More businesses are turning to outsourcing for HR tasks like payroll, hiring, and benefits management. It can be a bit overwhelming, but HR outsourcing examples can give you a clear idea and some inspiration on how to manage these tasks more effectively.
In this article, we’ll walk through 7 real-life examples to show how companies benefit from HR outsourcing.
7 Successful HR Outsourcing Examples You Can Learn From
Here are 7 examples of HR outsourcing in real life that turned out to be successes.
1. Unisys x Exult (IT Industry)
Back in 2000, Unisys, a major name in IT services, was dealing with a common issue that many large companies face: their HR operations had become too complex and costly to manage effectively.
The Challenge:
With 36,000 employees spread across 100 countries, keeping up with payroll, benefits, and employee data management was eating up resources.
Unisys needed a smarter way to handle these tasks, one that would cut costs and allow their HR team to focus on more impactful work instead of getting bogged down in routine administrative duties.
The Solution:
Unisys decided to partner with Exult, an HR outsourcing specialist, in a 7-year, $200 million deal. Exult took over many of Unisys’s HR functions which were previously handled in-house.
Here are just some of them:
- Payroll processing
- Benefits administration
- Web-based HR system
The new HR system, in particular, was a real game-changer. Unisys employees took control of their HR needs – whether it was updating personal information, managing expenses, or even submitting vacation requests – all from their desktops.
The Outcome:
This move to outsource HR was a transformative business decision for Unisys.
According to Unisys’ estimations, the partnership could save around $20 million. The new system empowered employees to handle many of their own HR tasks, which reduced the workload on HR staff and sped up processes across the board.
This successful shift to outsourcing and automation set a new standard for how Unisys managed its people, helping them stay ahead in the competitive IT industry.
2. John Muir Health x PwC & Workday (Health Industry)
John Muir Health is a major healthcare provider in Northern California with 3 hospitals, $2.1 billion in revenue, and around 5,000 employees. In 2018, it found itself in a tough spot.
The Challenge:
The biggest issue John Muir Health had was the rising operational costs. The added expenses were eating into their budget, and they needed to make big cuts – about 1/3 of their expenses over the next few years – to stay competitive.
Their old systems for Human Resources, Finance, and Supply Chain were outdated, inefficient, and costly to maintain. It was clear that just updating technology wouldn’t be enough – they needed a broader approach to tackle these challenges head-on.
The Solution:
John Muir Health partnered with PwC to rethink their entire business operation.
Instead of just focusing on new technology, they decided to first identify 10 key capabilities they needed to strengthen. Some of the major areas they prioritized included:
- Redesigning their processes
- Training their staff
- Automating tasks using Workday’s cloud-based systems
A big part of this effort was integrating Workday’s Supply Chain Management (SCM) system with their existing Human Capital Management and newly implemented Financials systems.
This setup allowed John Muir Health to share real-time data across different departments to improve decision-making and boost efficiency. They also proactively worked with other healthcare providers and Workday to fine-tune the SCM product to better meet industry needs.
The Outcome:
This approach resulted in major improvements at John Muir Health. They saw benefits almost right away:
- The time it took to close their books dropped from 10 days to 7
- The number of transactions handled through purchase orders increased by 25%
- The new Workday recruiting and onboarding modules sped up hiring, cutting down hiring-related expenses.
Aside from this, there were also several other benefits in other areas of the company. Outsourcing reduced manual work, improved internal controls, and made better use of mobile technology, which sped up approvals and cut down on paper use.
It also helped John Muir Health set up a plan to outsource procurement, IT, and revenue cycle management to Optum, building on the progress they had already made. Even better – employee satisfaction with the new systems went up, as recognized through awards like the Collaboration Champion Award at Workday Rising 2019.
3. Unilever x Accenture (Consumer Goods Industry)
In 2006, Unilever, one of the world’s largest consumer goods companies, was struggling to manage HR for nearly 200,000 employees across 100 countries.
