substantial amount of pent -up demand and/or requirements that need to be met
shortly after the implementation period begins. However, the ways in which the new initiatives are
prioritized, estimated, evaluated, approved, scheduled and performed may all be in the midst of change
during transitio n to the new outsourcing model.74
Resistance to Adopting New Methods . Oftentimes, a third -party service provider is br ought
in to be a change agent . The outsourcing sponsor wants to achieve business benefits quickly which
require changes in pro cess, technology, behavior and staffing. However, for many outsourcing
services, the provider is not in complete control of the end -to-end result. The users on the receiving
end of new methods can inhibit the achievement of business objectives through lack of compliance,
strategy disagreements or delays in executing their required respons ibilities.
Culture Clash b etween the Client and Service Provider . This can occur on two levels:
corporate culture and national or regional culture . In terms of corporate culture, the client and service
provider may have different norms in terms of speed, s tyle, decision making and organizational
structure. Sometimes both organizations can take extreme, inflexible positions that serv e to create
tension or distrust. In terms of national or regional inhibitors, language and the understanding of
subtleties in v erbal, non -verbal and written communications can be problematic. Also, expectations

72 Ibid.
73 Ibid.
74 Ibid.

38
regarding the level of open debate, acknowledgement of potential problems, and willingness to veer
from the defined process in order to complete work may vary between regio ns and nationalities.75
Changes Don’t Last . Old habits die hard. Even for organizations that initially change
behaviors and processes to achieve success with outsourcing, there can be a significant tendency to
revert to old ways of doing things. Sometimes clients start to cut back on dialogue with their business
stakeholders and service providers, reduce governance staff and reduce process rigor over time. This
retrenchment usually occurs because the client believes benefits will continue to occur
automatica lly.76
As it can be seen from the list above the provocations that European organizations are facing
when collaborating with HR outsourcing companies are far and diverse – as in any marriage. From
the classic cultural and linguistic barriers to misunderstan ding about who is the “boss” and who should
answer for that thing and that thing. Truly, human relations are hard to practice, to understand and to
live them. As an employee you represent your organizations and employers, you can’t just be you,
because the credibility and the honesty of an organizations can be seen and evaluated through its
employees. Then, when two different kinds of personnel, from two different organizations meet and
have to work with each other, the problem and the complexity grows. It’ s no wonder there are so many
issues in the relation of HRO companies and their clients.

6. How can the HR outsourcing improve the company’s prosperity?
The demand for value -added human resource services is growing. Standardized administrative
processes is traditionally the most outsourced human resource s ervices, and t his type of service doesn’t
require thorough expertise, making it relatively easy to train service providers’ staff. Although,
European companies are increasingly outsourcing more value -added and judgement -based human
resource services. This includes workforce analytics and HR reporting, but also consultancy, talent
management and recruitment. The next figure77 shows the most outsourced human resourced services
in 2014, planed and what really h appened. It can be seen that the HR for payroll time administrations

75 Ibid.
76 Ibid.
77 Human resource services in Europe, quoted.

39
is the most demanded HR along with recruiting and staffing administrations; opposing this, with the
least demand in outsourcing HR is the HR reporting and workforce analytics.
Tips
 Start with offering more standard human resource services, like payroll and benefits
administration. When you have established a solid relationship with you European partner,
you can include more judgement -based services.
 Offer human resource analytical servi ces, as this is a growing segment. However, you should
have long -term outsourcing deals and/or expertise in industry -focused data analysis,
knowledge services and risk and compliance.
 Specialize in human resource services for a specific industry to strengt hen your value
proposition. European companies prefer service providers with expertise in a specific service
or industry.78
Time. An employee would be more productive if he or she were focused on the tasks fo r which
you actually hired them . When members of the staff have to set aside their essential duties to manage
something at which they do not excel, they often lack the time they need to arrange extras such as
team building exercises or employee activities that strengthen the company cu lture. Valuable time is

78 Ibid.

40
wasted when employees are performing tasks at which they are n ot experts. By outsourcing the HR,
it can get the employees back doing what they do best and ultimately save money.79
For an outsourced relationship to work, the manager s will have to put time and effort into
finding the right supplier and in building a working relationship; it cannot abdicate all responsibility
for success to the supplier the organization choose. This has to be seen as a partnership, rather than an
outso urcing contract, in which the parties must contribute equally to its success.80
Reduce the employee liability. State, local and federal laws and regulations are always
changing, and can be quite complex. By outsourcing HR, there is a team to ensure that the company
is up-to-date on all of the laws that affects the business. Employee lawsuits a re expensive and time
consuming; i nstead of struggling with the shifting regulations and the complexities of a lawsuit, its
better to outsource a team of experts for he lp so the firm can avoid the legal hassle s and resolve issues
that arise.81
Legal challenges are among the most predictable for an organization to face when setting up
globally. Yet, even though it is well known that each country will have its own legal fra mework, too
many organizations fail to prepare adequately. US-based executives need to learn the hoops they have
to jump through in order to get things done in Europe. The legal requirements for country -level and
European -level consultation have to be understood and factored in before e mbarking on a program.
To complicate matters, European legislation is inconsistently applied. A majority of European
employment law is based on European Union (EU) Directives, but implemented through country –
specific legi slation, case law and precedent, which gives rise to some unexpected differences.82
Recruit better talent. One of the most important responsibilities allocated to the HR
department is bringing on new talent that adds value to the team and the company. Find ing the right
candidates is often a slow and tedious process, and if a position remains unfilled for an extended
period of time, productivity and morale may suffer. Some HR outsourcing companies handle the

79 Five ways HR outsourcing can improve , Link: https://www.staffone.com/five -ways -hr-outsourcing -can-help-company –
grow/ (seen on June 21, 2018).
80 How outsourcing can improve your business, Link: http://citywire.co.uk/new -model -adviser/news/how -outsourcing –
can-improve -your-business/a419140 (seen on June 21, 2018).
81 Five ways HR outsourcing can improve, quoted .
82 The People and HR Challenges of Expanding Shared Services Multinational , Link:
https://www.ssonetwork.com/global -business -services/articles/the -people -and-hr-challenges -of-expanding -shared -s
(seen on June 21, 2018).

