HR-BPO is a logical extension of the trend toward outsourcing and the inclination of companies to delegate individual functions. In HR BPO, the company outsources complete responsibility for an integrated set of functions such as Benefits Administration, Payroll Management and general Human Resources Administration to a third party.

While many outsourcing initiatives focus on specific business functions, some providers are trying to help their clients achieve more broad-reaching benefits. By carrying BPO to its next logical step, a company can outsource not single functions, but entire business processes and the overall responsibility for managing them. In these cases, the outsourcing provider becomes a strategic partner and the client provides only guidance and oversight of the provider’s activities.

Human Resources is a logical candidate for comprehensive BPO. It’s generally accepted that Human Resource departments provide 22 standard services to mid-sized and larger corporations, some of them strategic (they contribute to the central mission of the company), and some of them tactical (they don’t contribute to the central mission, but they’re necessary to carry on business day-to-day). In comprehensive HR BPO, the provider assumes responsibility for most, if not all, of the tactical, back office HR functions because these are transaction intensive and can consume as much as 80 percent of the time and energy of an HR department. The internal HR department and its staff retain responsibility for the strategic HR functions. Of the total list of 22 functions, eleven are tactical, back office functions. HR-BPOs offer:

• Compensation administration
• Benefits administration
• Payroll administration
• Time and expense reimbursement
• Employee data and records management
• HR information technology / HR information systems
• Employee and manager self-service technology
• Workforce analytics
• Expatriate administration
• Domestic relocation
• Policy and legal compliance