Jan. 20, 2000 --
More and more companies have turned to outsourcing, and most are having success
in meeting their company objectives, and will continue to contract with external
providers to perform these functions according to a recent survey by WorldatWork.
Survey respondents from 454 member companies reported using a number of criteria in selecting an outsourcing organization, with cost (90 percent), technical expertise (89 percent) and commitment to customer service (88 percent) leading the way. Other criteria companies consider in choosing an outsourcing vendor include: responsiveness (87 percent), customer service (83 percent), experience level of outsourcing partner (69 percent), reputation of the outsourcing firm (61 percent) and long-term stability and reliability (56 percent). For purposes of this survey, outsourcing was defined to include all possible benefit activities, including claims processing.
"Although most of the survey results validated the large use of outsourcing among organizations, it was surprising to learn that a majority of these companies do not have performance agreements in place with their vendors," states Lenny Sanicola, Project Manager, WorldatWork’s Benefits Line of Business. "It was also interesting to note that, of the 12 percent reporting bringing benefit functions back into the company, 22 percent of those reported a desire to bring benefits communications back into the fold, primarily due to cost issues."
Other key survey findings include:
50 percent of companies consider the key driver for outsourcing benefits functions to be the pressure to perform with limited resources, while 34 percent consider the complexity of benefit plans, including regulatory and legislative changes, to be the driving force behind the move.
59 percent of companies reported realizing added value since outsourcing one or more benefits, 53 percent report realizing cost savings and 46 percent report increased employee satisfaction with the function of the benefits plan.
51 percent of those outsourcing benefits functions are considering outsourcing further benefits in the future.
A majority of companies outsourcing various benefits functions report a neutral impact on costs.
Detailed Results
What benefit activities do you currently outsource?
88% outsource
benefit functions to more than one vendor.
What prompted your company to outsource, all or in part, for any of your benefit
activities?
66% chose to outsource
all or part of one or more benefit functions in order to implement more efficient
processes, save time, and reduce administrative costs.
55% chose to outsource
to access vendor expertise & leverage capabilities of advanced technology
while minimizing the internal investment in capital & labor.
Which do you consider to be the primary driver for outsourcing today?
49% consider the
primary driver for outsourcing today to be pressure to perform with limited
resources.
34% consider the
primary driver to be the complexity of benefit plans, including regulatory
& legislative changes.
Do you see the trend to outsource being reversed and more companies likely to
bring benefit functions back in house (insource)??
87% do NOT see
a trend to bring current outsourced activities back into the company.
Have your overall objectives for outsourcing been achieved?
81% believe that
their overall outsourcing objectives have been achieved.
When selecting an outsource partner, what factors do you consider?
90% consider cost
when selecting an outsourcing partner.
89% consider technical
expertise.
88% consider commitment
to customer service.
87% consider responsiveness.
83% consider customer
service.
69% consider experience
level of outsourcing partner.
62% consider the
partner’s reputation.
56% consider long-term
stability & reliability.
What has your organization realized since you outsourced one or more benefit functions?
59% have reported
added value since outsourcing one or more benefit functions.
53% have reported
cost savings.
46% have reported
increased employee satisfaction.
Has your role in benefits changed significantly due to outsourcing benefit activities?
74% say their
benefits role has NOT changed significantly due to the outsourcing of benefit
functions.
For what reasons would you consider bringing certain benefit functions back in-house?
81% would consider
bringing certain benefit functions back in-house if there was an inability
to maintain or improve quality standards under a current outsourced arrangement.
Has the growth in internet/intranet web-based technology impacted future outsourcing
for your company?
About 50% of respondents
see an impact on future outsourcing for their company? due to the growth of
internet & intranet WEB-based technology. (Evenly split almost)
Are you considering any further outsourcing?
51% are considering
further outsourcing.
49% are NOT.
Which benefit activities within the last two years has your organization insourced
or brought back in-house?
Of the 12% of
respondents reporting bringing benefit activities back into the company, 22%
have brought benefits communications back.
Which of the following tasks are you considering bringing back in-house (insourcing)?
For those considering
bringing current outsourced benefit functions back in-house, 27% of survey
respondents wish to bring COBRA/HIPAA administration back, and 23% wish to
bring benefit statements back in; 18% wish to bring back enrollment/eligibility
of their H&W plans .
Since the time you have outsourced selected benefit functions, have your costs
decreased, increased, or remained cost neutral?
55% report that
the outsourcing of the H&W enrollment & eligibility benefits function
has had a neutral impact on costs.
53% report that
the outsourcing of the DC enrollment & eligibility benefits function has
had a neutral impact on costs.
41% report that
the outsourcing of COBRA/HIPAA administration has had a neutral impact on
costs.
56% report that
the outsourcing of FSA claims processing has had a neutral impact on costs.
53% report that
the outsourcing of DB pension calculations has had a neutral impact on costs.
47% report that
the outsourcing of M/D/V claims processing has had a neutral impact on costs.
64% report that
the outsourcing of STD claims processing has had a neutral impact on costs.
67% report that
the outsourcing of LTD claims processing has had a neutral impact on costs.
54% report that
the outsourcing of premium administration & reconciliation/H&W has
had a neutral impact on costs.
46% report that
the outsourcing of benefits communication has INCREASED while 45% report that
costs have remained neutral.
70% report that
the outsourcing of nonqualified plans has had a neutral impact on costs.
48% report that
the outsourcing of benefit Statements has had a neutral impact on costs while
44% report an INCREASE in costs.
What criteria do you use in your service level agreements (performance guarantees)
with your vendors?
49% of survey
respondents report having NO service level agreement (service performance
guarantees) with their H&W enrollment & eligibility vendors.
57% of survey
respondents report having NO service level agreement (service performance
guarantees) with their DC plan enrollment & eligibility vendors.
61% of survey
respondents report having NO service level agreement (service performance
guarantees) with their outside vendors who handle COBRA/HIPAA administration.
57% of survey
respondents report having NO service level agreement (service performance
guarantees) with their outside vendors who handle FSA claims processing.
63% of survey
respondents report having NO service level agreement (service performance
guarantees) with their outside vendors who handle DB pension calculations.
46% of survey
respondents report having NO service level agreement (service performance
guarantees) with their outside vendors who handle Medical/Dental/Vision claims
processing.
61% of survey
respondents report having NO service level agreement (service performance
guarantees) with their outside vendors who handle STD claims processing.
63% of survey
respondents report having NO service level agreement (service performance
guarantees) with their outside vendors who handle LTD claims processing.
65% of survey
respondents report having NO service level agreement (service performance
guarantees) with their outside vendors who handle premium administration &
reconciliation-H&W.
70% of survey
respondents report having NO service level agreement (service performance
guarantees) with their outside vendors who handle benefits communications.
68% of survey
respondents report having NO service level agreement (service performance
guarantees) with their outside vendors who handle nonqualified Plans.
65% of survey
respondents report having NO service level agreement (service performance
guarantees) with their outside vendors who handle benefit statements.
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