41
recruiting and hiring process from start to finis h, while others provide guidance to their clients and
assist with certain critical tasks. The first step is having the right job description in order to attract the
most qualified applicants and set appropriate expectations. The next step is knowing where to post the
job listings so that the right candidates will see them. This process can be time consuming, and
working with an HR outsourcing company can greatly streamline the recruiting and hiring process.83
An HR outsourcing company can help find, intervie w and hire strong cand idates for job
openings. The consultant will have skills and experience in crafting job descriptions and identifying
the core competencies and behaviors exp ected of successful employees; t hey also have knowledge of
the best places to advertise open positions to attract qualified candidates . An HR coach can help and
hire managers to improve their interview skills and learn ways to identify people who will fit the
company’s culture. Once a new employee is hired , a consultant can provide an onboarding and
orientation program to help the newbie acclimate faster. An experienced HR consultant can provide
the support the firm need s to help ensure such complex employee interactions are handled in ways
that are both caring and compliant with HR best practices. They can also conduct climate surveys and
offer unbiased feedback on ways to address issues impacting employee morale. Since there’s a direct
correlation between employee happiness and profitability, addressing “soft” issues could lead to b etter
productivity without a large cash outlay.84
Reduce the cost of labor. Another way that HR outsourcing can be of help is by reducing the
cost of maintaining the company’s employees. Certified experts can review the company’s payroll,
the benefit plans, workers’ compensation, and other aspects of the employee administration.
Professionals can spot areas where some plans could be improved and costs could be cu t without
reducing the value provide d to the firm employees and th e value which t hey return to the base . Even
for a relatively small business, this can translate to savings of thousands of dollars per year.85
The most common reasons identified to reason why companies choose to outsource are:
 26% of companies outsource to save money ;
 23% of companies outsource to focus on strategy ;

83 Five ways HR outsourcing can improve, quoted .
84 Getting the most from your HR outsourcing company , Link: https://www.insperity.com/blog/getting -the-most-from –
your-hr-outsourcing -company/ (seen on June 21, 2018).
85 Five ways HR outsourcing can improve, quoted .

42
 22% of companies outsource to improve compliance ;
 18% of companies outsource to improve accuracy ;
 18% of companies outsource due to a lack of experience in -house ;
 18% of companies outsource to take advantage of technological advances ;86
Other reasons why companies outsource include consulting companies offering services that cannot
be offered in -hous e, is to reduce pressure of internal HR, to access expertize for specialized functions
and to gain access to resour ces. Many HR departments are understaffed and overworked. They have
more work than they can handle, but the company can’t afford to hire more full time employees.
Outsourcing is a cost effective way to take some of the pressure off the current HR staff. Sometimes,
hiring a professional who specializes in a specific HR function doesn’t make sense long term. This is
why many large companies outsource HR functions such as hiring, payroll, and administering
employee benefits to consultants on a part time or as needs basis. HR consultants are on the cutting
edge of new technologies, trends, and processes in HR. Rather than investing huge amounts of capital
internally, it can gain access to these resources through an HR consulting company, freeing up budget
money to spend on other areas of said business, and within the in-house HR department.87
Reduce employee turnover. Employees turn to HR departments as much as employers do
for solutions to their problems. If the HR department is unhelpful, overwhelmed or incompe tent,
employees can become frustrated when their issues are unresolved. This can increase turnover as
employees leave the company to find a company that looks after their needs. By outsourcing the HR
administration, you can work with experts who have the t ime, resources and know -how to see to save
the employees’ needs a nd ensure that they are happy; s atisfied, engaged employees stay on with their
companies and don’t jump ship the first chance they get.88
Too much information in too many places can be detrimental and counterproductive, leading
to more accidents from workers as they battle dissatisfaction and exhaustion from information
overload. That’s why, in the always -on workplace, one of the most important business strategies is to
offer digital wor k tools that manage your talent’s time and energy so employees can focus on the
things that matter. Workers in the knowledge economy no longer learn in a “create and push” kind of

86 Reasons why large companies should consider outsourcing HR services , Link: https://www.augmenthr.com/blog/3 –
reasons -why-large -companies -should -consider -outsourcing -hr-services/ (seen on June 21, 2018).
87 Ibid.
88 Five ways HR outsourcing can improve, quoted .

43
way, meaning businesses actually need to not only provide the right tools an d the right information at
the right time, but they also need to train their workers how to use the tools properly. As a result of all
of the digital tools that exist —from e -mail, instant messaging and enterprise social media tools to HR
applications and v irtual meeting tools —the work world is moving at a much faster speed, meaning
employees need to work faster and collaborate more efficiently in order to get their work done. And
without guidance, it’s much more likely that workers will be unable to find wh at they need, when they
need it. To decide on which tools to provide, organizations should first figure out how their teams
work, what they need to accomplish, and why they work the way they do. Once these things are
identified, certain tools can then be i ntroduced to mitigate the time spent on low -value tasks.89

89 Strategies for Improving Employee Productivity and Prosperity , Link: https://hrdailyadvisor.bl r.com/2017/10/24/3 –
strategies -improving -employee -productivity -prosperity/ (seen on June 21, 2018).

