Today's business leaders are constantly forced to cut costs and increase efficiency. Some employers see outsourcing as an obvious solution. Outsourcing can be a powerful tool when conducted for the right reasons. Unfortunately, companies often turn to outsourcing for the wrong reason - to save money.

Instead, employers should look at outsourcing as a way to gain access to greater expertise, receive better service, automate processes and improve quality. Used appropriately, outsourcing enables HR/benefits managers to be more productive by eliminating the manual, administrative tasks.

Recent studies have shown that HR/benefits departments are moving toward a selective outsourcing model that allows them to choose which functions they want to keep in-house and which they are comfortable contracting out. This is a better model for companies, as it allows them to take advantage of the benefits of outsourcing, but also lets them tailor their outsourcing strategy to meet their particular needs.

In-house vs. outsource

According to Watson Wyatt's latest HR technology trends survey, a large majority of employers already have started - or plan to start - outsourcing payroll, recruiting and stock plan administration, leaving HR/benefits pros free to take on strategic planning. On the administration side, 75% of companies polled are outsourcing defined contribution plan processes, and more than half are outsourcing health care and defined benefit plan processes.

Another area that will see major growth in outsourcing is talent management. Employers stated that succession planning, performance appraisals and workforce planning systems are their most immediate needs. They are moving from a manual, siloed process toward adopting a more holistic model, involving an integrated technology system. A total, or integrated, solution removes the silos and provides employers with a set of programs, processes and tools to attract, engage and retain critical talent.

However, companies are far less willing to outsource their information and management systems. Findings showed that a large majority (70%) are keeping the HR information systems in-house, while only 9% are relying on outside sources. This is further evidence that HR/benefits managers are taking advantage of selective outsourcing to retain some flexibility and control. Outsourcing entire information systems would mean giving away much of this control, something pros will be loath to do.

Also, in terms of HR/benefits delivery, most companies (63%) turn to internal or enterprise resource planning systems first to deliver services, and only 21% of companies automatically look to outsource programs. One in five are looking to change their HR delivery systems in one way or another in the coming year, suggesting that there is a major drive to change.

HR/benefits personnel should consider different delivery and administration options because theirs is a discipline that is changing rapidly.

Employees want more information and the freedom to have a more interactive part in the process of choosing their benefits and reward packages. Employers are encouraging this, as health care and retirement benefits become more complex than ever.

However, this shift calls for more sophisticated information systems and tools, which in turn need to be maintained. These tasks are automated and therefore easily outsourced, as technology becomes a bigger part of overall processes.

When it is crucial for HR/benefits managers to grapple with larger issues of employee engagement and information delivery, they do not want the bulk of their time to be spent on routine, administrative tasks.

Richard Hubbard is the director of Watson Wyatt's U.S. technology and administration solutions practice.