The Middle Market is Slow to Adopt Human Capital Management Functions Due to a Lack of Perceived Business Value, says Aberdeen Group Report

Business Wire, Oct 12, 2004

BOSTON -- Despite the fact that more than half of the middle market companies outsource some portion of their human capital management (HCM) programs, seventy-one percent of middle-market companies do not perceiver human resource outsourcing as having enough value to add to what they outsource today, says a report by Aberdeen Group.

The Aberdeen report, "Human Resource Outsourcing: HRO -- The Middle Market Benchmark" found that, unlike larger corporations, 60% of middle market companies, those companies under $1 billion in annual revenue thought the required organization or potential process changes were not offset by the expected benefits.

"Lowering operating costs is the primary reason mid-market companies consider a move to outsourcing their human capital processes today," said Dr. Katherine Jones, Aberdeen's research director of enterprise applications and author of the report. "Ninety-percent of respondents to our survey identified reduction of administrative and overhead costs as most important strategy. Yet this segment remains cautious about outsourcing its HCM processes."

However, indicated Jones, sixty-eight percent of survey respondents cite that the perceived lack of a compelling business value proposition can be overcome if an HCM technology demonstrates a clear ability to improve services to employees, followed by demonstrable savings within a year.

This study surveyed respondents on 22 categories of human capital business processes covering transactions, recruiting and staffing, and employee life cycle management to ascertain current views and future plans. It was designed for business executives considering outsourcing part or all of their human capital management and provides HRO planning guidance based on interviews with middle market companies currently outsourcing their human capital management.

To obtain a copy of this report please follow this link:

http://www.aberdeen.com/summary/report/benchmark/HRO_092904b.asp

This report, as well as Aberdeen's entire research library, is available to members of AberdeenAccess. For more information visit www.aberdeen.com, or call 617-854-5250.

About Aberdeen Group

Founded in 1988, AberdeenGroup Inc. is the trusted advisor to the global business executive for value chain strategies and business advice.