44
Chapter III: European organizations and HR outsourcing companies (Case Study)
Transferring the human resource management’s activities to external services suppliers must
associate with the company’s long -term strategy and has to be done in such a way that would help
company seek for its purpose in the market. That is why such aspects as company’s encounter with
competitiveness, necessity to perform shake -up or reduction of employees’ nu mber have to be
analyzed. Companies can choose external suppliers of human resource management services for their
experience and competency in these areas. However, outsourcing of human resource management
services can affect not only expenses but also com pany’s capability to service clients with quality so
company can choose human resource management services in order to achieve added value.90
Surveys and studies conducted by professional consultancy firms predict continuing growth
of HRO industry as a glob al trend. According to a survey, the HRO industry has grow n 5% in 2009
when it has annualized contract value would reach $3.2 billion. Another survey report showed that
the outsourcing to India, China, Southern and Eastern Europe and South Africa was expec ted to grow
exponentially over the following 10 years. Investors and management anticipated 30+% annual
revenue leaps. However, there should have been pressure on suppliers for cost cutting; a s a result most
of the suppliers had seen reduced margins and sm aller contract value. Thus, a ccording to Anthony
Bruce, Director of HR services at Price Waterhouse Coopers the European market would not see many
multi -processes HR Outsourcing. The new trend for the companies would be to buy small amount of
HR administra tion and supporting technology across multiple processes, to gain access to a supplier’s
superior techn ology capability . While European organizations have traditionally been more
conservative than their North American counterparts in embracing outsourcing, various legislative
and demographic considerations that impact HRO also contributed towards a lower adoption level in
the European region. Europe saw increased activity from a deal -origination perspective; which led to
increase in Europe’s share in the gl obal HRO market, which has been increasing from 20 percent to
30 percent, in terms of the number of deals .91 Some of the factors influencing the growth of HRO in
Europe are as follows:

90 Ernesta Stasiulytė, Motives of Human Resource Management Outsourcing: A Case Study from Lithuania , Economics
& Sociology, Vol. 4, No 1, 2011, p. 118.
91 Ajay K Jain and Debi S. Saini, Human Resource Outsourcing and Shared Services – An Asian -Pacific Perspective , p.
7, Link:
https://www.researchgate.net/publication/257419463_Human_Resource_Outsourcing_and_Shared_Services_An_Asian –
Pacific_Perspective (seen on June 25, 2018).

45
 Suppliers becoming more receptive to the unique challenges present in E urope, making HRO
a viable strategy for buyers to drive efficiency and generate cost savings;
 Increased adoption of HRO by the public sector in the UK ;
 Increase d acceptance of global sourcing;
 Entrance of new suppliers ;92
However, t here are some difference s in the way the European HRO market is evolving compared to
North America in terms of its path to HRO adoption, including technology considerations, HR process
inclusion, and usage of global sourcing.93 In this chapter we will discuss about the effect the HRO
industry has over some organizations and how this is affecting the European market.
4. Accounting Ace and a Comparative Study of Italy and the UK (Case 1)
Accace stands for “accounting ace” and marks the company’s early stages. Over the first year
of existence Accace noticed their client’s need of having all their internal processes handled by one
single provider and thus, in the years that followed, they have developed from a pure accounting
company to a complete, innovative outsourcing and advisory provider. Originally established in the
Central and Eastern Europe (CEE) in 2006, Accace now cover over 13 countries and have a growing
number of partner locations. Having knowledge about the differences betwe en particular countries
the region of Europe, they can understand their clients’ position when entering these markets. Thus,
the company tries to make the clients to minimize risks and the transition smooth and safe . Having
over 550 employees and an increa sing number of locations, they seek to attract, develop and motivate
the best talents in the business in order to provide their clients with top tier outsourcing and advisory
services. Accace’s v alues are a solid foundation upon which they build their success as individuals
and as an organization. They also believe that giving back to local communities and people involved
in them is as important as any other service that the company is providing. Accace invent s and design
their own IT solution and they encourage the development of new ideas and smarter solutions for their
clients by connecting expertise and experience with the latest technologies. They have a client
portfolio of over 2000 international companies, they are searching for possibilities on how to improve
Accace’s work and reduce useless costs day -by-day, task -by-task.94

92 Ibid.
93 Ibid.
94 Who we are, Link: https://accace.com/about -us/who -we-are/ (seen on June 25, 2018).

46
The following short case studies, made by Accace, depict the impact and effects of HR
outsourcing companies on their clients. Unfortunately, the company does not reveal the n ame of its
clients, thus I couldn’t follow the information farther on the clients end. The next case studies shows
three of the company’s clients, separated by the industry they are a part of. Also, each of this cases
are done on organizations from Europe.
Payroll and HR administration outsourcing for large business.
Industry : Technology
Client since : 2010
Region: Europe
 Complex payroll and HR administration services for almost 6 500 employees ;
 Annual tax reconciliation (end -to-end process) ;
 Payroll hotlin e services for all employees (via email, phone or online portal) with response
time of max. 24 hours ;
 Provision of TULIP – a secure online tool for management & employees self -service (incl.
solution for time & attendance tracking) ;
 Representation of Clien t in communication with all the local authorities ;95

Achievements. They managed a b etter control over all the processes – KPIs met every month at least
at 99,80% ; increased efficiency and transparency by using one tool for management & employee self-
service . Also, the p ayroll accuracy guaranteed at least at 99,98% and p ayroll timelines met at 100%
for the whole period of cooperation . Cost reduction for staff, technology and infrastructure by almost
25% and they had reduced administrative burden o n Client´s end – Accace prepares the most inputs
for payroll processing itself and also communicat es with third parties.96

95 Payroll and HR administration outsourcing for large business , Link: https://accace.com/about -us/case -studies/complex –
payroll -hr-administration -outsourcing -large -business/ (seen on June 25, 2018).
96 Ibid.

