Deciding On The Outsourcing Play And Engaging It With The Organization
The reasons why HR departments outsource functions are continuing to grow. Where once it was primarily seen as a cost cutting exercise, the additional benefits are now being realized – although the financial side is a definite draw, as budgets remain constrained.
"Managing compliance, greater alignment between HR and business, and access to technology are increasingly important,"Rajesh Ranjan, research director at Everest Group, explained.
In the multi-process Human Resources Outsourcing market, these drivers are expected to lead to an eight to ten percent growth this year alone, with North America remaining the leader in the market and Asia Pacific grasping an increasing share.
Recruiters are also increasingly moving to a model of blended RPO, where the full spectrum of talent acquisition is handled just through one vendor, rather than multiples.
With a greater number of functions being outsourced to fewer providers, the need for an effective relationship which enhances the long-term and short-term benefits has never been more important.
Benefits of Blended RPO
Ranjan and Everest Group's Sayan Chatterjee outlined the benefits of Blended RPO in a recent article, although none of these can be achieved without a strong business case, involving the relevant stakeholders, selecting the optimal supplier, drawing up a suitable contract and then complementing this with technological support.
On the financial side, they highlighted how a blended RPO approach can offer savings nearly 25 percent greater than those for a standard RPO arrangement or independent managed service provider arrangement alone, thanks to better demand management and workforce utilization.
By using just one vendor, businesses spend less time managing external relationships and more time on talent management, while the vendor offers a standard talent acquisition process across all roles. The pair argues that blended RPO also allows for greater alignment between HR priorities and business strategies.
On the other hand, it brings risks with regard to the concentration of many services in just one supplier and the fact that few providers are currently able to offer the standard of service needed.
Taking A Global Approach
As outsourcing begins to move away from being a purely cost-cutting exercise, to one where the company looks at how external expertise can bring with it new growth opportunities, it is taking on an increasingly global approach.
This is particularly true in emerging markets, such as those in East Asia, where local knowledge can bring huge benefits to talent acquisition, while high-ranking members of the workforce have the time and opportunity to apply their knowledge to making the most of human capital and driving the business forward.
Jill Goldstein, senior manager of HR outsourcing at management consultancy Accenture, told HR Magazine: "HR business process outsourcing can help organizations improve workforce performance, measured by revenue increases of from 1 percent to 2 percent.
"It can also help clients create competitive advantage by forecasting and fulfilling talent needs and aligning talent plans, workforce capabilities and employee performance with business strategy."
Nissan is among the companies which has recently entrusted its HR operations to a third-party provider. It signed a seven-year contract with Genpact which will see the latter take control of Nissan Human Information Service, which handles functions for over 54,000 employees worldwide.
Genpact will provide payroll, benefits, staffing, training and other key HR services, culminating in what Nissan believes will improve "delivery of outstanding services to our customers which is of utmost importance".
Pharmaceutical company Eli Lilly also recently signed a five-year RPO deal with Kenexa, as part of a plan to boost efficiency in the end-to-end recruiting process. The deal includes Kenexa's onboarding, recruiting, assessment, and survey solutions and employment branding.
Nancy Lange, senior director for Global Recruiting and Staffing for Lilly, said: "Our selection process was rigorous and Kenexa met our expectations by showcasing their global RPO services capabilities and providing access to their centers of excellence in Asia, Europe, and the Americas.
"The company demonstrated their strengths in integrating services, technology, and relevant content."