Federal and state governments are increasingly outsourcing HR
and other functions, a new study from The Conference Board
has said.
Sponsored by Accenture HR Services, the study said early
adopters such as the UK and Australia moved to outsourcing
to save costs, reduce capital spending and to change fixed
costs to variable ones — but noted potential negatives of
the practice: “job losses, skills transfers, unemployment
costs and the disruption of local services against the
promised benefits.”
The study said outsourcing is a way public sector
organizations can centralize disparate HR processes and
help HR departments focus on keeping talented workers and
improve service.
“Through technology tools and processes that most
public-sector organizations could not afford to build
internally, outsourcing can provide much improved and more
convenient services for employees,” says Ton Heijmen,
Senior Advisor to the Conference Board on Outsourcing and
Off-shoring. “This is a particular concern for public-sector
organizations, which generally cannot compete with the
private sector’s pay packages to attract and retain talent.”
State governments, faced with the need to replace legacy
IT systems at a cost of $80 million — $100 million and are
reluctant to do so given rapid technological change and
pressure to reduce costs, something the study says is
driving public organizations to contract out the services.
It said the “trend” would likely be focused at the federal
and state levels because scale is necessary to leverage
savings and justify costs.