47

Takeover and management of shared services center.
Industry : Digital Communications
Client since: 2016
Region: Europe
 Takeover of Client´s Shared Service Centre in Czech Republic with team of almost 40
employees ;
 Management of team delivering comprehensive accounting services in Czech Republic and
Slovakia ;
 Management of compliance requirements ;
 Detailed management reporting – KPIs m et every month at least at 99,99% ;97
Achievements. Accace took over of the activi ties performed outside Europe and decreased error rate
by almost 75% and ensured better control over the current processes as well . The e fficiency
improvements by almost 10% by better split of activities, responsibilities and change of team
structure . Also, the time spent on HR processes was reduced , such as hiring of new e mployees,
evaluation, trainings etc. on Client´s side by 100% leaving this responsibility at Accace´s end .

97 Takeover and management of shared services center, Link: https://accace.com/about -us/case -studies/takeover -and-
management -of-shared -services -centre/ (seen on June 25, 2018).

48
Moreover, they also took over t he project and increased their headcount by almost 40% in Czech
Republic while successfully managed the handover of the agenda .98

Complex financial outsourcing for large business .
Industry : Oil and gas
Client since: 2011
Region: Europe
 Full range accounting services to almost 60 retailers in Slovakia and Czech Republic –
processing more than 25 000 vendor invoices per month ;
 Tax compliance services (VAT, income tax, excise taxes etc.) and advisory on tax
consequences of sp ecific business operations ;
 Payroll and HR agenda administration for almost 2 000 employees ;
 Labour law consultancy and other legal support services ;

98 Ibid.

49
 Representation of Client in communication with all the local authorities ;99
Achievements. They i ncreased efficiency by using integrated document processing automation system
that helped to decrease time spent on AP management by 45% . Change d the processes towards
digitalization while reducing manipulation w ith papers by approximately 90% helping to gain bette r
control over all the processes . Moreover, Accace gained b etter control over the network and accurate
reporting for the headquarter – all internally set KPIs met at almost 100% and also i mproved
communication with retailers and better transparency in cost s.100

As seen above, the efficiency of a partnership between a HR outsourcing company and an
organization receiving the HR, is different in each cases. It does not depend only on the capabilities
of the HRO company, but also on the client: how much freedom does the client allow to the outsourced
HR? Who are the ones that give the orders and from which one should the HRO receive the rules?
And so on. As stated above, working with humans is not easy, managing them is harder and
understanding which person is best fo r which job is the key to success.

99 Complex financial outso urcing for large business , Link, https://accace.com/about -us/case -studies/complex -financial –
outsourcing -large -business/ (seen on June 25, 2018).
100 Ibid.

50
A Comparative Study of Italy and the UK.
Italy is known for bringing to the world some of th e greatest inventions and arts, C reativity
and innovation are not strange phrases in many Italian sectors such as fashion, aut omotive and leather.
But challenges to achieve innovation in the Italian service outsourcing sector still lay ahead. Recent
reports have highlighted the complexity involved in fostering collaborative innovation between a
client firm and a supplier, often re solving is unsatisfactory results; a study of 150 British and Italian
Service Outsourcing executives was carried out to examine their comparative innovation performance
and the mechanisms that support innovation in each country. The results show that Itali an client firms
reported more satisfaction with the quality, frequency and impact of innovation delivered by suppliers
than their British counterparts. The main di fferences between the Italian and British cases that may
explain the results were 1. Italian client firm’s strategic intent has been revolving around the objective
to increase the pace of innovation within the firm while their British counterparts have been focusing
on cost reduction, 2. Italian client firms have mainly been using outcome ba se pricing model while
British client firms have mainly been using fixed -price model and 3. Italian client firms have been
using advisory firms to a far more extent t han their British counterparts.101
This research wa s conducted by Prof. Ilan Oshri and Prof. Gi ovanni Vaia. The results of this
study are based on a cross -industry survey carried out in 2015 with 150 client firms in Italy (75 firms)
and the UK (75 firms) at the executive level who were directly involved in achieving innovation
through outsourcing. Fort y five (45%) percent of Italian executives interviewed for this study work in
firms that employ less than 1000 employees from various sectors such as manufacturing (25%), retail
(25%), finance (9%) and public sector (12%). Fifty three (53%) percent of them wo rk in the
information technology department within the business with 34% of them having more than 5 years
outsourcing experience. Seventy one (71%) of British executives in this study work in firms that
employ more than 1000 employees, representing similar spread of sectors such as manufacturing
(23%), retail (23%), finance (16%) and public sector (13%). Fifty -three (53%) percent of them work
in the IT area and 55% of them have more than 5 years of experience.102

101 Giovanni Vaia and Ilan Oshri, Outsourcing and Innovation: A Comparative Study of Italy and the UK . In Shared
Services and Outsourcing: A Contemporary Outlook 10th Global Sourcing Workshop 2016 Val d’Isère, France, February
16–19, 2016 Revised Selected Pa pers, Julia Kotlarsky, Ilan Oshri and Leslie P. Willcocks (Eds.), Springer International
Publishing AG 2016, p. 118.
102 Ibid, pp. 119 -120.

