Outsourcing as a function started in the early years as a cost reduction medium. Nowadays more and more services are being outsourced to offshore locations. The services that are outsourced includes, medical billing outsourcing, financial and accounting services, human resource outsourcing etc. HRO or Human Resource Outsourcing earlier was done as a cost reduction step by the companies but now it has become a function which is creating business value. The BPO companies are now exceedingly becoming vertical focused rather than horizontal focused. The clients are also looking to outsource some non key functions so that they can focus on the key functions.
A lot of developments are happening in the outsourcing sector. BPO companies are increasingly using business analytics and business intelligence to generate more value to clients. HR BPO companies are also exploring new ways to meet the fast changing needs of the business and thereby improving the business performance of the clients as their role has also undergone a change. Recently 292 HR organisations were surveyed by Aberdeen Group and it was found that HRO function is giving strategic support to clients and also providing the line leaders the support in day to day talent management. The demand from the client companies are also increasing which is making these BPO companies to constantly innovate and come out with new service offerings.
HRO in 2012 is supposed to take off in a very big way and lot of changes are expected in this field. Apart from the extensive use of technology some other changes that are expected to take place in HR Outsourcing space are:
- There will be extensive use of descriptive and predictive analytics that will help in giving insights to drive performance. Goldstein of Accenture predicts significant use of analytics in HRO in the future.
- HRO BPO firms will start extensively using cloud based platforms for Software as a service (SAAS) solutions. HRO service providers will be offering more sophisticated services in Talent Management not just software packages.
- HRO will be adding more value to client organisations by offering specialised services rather than entire processes. According to a survey, 2% of the respondents said that they currently outsource all their functions whereas 48% said that they outsource some of their HR functions. This point to the demand for specialised services.
- The focus for HRO’s would be to move away from merely helping in cutting down employee cost to driving improvements in costs, workforce operations and results. Services of HRO firms would be required in selection and retention of top performers, forecasting talent requirements etc.
- The vendors would be developing their talent management capabilities to manage the value services as this will be the key to growth.
- Experts foresee a convergence of different services in HRO. The challenge of HR managers would be converge of services like health and welfare decisions.
According to Michael Custers, Vice President, Global Marketing, NorthgateArinso 2012 will be a turning point in HRO. It is predicted that there will be convergence of BPO and SAAS in HRO. It will help the HRO firms in becoming more flexible in their operations and to provide customised services. The use of technology will help them in offering their services at aggressive prices prompting even the small and medium businesses to go for Human Resource Outsourcing.