Outsource Magazine Issue 29 - (Page 100)

This issue: The deaTh of hr ouTsourcing? news of hr BPo’s deaTh has Been exaggeraTed It’s one of the most diverse areas of the outsourcing space – but has HRO had its time? Not a chance, says NelsonHall’s Rachael Stormonth, who in her first article for Outsource looks back across a chequered history – and discusses how vendors are adapting to meet evolving market demands… T he story of multi-process HR BPO to date is well known to HR outsourcing watchers. It can be categorised as a story spanning four generations, during which time some actors in the story have left the stage, often mortally wounded (Exult, ExcellerateHRO, Convergys) with others more recently joining the cast (e.g. Logica, TCS). (See Figure 1) The Generation 1 deals like BT/ Accenture and those conducted by Exult were all-encompassing in terms of process scope and were often JVs. However the delivery was still largely onshore and at least 50 per cent of the cost base was not addressable since aspects like payroll and benefits were subcontracted, usually remaining with the same third parties as before. With the client expecting a 20 per cent cost reduction and the vendor a profit, this led to massive financial failure. Generation 2 wasn’t much better. It was predicated again on an all-encompassing process scope but this time on the assumption that standard processes could be built which would be shared across GEN Gen 1 Gen 2 Gen 3 Gen 4 ATTRIBUTE All-encompassing scope but 50% sub-contracted All-encompassing scope; attempt at process standarisation rebuffed by clients Back to transactional processes; safe and steady Rebuild across processes OUTCOME Financial failure Too ambitious too soon What about talent management? Jury still out! Figure 1 clients. An early utility model, except the standardisation couldn’t be achieved and vendors were far too early to gain client acceptance – and the costs of trying to achieve standardisation were far too great. Generation 3: multi-process HRO then went back a few steps and typically ditched the talent management processes. Deals focussed on standardising the “safe” transactional processes such as payroll and HR record-keeping. So that leaves us today, at Generation 4. Once again suppliers are building on transactional processes, adding in elements of talent management to offer clients a set of integrated HR processes, which increasingly include SaaS-based offerings in some areas. IBM’s acquisition of Kenexa is an interesting development, with RPO one of the areas where SaaS-led HRO activity is resonant. So major multi-process HRO suppliers are rebuilding their approaches – but is the market interested? Major HR priorities today: cost, talent, and information NelsonHall recently interviewed 220 organisations to find out about their HR priorities and also their attitudes to outsourcing. The vast majority identified six HR issues as highly important for them:  educe the cost R – Need to reduce cost of staff healthcare and benefits – Corporate requirement for reductions in costs of HR administration  etain the right people R  Rachael Stormonth is Senior Vice President, NelsonHall. She can be contacted at rachael.stormonth@nelson-hall.com or on Twitter at @rstormonth 100 ●● ● www.outsourcemagazine.co.uk http://www.nelson-hall.com http://www.twitter.com/rstormonth http://www.outsourcemagazine.co.uk

Table of Contents for the Digital Edition of Outsource Magazine Issue 29

Call Me Maybe?
Optimising Your supplier Portfolio
Application Development Outsourcing
Are You Fat?
The Future of BPO
Digital by Default
The Face of Finance
Procuring Excellence
The Importance of Being Secure
NOA Round-Up
Steering the Flow
Changing Shape
Legal Transformation
Getting to the Real-Life Win-Win
What’s the Point of Outsourcing?
The Legal View
Top Ten
NelsonHall Round-Up
The Oral Review
Online Round-Up
Inside Source
The Last Word

Outsource Magazine Issue 29