51
Strategic innovation is expected to positive ly affect the way the client firm competes and
penetrates new markets while operational innovation is likely to reduce operating costs and improve
efficiencies. This study reveals a significant difference in 6 areas of benefits from innovation between
the Italian and British outsourcing sector. Cost Saving Benefits . Sixty seven (67%) percent of Italian
executives reported that they strongly agree or agree with the statement that innovation contributed to
a decrease in running costs compared with only 41% of the British executives . These result s may
suggest the following: 1. innovation in Italy delivers a reduction in running costs more bro adly than
in the UK, and/or 2. Italian executives are more content with the level of costs reduction deliver
through innovative s olutions by their suppliers than their British counterparts. The next figure shows
the innovation contributed to a decrease in running costs .103

Improve Service Offering . Seventy two (72%) percent of Italian executives reported that they either
agree or strongly agree with the statement that innovation delivered by suppliers improved their
service offering compared with only 49% of British executives . These results suggest that 1.
Innovation delivered in Italy is achieving a broader strategic impact on the business than in the UK
and that 2. Italian executives are more satisfied than British executives with the impact on service

103 Ibid. p. 121.

52
offering achieved by the ir suppliers through innovation. The following figure shows how t he
innovation improved the service and product offering .104

Process Transformation Effect . Seventy three (73%) of Italian executives reported that they agree or
strongly agree with the statement that innovation has led to transformation in processes compared
with only 54% of their British counterpar ts. This chart shows that i nnovation has led to beneficial
transformations in the outsourcing processes .

104 Idem.

53
The results suggest that innovation in the Italian outsourcing sector delivers process transformation
more broadly than in the UK and that Italian execu tive report satisfaction with the transformation
delivered by their suppliers .105
Number of Innovation Solutions Delivered by Supplier . Another indicator of innovation
performance is the number of actual innovative solutions delivered by suppliers. An incre ase in
solutions delivered by suppliers can be seen as a healthy indicator while a decrease in numbers may
suggest that the parties have lost interest in pursuing innovation. In this study, 57% of Italian
respondents indicated that the actual number of innovation solutions has either ‘increased a lot’ or
‘significantly increased’ compared with only 31 % of their British counterparts. The next figure t he
actual number of innovative solut ions delivered by the third party the suppliers had.106

The Quality of Innovation Delivered. It has also been examined comparative perceptions of the quality
of innovation solutions delivered by supplier. Sixty five (65%) of Italian executives reported that the
quality of innovation solutions delivered by supplier has either ‘increased a lot’ or ‘significantly
increased’ as compared with only 36% of the British executives . The quality of innovations d elivered
through outsourcing can be seen in the following fi gure.107

105 Ibid, p. 122.
106 Ibid, p. 123.
107 Idem.

54

Differences. There are three fundamental differences between the Italian and British
outsourcing sector. First , the percentage of large firms (bigger than 1000 employees) participating in
this study was higher in the UK (71%) than in Italy (55%). In deed, the Italian economy is characterized
by the relatively higher population of smaller firms as compared with most Western -European
economies. The implications of this difference in terms of the firm size is that smaller firms are more
likely to work with s maller suppliers thus more capable of maintaining close relationships with their
suppliers that often lead to successful innovation. Second , the strategic intent for outsourcing the
functions in which innovation was sought in Italy and the UK is different. In Italy, the main reason
for seeking innovation was to speed up the rate of innovation within the client firm (39%) while in the
UK the main driver was to reduce cost s (39%). Thus , most studies have persistently showed that the
vast majority of the client firms’ drive to outsource is cost reduction. In this regard, the Italian case
presents a new motivator in the outsourcing literature that is purely focusing on innovation as an
outcome of the outsourcing engagement . Thirdly , the vast majority of Italian cli ent firms (65%) have
used advisory firms to help them achieve innovation in their outsourcing engagements compared with
only 39% of their British counterparts. This approach by Italian firms may have helped them use best
practices and advance methodologies le ading to high innovation performance .108

108 Ibid, pp. 124 -125.

55
2. European Organization for Quality – an organization without outsourced HR? (Case
Human resource outsourcing entails the delegation of one or more human resource services to
an external provider, who owns, manages and administers the delivery of the services based on pre –
determined performance metrics. Outsour cing of human resource functions has become a common
phenomenon globally. Organizations, regardless of their size, find themselves having to replace,
supplement or broaden their oper ations by outsourcing aspects of their HR functions. The organization
must consider the economic, social and legal landscape it operates in. The strategic objectives and
financial plans of the organization define the scope and direction an organization desires to take. Then,
why should organizations outsource HR?109 The most known motives for outsourcing human
resources are the following:
Some of the effects of outsourcing the HR, are as foll ow:
 Reduced costs. There is constant pressure from internal corporate clients to provide cost
effective products and services.
 Improved service. The shared business unit’s customer -oriented focus should result in better
service to internal customers, than typical in -house services.
 Fewer distractions from core competency activities. With back office and other non -critical
activities handled by shared services, the management of the parent company is free to focus
the company on its co re competencies.
 A potential for creating an externally focused profit center. At one end of the spectrum, a
business unit following the shared services model can be operated as a nearly autonomous
entity, with other paying outside clients. From the perspective of the shared business unit, the
shared services model promises:
 Increased efficiencies. Standardization of processes and applying technologies where
appropriate can provide improved quality of services at comparable or lower prices. There is
constant pressure on the business unit to increase efficiency and internal customer satisfaction.
If the business unit evolves to the point that it has sufficient surplus capacity to sell services
on the open market, then this pressure applies to external customer s as well.

109 Why HR Outsourcing Adds Value to an Organization , Link: http://www.virtualhr.co.ke/why -hr-outsourcing -adds-
value -to-an-organization/ (seen on June 26, 2018).