The Challenge:
Unilever found several admin and management tasks becoming increasingly difficult as they scaled up. Although the company had 3,300 HR employees, their HR systems were outdated, resulting in inefficiencies and rising costs.
Unilever knew they needed to simplify and unify their HR operations to keep up with their global “One Unilever” initiative, which aimed to bring all their operations under one cohesive strategy.
The Solution:
To tackle these challenges, Unilever signed a 7-year outsourcing agreement with Accenture, starting in July 2006.
Accenture stepped in to manage Unilever’s HR operations across Europe, the Americas, and Asia/AMET (Africa, the Middle East, and Turkey). They delivered services in more than 20 languages from centers in Bangalore, Manila, Dalian, Bucharest, Prague, and Curitiba. They took charge of essential HR functions, including:
- Payroll
- Recruitment
- Performance management
Accenture also handled Unilever’s learning services, managing everything from content creation to program delivery. Unilever needed to shift their HR tasks to a trusted expert, so they could focus more on their core business. The goal was to make their HR operations smoother and more responsive to their global needs.
The Outcome:
The collaboration between Unilever and Accenture brought about a major transformation in how Unilever handled HR.
While the exact details weren’t confirmed, the partnership successfully supported Unilever’s global growth plans. It was renewed in 2012, putting the 2 companies on another 5-year contract worth £500 million.
It has also brought about more partnerships over the years. In fact, just this year, Accenture announced another partnership with Unilever, this time regarding the company’s AI processes.
4. Procter & Gamble (P&G) x IBM (Consumer Goods Industry)
Procter & Gamble (P&G) may be a powerhouse in the consumer goods industry, but with their size comes a fair share of unexpected challenges.
The Challenge:
Known for its wide range of consumer goods, P&G wanted to tap into HR analytics to improve its workforce management.
But there was a problem: they didn’t have the in-house skills or resources to build the kind of advanced analytics systems they needed for their 98,000 employees.
Without these capabilities, it was hard for P&G to analyze employee data and make better decisions about hiring and workforce planning, especially on such a large scale.
The Solution:
P&G teamed up with IBM in a $400 million outsourcing deal that started in 2004. This was part of a series of outsourcing contracts with 3 companies – IBM, Hewlett-Packard (HP), and Jones Lang LaSalle (JLL), worth about $4.2 billion in total.
IBM took over many of P&G’s HR services, including:
- Payroll
- Recruitment
- HR analytics
IBM’s job was to set up and run tools that could process huge amounts of employee data, helping P&G make smarter decisions.
This agreement also meant that about 800 P&G employees moved over to IBM to work on these tasks. IBM managed HR operations across 80 countries through a network of global service centers. This provided P&G with advanced analytics without having to build these capabilities from scratch.
The Outcome:
With IBM’s help, P&G could finally use data to make informed decisions about their workforce. The new analytics tools let them predict trends like employee turnover and workforce needs, which helped P&G optimize its HR strategies.
The collaboration with IBM showed how outsourcing HR analytics could produce better results while letting P&G focus on its core business goals.
5. Prudential Financial x Exult (Financial Industry)
In 2002, Prudential Financial, a major player in the insurance and investment industry, was having trouble with their increasing business needs.
The Challenge:
Prudential was wrestling with the complexity and rising costs of managing HR for its 47,000 employees. The company’s HR functions, from payroll to benefits administration, were becoming increasingly burdensome.
To stay competitive and focus more on strategic HR activities, like enhancing employee self-service options, Prudential needed a more efficient way to handle these everyday tasks.
The Solution:
Prudential made a bold move by partnering with Exult Inc., signing a 10-year, $700 million outsourcing deal.
Exult took over a wide range of HR duties, including:
- Payroll
- HR call center management
- Employee records management
- HR IT management
By handing off these tasks to Exult, Prudential benefited from how efficient Exult’s service centers in North Carolina and Texas were.
