A growing proportion of HR spend is finding its way into the pockets of specialist HR service providers, according to IDC. Based on the levels of HR consulting and HR outsourcing activity being witnessed by IDC in Europe, HR spend with external service providers is expected to climb from 32 per cent in 2002 to 38 per cent by 2012.
“The emergence of HR Business Process Outsourcing (BPO) is one example of the growing number of service offerings to emerge in the past decade,” said Mike Friend, research analyst, European services. ‘With technology increasingly able to help service providers meet demanding client service delivery expectations and carry an increasing share of the transactional and administrative workload, so service providers have been able to focus their attentions on delivering more value add services to their clients.”
Three major sourcing strategies are available to organisations. These are the in source option, the shared service option, and the outsource or BPO option. The majority of organisations in Europe remain convinced that the HR function is a core business process that should remain physically and operationally under the direct control of the company.
The larger these organisations become, the more likely it is that HR will invest on a project-by-project basis in building up the necessary expertise internally to meet the service delivery requirements of the enterprise.
Organisations pursuing a shared services strategy, on the other hand, have often reached a point where the inefficiencies and costs of the former model are beginning to impact the effectiveness and quality of service delivery.
The decision to pursue a shared services strategy is ultimately both a business and an IT or infrastructure decision. Whilst the enabling technologies can be readily acquired and implemented, the challenge is in identifying the necessary management practices and process interfaces required to migrate the organisation from the current state to the desired end state.