Outsourcing Administration of International Benefits: What advantages it offers to employers and other groups

For the small and medium-sized company, outsourcing of some or all of the Human Resource functions has become not only possible, but a very viable option.

WorldatWork Survey
A recent survey was conducted by WorldatWork, formerly the American Compensation Association, a global, not-for-profit professional association of more than 26,000 compensation, benefits and human resources professionals.

Survey respondents from 454 member companies reported using a number of criteria in selecting an outsourcing organization, with cost (90 percent), technical expertise (89%) and commitment to customer service (88%) leading the way.

Other criteria companies consider in choosing an outsourcing vendor include: responsiveness (87%), customer service (83%), experience level of outsourcing partner (69%), reputation of the outsourcing firm (61%) and long-term stability and reliability (56%). For purposes of the survey, outsourcing was defined to include all possible benefit activities, including claims processing.

Additionally:

•  50% of companies consider the key driver for outsourcing benefits functions to be the pressure to perform with limited resources, while 34% consider the complexity of benefit plans, including regulatory and legislative changes, to be the driving force behind the move;
  
• 59% of companies reported realizing added value since outsourcing one or more benefits;
  
• 53% report realizing cost savings and 46% report increased employee satisfaction with the function of the benefits plan;
  
• 51% of those outsourcing benefits functions are considering outsourcing further benefits in the future;
  
• A majority of companies outsourcing various benefits functions report a neutral impact on costs.
  
 

HRMagazine
If these facts ring true when discussing benefits for employees within the same region/country, how much more so when managing the HR needs of expatriate employees - those living in another country.

In a December 1995 article in HRMagazine, the authors started the article with the following:    

 "As multinational firms expand in new and varied ways, they often find it necessary to send employees abroad to manage operations ranging from joint ventures to technology transfers to new business development. But, because a worker's performance can suffer when financial, family, or legal issues arise, it is vital that a company's human resource professionals create a supportive environment for the company's expatriates."

They cited the fact that "'companies typically spend three times an overseas employee's salary and bonus each year." They go on to provide a checklist of questions a company should ask itself when deciding whether to outsource the HR needs of expatriates:

• Do day-to-day administration and details consume an inordinate amount of HR staff time?
  
• Is expatriate service constrained by cost considerations, experience levels of staff or both?
  
• Is it difficult to attract and retain individuals with experience in expatriate administration?
  
• Do fluctuations in the company's expatriate population make it difficult to maintain appropriate  levels in HR staff assigned to support employees abroad?
  
• Are you confident that the company is spending the right amount to maintain its expatriate workforce?

The article ends with the following statement:     

"The benefits a company obtains by engaging an independent provider extend across several areas. Companies can raise their HR productivity, implement policies that best support expatriate employees, and achieve substantial savings over current expenditures.

A leaner HR staff, relieved of the need to perform these administrative duties, can then tackle strategic issues such as developing and retaining talent. HR should be planning how to use the skills and expertise of returning expatriates, not just helping them unpack".

The bottom line to all of this is that the management of expatriate employees and their families does end with their departure for their new posting. In fact, this is frequently when the problems begin. Inadequate preparation, education, training and support for assimilation and cultural differences, and  host of other aspects of the move can doom the success of the move before it even starts.

FTExpat
From the other side, FTExpat.com (Financial Times Expatriate website), in an article entitled "Uncovering the real world of the expat", provides information from a survey conducted on 160 multinational expatriates by the London School of Economics and Homezick.com. The survey was conducted to identify the challenges faced by expatriates and their families in moving abroad. Some of the more interesting results were that:

This quick look at outsourcing of international HR functions is to remind you, as always, that there are no bargains out there. You should always use the services of an experienced international consultant to assist you in making such decisions.




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The Innovative Benefits Consultants
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