IBM ousourching HR functions
By reducing the HR workforce you also reduce the administrative burden of maintaining that large work force. With 260,000 employees and retirees IBM already has a sizable work force, the personnel department or the HR department would have had to maintain records for each and everyone. Payroll has to be tracked, training requirements meet, and etc. IBM had one HR staff member for every 216 employees and retirees, by outsourcing to Fidelity and reducing its HR staff by at least 450 personnel that increased the ratio 346 to 1. But while the ratio increased the work needed to maintain the higher ratio will drop actually decreasing the workload on the remaining HR staff. Everyone I think understands that there is more to running a large or even a small corporation than working on its “core competencies”. But if you can outsource some or all of these other functions to another company that specializes in them while at the same time saving money and possibly reducing your work force it only makes since to do so. The more that a company can do with a smaller workforce, makes that company more efficient. IBM seems to have embraced the work smarter not harder theory. IBM is a high technology company and increasing efficiency only . . .
Now figure rent for offices space, the average person probably has about 48 square feet at about $30. 00 for computers, the same for a desk plus another $100. Most companies would have to reallocate allot of these resources on HR functions instead of focusing on primary objectives whether that being research, manufacturing or It management. By outsourcing HR administrative functions IBM can get back to the basics of its business and not have to use resources on HR functions. Fidelity is an expert on HR functions and its stands to reason that being experts they have a better understanding of how these HR functions work. IBM has the option to use a large amount of freed up funding now available for other projects. HR issues change daily and can be a large drain of resources like personnel, funding, and supporting hardware/software. By having a company like Fidelity that specializes in HR administrative functions IBM can get back to its basic mainstay of business. With the exception of the computers, desk and other miscellaneous office supplies IBM could be able to save over $16 million annually. This calculation was just in salary; now take into account the training involved and the capital investments with maintaining a 1,200 HR work force. That is not a minuscule sum, and we do not know how many HR positions of the 1,200 that IBM was actually able to reduce? Depending on how much of the HR functions that Fidelity took over I believe that we could safely assume IBM was able to reduce its HR staff by more than just the 450 that Fidelity hired. Decreasing the administrative burden on itself that comes from maintaining the HR administrative functions of 260,000 employees/retirees and with a large HR department within itself. By being able to reduce its large HR department, IBM will be able to save millions of dollars.
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