The trend towards outsourcing will continue to grow as market pressures force corporations to be more tightly focused on core business functions, gaining competitive advantage and reducing costs. Outsourcing is an attractive alternative in good times and bad times. Shifting back end administrative and business functions to an external provider in good times, may be a means for quicker time to market and focusing resources on core business activities to grow the business. In bad times, outsourcing is a means for streamlining the enterprise by eliminating functions, which create a drag on capital and/or do not provide any competitive advantage.

In the current economic environment, concerns over, shrinking margins, liquidity and the need to reduce operating cost structures is accelerating a trend towards shifting certain back office administrative functions to outside suppliers. This trend is seen as a major paradigm shift within enterprises, which have realigned their internal corporate infrastructure to focus on more strategic areas of their core business.

Although the human resources (HR) function is viewed as critical within corporations, increasingly, small, medium and even large corporations are moving to outsource this service.

The case for outsourcing has three basic rationales. First the regulatory compliance obligations imposed under ERISA, COBRA and IRS regulations, have become extremely burdensome and expensive for companies. Consequently, avoiding major legal problems and financial liability requires substantial investment in resources and capital in an area outside of the core business of most companies. This makes outsourcing a viable option even if it does not necessarily result in a cost savings in the near term. Second, the need to upgrade HR systems and invest in new technology is increasingly difficult when companies are hard pressed to invest in functions aligned with the core competency of the enterprise. HR outsourcing service providers are better positioned to invest in new technologies and software more likely to conform to