56
 Decre ased personnel requirements. With the ability to concentrate and focus resources for
particular purposes in a shared business unit, fewer employees are generally needed to provide
the same results. In addition to downsizing or rightsizing, the shared servi ces model often
allows downscaling, in which new methodologies and efficiency improvements allow junior
staff to take over tasks once controlled by more expensive senior staff.
 Improved economies of scale. Like a traditional centralized approach, shared s ervices
concentrates purchasing and other formerly dispersed business activities, resulting in greater
buying power and greater concentration of specialized resources, such as specialists in certain
aspects of accounting. This concentration allows for incr eased economies of scale, compared
to the original corporate structure.110
As seen above about the benefits of outsourcing HR and following the history of outsourcing, we can
affirm with a certain of surety that any modern organization use or used at a given time HRO. The
following organization that I am going to present is not for the fact it haven’t ever used an outsourced
HR, but because I believe that the NGOs are different kind of organizations. The NGO certainly use
outsourced HR – many a time the perso ns administering the NGO are volunteers, its personal it’s
composed mainly by volunteers. Thus, aren’t volunteers an outsourced human resource?
European Organization for Quality . The EOQ, is a n autonomous, non -profit making
association under Belgian law. The EOQ is the European interdisciplinary organization striving for
effective improvement in the sphere of quality in its broadest sense acting as the coordinating body
and catalyst of its Nat ional Repre sentative Organizations. Within the EOQ network of organizations
from European countries and all over the world are linked hundreds of thousands of experts and
companies in the field of quali ty. The values, vision and mission of EOQ are containe d in the EOQ
Charter developed and adopted by the EOQ General Assembly. The EOQ (at that time called
European Organization for Quality Control – EOQC) was established in 1956 and the founding
organizations came from five western European Countries: France, Italy, Western Germany, The
Netherlands and United Kingdom. Then, as a first major step in broadening the delivery of a quality
agenda the EOQ spread its roots into other western European countries, before establishing links with
central and eastern Europ ean countries in what was then seen as a Communist bloc. More recently

110 Bergeron, Bryan P., Essentials of shared services , John Wiley & Sons, Inc., 2003, pp. 6 -7.

57
EOQ has widened its activities to include the countries of the southern and eastern Mediterranean
region.111
Facts and Figures
 40 countries ;
 70 000 m embers (through its member organizatio ns);
 500 000 companies linked;
 Over 80,000 experts registered ;
 Over 1000 events during the yearly European Quality Week ;
 60 yearly congresses ;
 More than 40 professionals who will write persuasive essay for you;112
Historical Data
 2015 Definition of new EOQ mission, vision and strategy;
 2009 TWG – starting the elaboration of EOQ normative documents (CoS and CS) ;
 2005 EVROS ;
 2004 Business Leaders Club ;
 2004 European Platform on transformation ;
 2003 European Quality Leader ;
 2002 Sustainable development ;
 2001 EOQ Summer Camp ;
 2000 European Quality Vision ;
 1999 European Customer Satisfaction Index ;
 1997 European Quality Award for SME ;
 1996 Anticipation and breakthrough management ;
 1995 European Quality Week ;
 1992 European Quality Award for Business Excellence ;
 1990 Certification of Quality Personnel ;
 1990 European Quality Award for Leadership in TQM ;

111 About EOQ , Link: http://www.eoq.org/about_eoq.html (seen on June 26, 2018).
112 History, facts and figures , Link: http://www.eoq.org/about_eoq/history_facts_and_figures.html (seen on June 26,
2018).

58
 1989 Yearly World Quality Day initiated by the EOQ ;
 1987 EOQ moves from Quality Control to Quality Management ;
 1985 National Quality Award ;
 1960 Zero default ;
 1950 Diffusion of statistic methods ;113
EOQ is a widely accepted quality management network based in Europe and worldwide. EOQ
is actively cooperating with other European and international organizations. It is closely linked with
the World Alliance for Quality (WA Q), International Personnel Certification A ssociation (IPC), and
International Organization for Standardization (ISO), Committee on Conformity Assessment
(CASCO), European Committee for Standardization (CEN), European Co -operation for Accreditation
(EA), I nternatio nal Accreditation Forum (IAF). However, t he success of EOQ depends on its member
organizations. EOQ effective members or national representatives and associated members are non-
profit quality organizations established in Europe including countries in the Mediterranean region,
actively promoting and supporting quality on a national level. The EOQ honorary members are
individuals who have made an ou tstanding contribution to EOQ and the EOQ affiliate members are
organizations around the world willing in various wa ys to cooperate with EOQ. EOQ partners are
organizations such as universities or companies willing to share knowledge and experience at regional,
European and international levels.114
EOQ vision and mission. Europe’s leading promoter of Quality by extending its sphere of
influence through entire Europe and beyond and to i mprove European society through the promotion
of Quality in its broadest sense. This will be achieved by:
 Facilitated networking especially by developing and providing a n information and
communication network for EOQ members to facilitate the transfer of knowledge ;
disseminating leading edge concepts and techniques ; cooperating with relevant organizations,
governments inside and outside of Europe and f ostering the process es of global integration in
the field of quality .

113 Idem.
114 European Organizations for Quality (EOQ) , Link:
http://www.eoq.org/fileadmin/user_upload/Loginarea/News/7_2_EOQ_leaflet_general_final_090410.pdf (seen on June
26, 2018).

