The ‘Lift and Shift’ comeback in HR Outsourcing – 7 tips to reduce the risks

By HR Transformer Blog | November 5, 2009

According to Everest, HR Outsourcing (HRO) buyers are now looking increasingly at the “Lift and Shift” model to provide early cost savings by transferring HR processes to suppliers.

Lift and shift has its place in HR Outsourcing for processes that are non-strategic, highly transactional, less complex and working pretty well already. In these examples, cost savings with similar service levels are achievable. Avoid transferring your problems to a 3rd party vendor as it will be more expensive to fix and reinforce the other name for this type of outsourcing - “your mess for less”. Do consider more transformational solutions as you develop your business case.

Some points to consider when thinking about “Lift and Shift” for HR outsourcing or offshoring :-

1. Develop a set of sourcing criteria around decisions to help focus on which processes to keep ‘in-house’, outsource or offshore. Typical criteria include :-
o Strategic vs Non-Strategic processes
o Market competition for services
o Realistic cost and service benefits
o Complexity of the process
o The overall change impact
o Process readiness

2. ‘Transition first then Transform later’ probably won’t happen in the planned timescales. After you have achieved the difficult transition and stabilised the process, priorities for investment will have moved on. It is well worth spending the time up front on process redesign as you might find that the root cause of your problems is harder to fix after outsourcing.

3. Do as much process standardisation and policy harmonisation as possible. This will involve extra time in getting your internal customer groups to agree to a standard, common level of service, but will be worth it 6 months after go-live with better service levels and lower costs.

4. Spend adequate time on data cleansing – again this will take more time up front but the payoff will be avoiding the extra ongoing management costs of fixing service issues – which are more expensive when 3rd parties are involved.

5. Expect the length of service stabilisation to be between 3-18 months following ‘go-live’, this will be influenced by many factors including the state of the processes you are transitioning.

6. Think about your longer term HR Operating Model and HR Technology Infrastructure. Have a clear view of what is required from HR in the future – especially in the current environment. Make sure no doors have been closed by outsourcing HR processes.

7. With a lift and shift business case, also develop a more transformational solution alternative in addition to your “as-is” or baseline case. Ask an independent expert (not the HRO vendor) on what the realistic cost and benefits will be.

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