The Outcome:
Exult took charge of processing over $3 billion in annual accounts payable transactions, allowing Prudential to streamline operations. Although the exact savings weren’t disclosed, handing over HR tasks to HR outsourcing specialists helped the company reduce administrative burdens and made things more cost-effective.
This change let Prudential concentrate on core business goals and strategic HR initiatives, setting a strong example of how outsourcing can be a smart move for large companies dealing with complex operations.
6. L’Oréal x UCMS (Beauty Industry)
In 2005, L’Oréal was dealing with the growing challenge of managing HR operations for its expanding business in Russia.
The Challenge:
L’Oréal wanted to focus on creating top-quality beauty products, but they were repeatedly overwhelmed by the demands of handling payroll, HR administration, and compliance with Russian labor laws.
The company knew they had to find a way to keep these processes efficient and compliant without getting stuck in the day-to-day complexities, so they could focus on their core mission: beauty innovation.
The Solution:
L’Oréal partnered with UCMS Group, a company specializing in HR outsourcing. Initially, the focus was on outsourcing payroll management to pay employees accurately and on time.
However, as the partnership grew, L’Oréal extended the outsourcing agreement to cover more HR functions, including:
- Managing employee data
- Compliance reporting
By 2009, the company had adopted a Software-as-a-Service (SaaS) model that UCMS Group provided. With it, L’Oréal handled HR tasks with greater flexibility and efficiency without investing heavily in new technology.
The Outcome:
This partnership with UCMS Group brought noticeable improvements to L’Oréal’s HR operations. The SaaS model offered a flexible, easy-to-use platform that was tailored to meet the specific needs of L’Oréal’s Russian business, especially for complying with local labor regulations.
The successful implementation of these outsourced HR functions helped L’Oréal streamline its operations and reduced the administrative burden on its team. This freed up resources and let L’Oréal concentrate on leading the beauty industry with innovation and creativity.
7. PepsiCo x Hewitt (Food & Beverage Industry)
In 2005, PepsiCo was struggling to manage HR for its massive workforce of 150,000+ employees across more than 200 countries.
The Challenge:
PepsiCo’s in-house systems were becoming too complicated and costly, creating a bottleneck that hindered efficiency. The company realized it needed to find a way to streamline these processes and cut costs.
The Solution:
PepsiCo decided to partner with Hewitt Associates, a leading provider of HR outsourcing services, as part of a $1 billion initiative to optimize its global operations.
Hewitt took over time-consuming but key HR functions like:
- Payroll
- Benefits management
- Workforce administration
The partnership was also expected to save the company millions of dollars each year by reducing administrative costs and delivering better HR services to employees worldwide.
The Outcome:
PepsiCo saw a 20% drop in HR-related costs in the first few years. Employees experienced better, more consistent HR services, which boosted overall satisfaction. With HR duties taken care of, PepsiCo could focus more on innovation and growth to strengthen its position in the global market.
This smart move streamlined its HR operations and helped hit financial targets during an important expansion period.
3 Top-Rated HR Outsourcing Firms To Consider
If you’re thinking about outsourcing HR services, finding the right provider can make all the difference. Here are 3 top-rated HR outsourcing firms offering various services to fit your needs and budget.
I. Genius
Genius can help you hire the top 1% of remote HR professionals in less than two weeks. We specialize in sectors like IT and finance, letting you cut costs by up to 80%. Plus, there’s no monthly fee, and we offer free interviews along with a 6-month talent guarantee.
Core Services:
- Payroll and benefits management
- HR strategy and support
- Employee onboarding
Cost:
25% of the candidate’s first-year salary, paid as a one-time fee.
II. ADP
ADP offers a complete set of HR services through its user-friendly, all-in-one platform. They serve businesses of all sizes and offer flexible HR solutions backed by over 75 years of experience and innovative technology.
Core Services:
- Payroll and tax services
- Benefits administration
- Compliance support
Cost:
Pricing is customized based on your company’s needs.
III. Insperity
Since 1986, Insperity has been a trusted partner for businesses needing full HR support. Their services use advanced HR tools to simplify day-to-day operations for businesses across industries.
