Companies Continue Move Toward Selective Outsourcing Approach, Watson Wyatt

WASHINGTON, D.C., June 24, 2008 — Employers continue to take a selective
approach to outsourcing their HR technology and functions rather than
relying exclusively on a single provider, according to Watson Wyatt, a
leading global consulting firm.

“Over the last few years, we’ve continued to see tremendous growth in
selective outsourcing,” said Richard Hubbard, director of Watson Wyatt’s
U.S. technology and administration solutions practice. “The economic
strains some companies are facing will only add to the reasons to choose
selective outsourcing. Selective outsourcing provides employers a lot of
flexibility and helps them keep their options open.”

Watson Wyatt’s 2007 HR Technology Trends survey of 182 U.S. companies found
that many companies expect to do more outsourcing in the future, in areas
such as health and welfare programs.

HR Functions Outsourced Now or Likely to be Outsourced in Near Future

Currently Outsourced Plan to be Outsourced
This Year or Next
Define Contribution
Retirement Administration 75% 1%
Health and Welfare 52% 6%
Defined Benefit Retirement
Administration 50% 5%
Stock Administration 40% 6%
Deferred Compensation 36% 3%
Payroll 22% 8%
Recruiting 9% 6%
Performance Management 4% 5%


However, few companies (21 percent) automatically look to outsource
programs. The majority of companies (63 percent) turn to their internal or
enterprise resource planning systems first to deliver HR services.

The independent technology research firm CedarCrestone has also found
growth in selective outsourcing. In its 2007/2008 HR Systems Survey, 10th
Annual Edition the firm found that selective outsourcing is preferred to
total business process outsourcing in most HR categories. In the study, the
firm forecasts that selective outsourcing will continue to grow in 2008,
particularly as small and medium-sized organizations adopt the strategy.

“Selective outsourcing is growing so popular because it can be tailored to
meet an organization’s exact needs,” Hubbard said. “For most organizations,
this means outsourcing routine, transaction-oriented processes while
refocusing the HR department on strategic planning. Many companies report
that selective outsourcing best meets their needs for access to
leading-edge technologies, while improving employee experience and service
levels. The key to successful outsourcing is finding the solutions that fit
the organization’s needs and culture.”

More information on Watson Wyatt’s Changing Strategies in HR Technology and
Outsourcing – 2007 Technology Trends Survey can be found at
www.watsonwyatt.com/techtrends.

About Watson Wyatt

Watson Wyatt (NYSE, NASDAQ: WW) is the trusted business partner to the
world’s leading organizations on people and financial issues. The firm’s
global services include: managing the cost and effectiveness of employee
benefit programs; developing attraction, retention and reward strategies;
advising pension plan sponsors and other institutions on optimal investment
strategies; providing strategic and financial advice to insurance and
financial services companies; and delivering related technology,
outsourcing and data services. Watson Wyatt has 7,000 associates in 32
countries and is located on the Web at www.watsonwyatt.com.

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