59
 Supporting EOQ members. EOQ has to transform itself into the new business and
organisational model. The revenue stream should mainly be achieved by sharing good NRs
practises under the leadership of EOQ and applying for funding for Quality and
competitiveness and by p rograms like mentorship, marketing packages, product portfolio,
exchange of experts, trainings and education, can be implemented.
 Strengthening the reputation of EOQ . Increasing marketing activ ities and s upport ing a high
level prestige of EOQ recognized professionals . Also by s upport ing the local recognition and
reputation of EOQ members ; by a cquisition o f strong and active new members or partners and
influencing of and active participation in quality infrastructure related standardization
activities .
 Developing EOQ product portfolio and value proposition . Implementing My EOQ model with
increased number of products, e.g. recognized by EOQ, troubleshooting kits, activities,
awards , events continu ous improvement model, kits for improving creativity and innovation
in a field of Quality, etc.
 Supporting management or /quality professionals by developing EOQ normative documents
internationally recognized , EOQ recognition of competence , registration of certified
professionals and o rganizing training and other activities for supporting careers .115

5. How the HR outsourcing can improve the organization’s prosperity (Strategy)
The emphasis on human capital and knowledge creation to gain and sustain competitive
advantage in today’s highly competitive global economy has made the human resource function or
the system strategically important. HR system is one important component tha t can help an
organization become more effective and achieve a competitive advantage .116 The single biggest cause
in the increase of outsourcing has been the concept of the core organiz ations which focuses its in –
house expertise on its primary functions and purchases any necessary support from a ran ge of sources

115 EOQ Charter , Link: http://www.eoq.org/about_eoq/eoq_charter_mission_vision.html (seen on June 26, 2018).
116 Chung -Shing Leea, C. Christopher Leeb and He -Boong Kwon, A Framework of Outsourcing Decision -Making for
Human Resource Information Systems , Link: http://www.kmis.or.kr/3_sig/krais_data/07spring -3.pdf (seen on June 26,
2018).

60
in its periphery.117 When making a decision about outsourcing human resources, one should take into
account the following:
 What will be the net gain or loss in efficiency and cost -effectiveness of using outsourcing?
 What will be the net gain or loss in performance quality of using outsourcing?
 What will be the net effect on the strength, versatility and resourcefulness of the treasury
department if the duties in question are outsourced?
 What dependence on a third party will be created by outsourcing, and how vulnerable would
the organization be if that third party somehow became unable to perform as expected?118

To have a better strategy of something, you need to understand its struggles and its positives.
Where does it want to go? What does it already use in its strategy for bettering itself? One of the
problems with HRO is difficulty in accepting the change by the employees of the organization; losing
control over the process and lay. Such e mployee reactions generally create difficulty in outsourcing.
Effective communications and change management programs are especially crucial at this stage when

117 Agwu Edwin, Strategic Management of the Benefits and Challenges of HR Outsourcing in Effective Organizational
Management , Link: http://jbsq.org/wp -content/uploads/2015/12/December_2015_6.pdf (seen on June 26, 2018).
118 Idem . (The next figure is taken fro m the same article as this data)

61
the new scope involves implem enting a self -service platform; e mployees need to be helped to adop t
to this the new system. Also there are various risks associated with HRO. One of such risk is the
business risk which may arise due t o cheap outsourcing contracts; t here is also spillover risk (meaning,
exposing of confidential matters to competitors ). Political risks is another issue in outsourcing.
Another problem in H RO is that somet imes it brings threat to the organization culture and it gets
totally out of control if gone into the hands of unsympathetic outsourcers. Also vendor organization
should be well aware with the laws and should act in compliance with laws of his and client’s country
otherwise legal issues may crop up and may adversely affect organization. One more problem that
arises is the loss of personal touch with the employees . Because an in-house HR person interacts daily
with your employees, they will likely have more of an interest in your employees; giving up the right
to hire and fire their employees , may not be desirable for their particular business.119
Following the information above, a strategic first step in a healthy relation between a HRO
company and its client is knowledge. Know your client, know its culture, its language, its rules and
regulations. Study the client and see what kind of organization it is. Does it run on a vertical plane or
a horizontal one?120 Is its director or manager a honest man? Could you understand each other? Would
he or she understand that the HR outsourced to them are not really their employees? And so on and

119 Amitabh Kodwani, Human Resource Outsourcing: Issues and Challenges , Link:
https://www.researchgate.net/publication/279482544_Human_Resource_Outsourcing_Issues_and_Challenges (seen on
June 26, 2018).
120 I’m referring here at the organizations run hierarchic or egalitarian. KnoweledgeUnderstanding
Respec t
Honesty
Truthfulness ComunicationNo blundersNo ignorance

62
so forth. Knowledge is the base for any ty pe of relation. If you don’t “map” before you “jump” it may
be a las t jump, or a highly dangerous one.
Ignorance is not bliss, as some would say. No. To be ignorant means that you either have not
yet knowledge about that something, or that you don’t want t o know about that something and this is
foul. By knowing your client you’ll have the ability to understand his or hers idiosyncrasies, or its
religion, belief, policy, type – for example, is the client an authoritarian leader, if so, would you want
to have any kind of relation with him or her? Trough knowledge of each other, the two firms can gain
a healthy respect for one another, from which may result a long and healthy relation. Also, by
understanding the client or the HR Company’s culture, you can avoid numerous offences to each
other.

63

CONCLUSION

When consid ering HR outsourcing, an organiz ation needs to ask at the outset why it needs to
change the way the HR function operates at present. In other words, what aspects of the existing HR
systems are not satisfactory and/or would benefit from improvements? Creating a business case for
HR outsourcing is an important step in establishing its legitimacy. There are a number of potential
benefits and challenges in HR outsourcing.121
 Core vs p eriphery activities . Some scholars use the concept of “core” and “pe riphery”
activities to explain the outsourcing of a firm’s. This line of thinking argues that the
outsourcing of non -core HR acti vities allows the HR department to focus on its cor e stra tegic
HR activities which are critical for realizing business strategy.
 Transaction cost economic model. The decisions to produce or outsource HR should rest upon
the relative costs of production and transaction.
 Lack of in -house expertise . Firms are seen to outsource so as to gain from the rising
comparative advantage of extremely specialized service providers who may have exper tise in
the concerned areas.
 To perform one -time tasks . This includes issues such as integration in the case of mergers &
acquisitions; a nother reason why companies may consider HR outsourcing is to perform a one –
time activity, fo r example, change management.
 To overcome cultural differences. When the organization’s culture is significantly different
from the local cultur e greater resort to outsourcing may be done. Companies also outsource
their HR processes, especially recruitment, so as to overcome problems arisi ng from cultural
differences.
 Cost efficiency. Downsizing and tougher competition p ut HR under increasing pre ssure to
demonstrate value both in terms o f efficiency and effectiveness . Outsourcing some of their
activities allows companies to cut direct and indirect costs. Thus, it saves costs on recruiting,

