Recession fears are around the corner and cost savings is a priority for every enterprise. This coupled with the growing complexities in handling HR processes and meeting the fast changing technology advancements is likely to drive human resource outsourcing in the year to come. Rohail Khan, Group President, HR Outsourcing and Solutions, ACS, says, “Focus on cost management is going to drive HRO. The “double dip” economy in the United States is forcing companies to focus on core, revenue generating areas and outsource more of the other non-core functions, like back office processing.”
Keep it Short and Small
This year we saw more preference for small, short term deals as enterprises became more cautious about their outsourcing decisions. Even the multi-process HRO deals had reduced in size with the inclusion of fewer processes. Experts believe that this trend is going to continue as enterprises are still treading a safe path and are cautiously optimistic about outsourcing their HRO processes.
Rajesh Ranjan, Research Director, Everest Group, says, companies will continue to be cautious and start with outsourcing a few HRO processes to a single service provider. He adds “A multi vendor approach is likely to increase as a single vendor may not be able to offer everything end-to-end.” The success of such contracts will depend on how enterprises make use of such relationships to achieve the desired outcomes.
Manish Dugar, Senior VP & Global Head, Wipro BPO, holds a slightly contrary view on this. He believes that instead of the trend of outsourcing different processes to different service providers, the industry will see the emergence of multi-process transactions” he says. ACS too holds a similar view.“Clients are driving the need for much more service integration across HR domains, as client HR teams are downsizing and can’t effectively manage the host of vendors they have had historically” says Khan.
Global Footprint is the Need of the Hour
Enterprises want to partner with service providers that have outsourcing capabilities in not just one but multiple locations. Expanding their capabilities and gaining a global footprint will be high on service providers' agenda. This they may be doing on their own or inorganic growth strategies like mergers and acquisitions. More consolidation is thus likely to be seen. Service providers will have to be prepared to handle this kind of complexity to play in the HRO market. Dugar adds, “You need to have the capability of understanding the law of land and managing the requirement of different geographies, if you want to play in the HRO field. You can either do this on your own or partner with someone.”