Tim Palmer, expert in HR Transformation consulting and the Co-Chair of the European HR Outsourcing Association at PA Consulting Group.

In the third of four articles, Tim Palmer, expert in HR Transformation and the Co-Chair of the European HR Outsourcing Association at PA Consulting Group, examines a further two myths of HR outsourcing and dispels some commonly-held yet erroneous beliefs.

Myth 3: Don’t outsource a mess. A claim often repeated by those who have had a negative experience outsourcing, but not bought by industry insiders, it is generally better to have well-defined processes and taking out surplus head count before outsourcing, looking at why these areas have not been addressed before, and finding credible answers to why things are different now.

Too often this myth is used by HR leaders as an excuse to procrastinate. Outsourcing can provide a trigger to get things done. A better alternative to this myth would be: “Don’t outsource a mess unless you understand what the mess is and exactly what you and the service provider are going to do to correct it”.

Consider what innovation will be delivered in years three, four and five of the contract. How can the organisation ensure the outsource provider has an incentive to, for example, upgrade HR applications and processes when new capabilities become available?

There is a need to build incentives for the outsourcing provider that reflect requirement for innovation, such as delivery of better training services or streamlined leaving processes, and building in a fair way of sharing risk and reward.

Myth 4: You’ll lose control. Our research into European HR outsourcing shows that there is a ‘transparency gap’ between HR service providers and their customers – with customers believing service providers to be too opaque. It seems that the outsourcing industry defaults to minimal transparency where allowed. If this transparency gap is closed, the onus is on the client organisation to put this at the heart of its requirements and engage with the market. When done, enhanced control and better quality service will follow.

Much HR outsourcing has failed in this regard. Commonly-used procurement and contracting processes do not drive transparency. Indeed, the rhetoric of the outsourcing industry is that organisations do not need to worry about how the work is being done; ‘look instead at the end results’. But this is another myth. When an outsourcing approach is transformational - with services provided in a new way, usually from a remote location, suspicion can be fuelled. With no clarity over what is happening, who is delivering services and what skills they have, client teams understandably assume the worst. Is the provider deliberately cutting costs by downgrading skills in the offshore centre? More likely, the provider has lost staff and is struggling to recruit adequate skills. But with no transparency, who knows?

Next week, in the fourth and final blog in this series, Tim Palmer , investigates a fifth and final myth of HR outsourcing and shows how assessing the practicality and utility of sourcing for your own business, even if it is not actually pursued as a strategy in the end, can protect HR’s board-level reputation and ensure ongoing control