HACKENSACK, N.J. – Whether it’s hiring a customer service call center in India or a large accounting firm two towns away, more American companies are expected to farm out tasks that were once performed in-house.

“It’s been going on for about 20 years now, and it isn’t going away,” said Harry Feinberg, chairman and chief executive officer of Outsourcing Today LLC in Roseland, N.J. The company publishes HRO Today magazine, a 2-year-old publication on human resources outsourcing trends.

Feinberg said 2004 will be the year midsize outfits look to join larger corporations in saving costs by outsourcing various “noncore” functions.

“Midmarket companies, those with 500 to 15,000 employees, are waking up,” he said, noting companies can trim costs by contracting out the management of employee health plans, or compliance with new internal auditing laws.

Neil Bebbington, director of corporate governance services for J.H. Cohn Consulting in Parsippany, N.J., said business is brisk, due in no small part to last year’s passage of the Sarbanes-Oxley law that’s designed to rein in corporate wrongdoers by requiring more disclosure of information.

“Internal auditing is big this year,” Bebbington said. “We’ve doubled our work force in the last four months to keep up.”

He said outsourcing firms can provide specialized expertise that some companies would struggle to maintain in-house.

“We have 30 people in corporate governance here with a wide variety of skill sets,” Bebbington said. “You can pick and choose what you need and you’re not restricted to just the knowledge and skill sets of that one permanent hire companies used to rely on.”

Sheila Basile, general manager and senior vice president of Lee Hecht Harrison, the global career services firm based in Woodcliff Lake, N.J., said outsourcing some tasks generally allows a company to focus on its strengths.

“It can actually add more value and free up companies to concentrate on their core competencies,” Basile said.

But she knows that the mere mention of the “O” word can invoke fear and loathing among employees, especially when some jobs wind up going overseas.

“It’s very frightening to people, because people tend to hate change,” Basile said. “And those changes come at a time when people have to reinvent or reposition themselves in the market.”

The key to staying viable as an employee, she said, involves an effort to stay trained. In companies that outsource the management of employee benefits, for example, workers within the human resources department must be ready to do other jobs.

“Companies want their HR people to concentrate more on the business,” Basile said. “Most human resources people were not trained that way, but now they’re expected to be partners and become involved with the core business.”

The move to outsource certain company functions has been around for several years. Basile said it started with some payroll services being sent off-site. Then, over time, outsourcing became more common in areas like mailroom management, information technology, telecommunications, financial services and human resource functions.

“Offshore call centers is the latest, in terms of IT applications,” Basile said, noting that many prognosticators believe that despite the loss of some jobs domestically, the overseas trend can ultimately help the American economy.

“Most people say it’s good for our economy because it will create, as time goes on, a healthier global economy,” she said.

If a company can reduce its costs by setting up a customer call center in India or China, the theory goes, the savings can be funneled back into areas such as research and development.

But for the trend to ultimately be good, Basile said, there must be a safety net for displaced workers.

“Outsourcing can be a very good thing for all of us,” she said. “But if everything in the future is outsourced or offshored, and we all become portable employees, then everything else, like benefits, needs to be portable as well.”

—

(c) 2004, The Record (Bergen County, N.J.)

Visit The Record Online at http://www.northjersey.com/

Distributed by Knight Ridder/Tribune Information Services.

AP-NY-02-03-04 1949EST