Core Services:
- Payroll and risk management
- Employee benefits and compliance
- HR support
Cost:
Custom pricing tailored to your company size and specific needs.
HR Outsourcing Challenges & Solutions To Prepare For
HR outsourcing isn’t a walk in the park. Here are 5 common challenges and the possible solutions to them.
A. Dealing With Communication Issues
Communication challenges are common in HR outsourcing, especially if you’re working across different time zones or the vendor doesn’t fully understand your company’s needs. Misunderstandings can cause delays in handling employee requests or mistakes in payroll processing. This can frustrate both you and your employees.
The best way to avoid this? Establish clear lines of communication from the get go. Set up regular check-ins, designate clear points of contact, and use effective tools like Slack or Zoom to keep everyone aligned. Consistent updates and feedback will go a long way in avoiding missteps.
B. Navigating Data Security Risks
Sharing sensitive employee information with a third-party vendor can be risky, especially when it comes to protecting personal data. Any mishandling of this information can have serious consequences.
So, make sure the HR provider you choose has strong data protection policies in place. Ask them if they have encryption protocols like RSA-2048 or AES 256 and make sure they’re complying with local regulations.
C. Managing Differences In Company Culture
Your HR outsourcing partner may have a different work culture, which can cause friction when their way of doing things doesn’t align with yours. This can make it harder to get everyone working toward the same goals.
To combat this, choose a vendor that matches your company’s values and take the time to onboard them properly. You can have training sessions or even arrange a visit to your offices to help them better understand how you operate.
D. Ensuring The Service Quality From Vendors Meets Expectations
It can be challenging to guarantee the same level of quality from an outsourced HR vendor as you’d expect from an in-house team. If the vendor’s standards slip, it can negatively impact your employees’ experience.
One way to keep the service quality high is to agree on clear performance metrics and schedule regular reviews. Stay in close communication with your vendor so you can quickly address any issues that come up. Also, ask for employee feedback regularly to get a better sense of how the vendor is performing and make adjustments as needed.
E. Addressing Potential Resistance From Employees
Employees might feel uneasy about HR outsourcing, worried that their jobs could be at risk or that they’ll lose the personal touch of an in-house HR. This can create tension and lower morale.
To ease these fears, communicate clearly with your team about why you’re outsourcing and what the benefits are. You can also offer additional training and education sessions. Even better, involve your employees in the transition to make them feel like a key part of the team.
Conclusion
These HR outsourcing examples show how companies have successfully transformed their operations by partnering with specialists. Beyond simply cutting costs, these real-world stories show how outsourcing can boost efficiency and let businesses like yours focus on what you do best.
At Genius, we know the value of outsourcing, too. Just as these companies saw benefits from outsourcing HR, you can achieve similar success with us. We connect you with top global talent at 80% less and without any monthly fee. Our process is simple and effective: hire A+ players, save money, and focus on growing your business.
Ready to take the next step? Check out Genius and see how we can help you succeed!
FAQs
How does outsourcing HR influence company culture?
Outsourcing HR can have a big impact on your company culture, for better or worse. It can free up your internal team to focus on culture-building, but if not managed carefully, it might create a disconnect between employees and the outsourced HR team.
Can outsourcing HR create compliance risks?
Outsourcing HR can actually lower compliance risks if you work with experts who stay updated on laws. However, if your provider isn’t familiar with specific local regulations or if communication breaks down, you could face compliance problems.
How flexible are HR outsourcing contracts?
HR outsourcing contracts can be pretty flexible, letting you adjust services as your needs change. It’s important to negotiate terms that allow for changes in your workforce size or business needs, so you’re not stuck in a rigid contract.
What hidden costs should you watch out for in HR outsourcing?
Hidden costs include fees for extra services, transition costs, and expenses tied to managing the outsourcing relationship. It’s smart to go over contracts carefully and clarify all potential costs upfront to avoid any surprises down the road.
