Get the full picture: calculate the total value of your outsourcing investment

As a business leader, you must manage the multitude, complexity, and cost of administrative functions in your operations. It is wise to outsource these functions, since they are technology driven, continually evolving, and costly to administer with internal resources. However, you should assure the strongest return on your outsourcing investment to create maximum value for your enterprise.

Paying attention to cost savings is a good start. Hard cost comparisons are straightforward using quantifiable variables, and these comparisons can give the impression of equal value between processes. However, looking at soft cost comparisons, such as IT support costs and employee retention, will add significantly to the value of your outsourcing investment.

Outsourcing lets you convert fixed costs to variable by reducing items such as space allocation and personnel training. As you quantify cost reductions, pay attention to the savings of reduced risk. For example, outsourced payroll tax services should protect you from non-compliance penalties, late fees, and other risk-related expenses. Quality service levels can increase productivity and employee satisfaction levels, adding to your overall value. For example, Web self-services give employees more control over their data, and lowers transaction costs by redistributing workflow and reducing redundant activities.

Flexible, scalable technology is essential to a strong partnership. Technology should be responsive to change, and adapt to fluctuating conditions. The solution should easily integrate new business units, employees and systems resulting from mergers, reorganizations or other corporate changes. This flexibility will help you make more strategic decisions and ensure that the HR administrative function contributes to the change process, rather than creating a bottleneck.

Finally, your solution should add value to your human capital investment. Survey your administrative and IT professionals to see if they trust your provider's expertise and are experiencing the expected time savings and efficiencies. They should be able to shift non-core activities with full confidence, and have more time to focus on strategic initiatives.

Getting the full picture of your outsourcing investment will help you manage your outsourcing partnership with a tighter focus, a stronger commitment, and a greater assurance in its ultimate value.