121 Jain & Saini, quoted , p. 4.

64
overtime working, training and development. It saves costs involved in higher incidence of
absenteeism and also reduces administrative and backup costs. Scholars have observed that
HR outsourcing decisions are taken often in response to demand for reducing costs for HR
services.122
Accounting Ace is an organization that has established in the Central a nd Eastern Europe
(CEE) in 2006. They help companies switch from paper -based activities to fully innovative, online
business administration . Accace outsources in the following: payroll outsourcing & H R
administr ation s ervices , accounting outsourcing & reporting s ervices , accounts payable management
I canning, data extraction and archive and Microsoft Dynamics NAV .123 On the other hand, the
European Organization for Quality is a NGO, based in Brazil and is acting as a worldwide leader in
the development and management of quality and as a key influencer in education in the field of
quality. EOQ was founded in 1956 and is the European interdisciplinary organization striving for
effective improvement in the sphere of quality in its broadest sense acting as the coordinating body
and catalyst of its National Representative Organizations .124
Why do organizations use outsourced HR? This are some of the mainly motives for
outsourcing: an HR team that’s too overwhelm ed to handle all of the critical HR tasks , risks from not
being up -to-date on compliance, or not recognizing violations as they occur , broken or non -existent
hiring processes , communications problems, l ack of proper attention to training needs , employee
morale or engagement issues , unnecessary employee turnover – or the need for employee turnover
and p erformance not being managed properly .125 Thus, even if there are some negative aspects of
outsourcing, the positive ones far outweigh the downs of HR outsourcing.

122 Idem.
123 Outsourcing , Link: https://accace.com/outsourcing/ (seen on June 26, 2018).
124 About EOQ, quoted .
125 Why outsource , Link: https://myhrpartnerinc.com/about/ why-outsource/ (seen on June 26, 2018).

65

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38. Link: https://www.inc.com/fiscal -times/human -resources -big-savings -for-small –
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39. McKinse y & Company Europe at a glance , Link: http://www.vault.com/company –
profiles/management -strategy/mckinsey -company -europe/company -overview .aspx (seen on
June 20, 2018).
40. Office locations , Link: https://www.uk.mercer.com/about -us/locations.html (seen on June 20,
2018).
41. Office locations , Link: https://www.willistowerswatson.com/en/about -us/office -locations
(seen on June 20, 2018).
42. Organizational Growth , Link: https://www.inc.com/encyclopedia/managing -organizational –
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43. Our history, Link: https://www.willistowerswatson.com/en/about -us/our -history (seen on
June 20, 2018).
44. Outsourcing, Link: http://www.businessdictionary.com/definition/outsourcing.html (seen on
June 26, 2018).
45. Outsourcing , Link: https://accace.com/outsourcing/ (seen on June 26, 2018).
46. Outsourcing , Link: https://www.techopedia.com/definition/8728/outsourcing (seen on June
26, 2018).
47. Overview , Link: https://www.willistowerswatson.com/en/about -us/overview (seen on June
20, 2018).
48. Payroll and HR administration outsourcing for large business , Link:
https://accace.com/about -us/case -studies/complex -payroll -hr-administration -outsourcing –
large -business/ (seen on June 25, 2018).

69
49. Pioneers of consulting , Link: https://www.kienbaum.com/en/company/history (seen on June
20, 2018).
50. Reasons why large companies should consider outsourcing HR services, Link:
https://www.augmenthr.com/blog/3 -reasons -why-large -companies -should -consider –
outsourcing -hr-services/ (seen on June 21, 2018).
51. Strategies for Improving Employee Product ivity and Prosperity , Link:
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prosperity/ (seen on June 21, 2018) .
52. Takeover and management of shared services center, Link: https://accace.com/about -us/case –
studies/takeover -and-management -of-shared -servi ces-centre/ (seen on June 26, 2018).
53. The ISO 27000 series of standards have been specifically reserved by ISO for information
security matters. This of course, aligns with a number of other topics, including ISO 9000
(quality management) and ISO 14000 (env ironmental management). Link:
http://www.27000.org/ (seen on June 21, 2018).
54. The People and HR Challenges of Expanding Shared Services Multinational , Link:
https://www.ssonetwork.com/global -business -services/articles/the -people -and-hr-challenges –
of-expanding -shared -s (seen on June 21, 2018).
55. The Top 10 Problems with Outsourcing Implementation, Link:
https://www.ssonetwork.com/business -process -outsourcing/articles/the -top-10-problems –
with-outsourcing -implementatio (seen on June 21, 2018).
56. Virginia Doellgast and Howard Gospel, Outsourcing and Human Resource Management ,
Link:
https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=2234&context=articles
(seen on June 26, 2018).
57. Who we are, Link: https://accace.com/about -us/who -we-are/ (seen on June 25, 2018 ).
58. Why HR Outsourcing Adds Value to an Organization , Link: http://www.virtualhr.co.ke/why –
hr-outsourcing -adds-value -to-an-organization/ (seen on June 26, 2018).
59. Why out source , Link: https://myhrpartnerinc.com/about/why -outsource/ (seen on June 26,
2018).