Person deciding which direction to go

When choosing an absence management model, employers have a great deal of flexibility.  Outsourcing, co-sourcing, in-sourcing, and in-sourcing with the help of specialized absence management software are all options that can work well.  But how do you decide which path makes the most sense for your organization? Based on our experience, here are the benefits and considerations of each model: 

I’ll Do It Myself – Insourcing Absence Management 

In an insourced model, the organization is performing all functions of the absence management program—from benefit design to delivery—internally, typically within a centralized Human Resources Service Center. While some organizations perform this function on a homegrown system, or in some cases (gulp) an Excel spreadsheet, a third-party system is highly recommended to ensure accuracy, consistency, and compliance with the web of federal, state, and company requirements. 

Benefits of Insourcing 

  • Organization maintains control of the function and can drive the experience in its preferred way and in a way that is fully customized to the organization’s needs and reflective of its culture. 
  • Commercially available tools can be leveraged to deliver automation in critical functions (e.g., notifications, eligibility and entitlement calculations), provide compliance support and tools, and streamline the employee experience. 

Considerations of Insourcing 

  • Requires higher ongoing resource requirements, including both staffing and foundational support: training, software and talent acquisition are a few examples of critical support in this model. 
  • This approach also includes the need to support the ebbs and flows of volume throughout the course of management (for example, the sudden spikes in absence requests and the increase in the complexity of managing leaves that affected nearly all employers during the initial COVID outbreak and subsequent spikes when COVID cases rose) 
  • Absence management is not a core competency in most organizations. 
  • Unlike other HR transactions, absence administration requires specialized training, given the criticality of ensuring compliant, consistent administration for events that have many moving parts in terms of benefits, chronology (e.g., shifting start and end dates), and sensitivity 

Do it for Me – Outsourcing Absence Management 

In an outsourced model, a third-party administrator is managing the events, with the client maintaining responsibility for program design. This shift in focus from administration to strategy can arguably be one of the largest benefits of the approach. 

Benefits of Outsourcing 

  • Provides ongoing access to absence management best practices. 
  • Employers benefit through the outsourcer’s ability to offer specialized absence expertise with insight gleaned from serving similar organizations, and absence expertise from dedicated compliance professionals 
  • Provides access to services that are typically only available in a scaled solution. 
  • This can often take the form of additional channels of communication, including live chat, telephonic intake and customer service support, as well as support for text messaging 
  • Above and beyond the compliance support that technology solutions provide, outsourcing further decreases compliance risk with indemnification. 

Considerations of Outsourcing 

  • Does not entirely eliminate the need for ongoing involvement in some parts of the absence process, especially for ADA events. 
  • While day-to-day involvement is mitigated in an outsourced model, it is not eliminated, especially in instances where the employer needs to determine what can or can’t be accommodated. 
  • Increased implementation effort, especially in the realm of change management. 
  • Successful outsourced implementations can require a higher degree of effort on the part of first-time outsourcers, as time should be taken to really understand the current state, clean up policies to ensure they align with the organization’s intent, and to communicate the new processes to employees and manager/HR users. 

A Little of This, A Little of That – Co-sourcing 

Co-sourced solutions are what you decide to make them. They can be as small as your organization insourcing the administration of no-lost-time ADA accommodations, or as big as having an outsourcer—like ReedGroup—provide telephonic intake services while the disability and leave of absence case management process is insourced. The key is spending the time to determine what components you want in your program and who is best positioned to deliver them, while also ensuring that the different activities each organization is doing are coordinated to deliver a seamless experience for employees, managers, and HR users. The benefits and considerations are not as easily defined, as a well-designed, thoughtful approach can deliver the benefits of both insourced and outsourced models. 

As Spider-man’s Uncle Ben famously said, “With great power comes great responsibility.” Ultimately, the decision is yours as to which model makes the most sense for your organization.  

Need help? ReedGroup’s team of solutions and strategy experts is here to help you determine how each of these models would look in your ecosystem. ReedGroup can provide software for insourcers, full administrative solutions for outsourcers, or co-sourced solutions that blend technology and service to deliver a tailored model based on the organization’s preferences and capabilities. 


Information provided on this blog is intended for general educational use. It is not intended to provide legal advice. ReedGroup does not provide legal services. Consult an attorney for legal advice on this or any other topic.  

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