HR outsourcing is on the rise, with recent research by Technavio forecasting a compound annual growth in the global HR outsourcing market of nearly 9 percent between 2018 and 2022.
Much of this growth, they predict, will be driven by technology.
In truth, that shouldn’t come as a surprise.
Modern Cloud HR solutions have opened up new and better ways of working; streamlining every-day HR processes, improving employee engagement, liberating information, and freeing up HR to focus on more strategic, future-facing activities.
That doesn’t mean that HR consultancies (HROs) are going to find themselves out of a job any time soon though.
On the contrary, in an increasingly complex and demanding world of work, we’re seeing more and more organizations looking to combine in-house HR with external expertise centered around a shared, outsourced technology platform.
This ‘hybrid HR’ model, where HR consultancies deliver their services through a Cloud HR system, presents a compelling proposition: one that benefits both HR outsourcing consultants and the organizations they serve.
Here are five key benefits of this hybrid HR approach:
1. Depth of expertise
In-house HR teams have enough on their plates without having to take on the ongoing management and optimization of their HR system. In most cases, HROs will work with one cloud HR system, so they become expert primary system administrators.
They combine a deep understanding not just of HR, but also of the system they are proposing to their customers. This delivers a depth of expertise with the system that hard-pressed internal HR teams rarely have the time to acquire for themselves.
2. Smooth set-up and self-service delivery
On top of ensuring the wider organization gets the best out of its HR technology solution day to day, HROs can also provide a speedy and smooth set-up. They have done this before, they know what needs to be done, what will deliver the most impact, and how to encourage a company-wide adoption.
With employees – and not just the HR team – accessing the system, employees can update their own data, which further lessens the burden on HR, and also means workers don’t have to rely on others to provide information for them – a factor that, in itself, creates frustrating delays and poor employee experiences.
The really great thing here is that an HRO and modern cloud HR system make life easier on the employee as well as the HR department.
3. Cost savings
With Ernst & Young estimating the average cost of not using online automated HR systems at $4.39 per data entry, the cost-efficiencies reaped from the hybrid HRO and Cloud HR model create a compelling business case, too.
Mike Kealey, MD of Vero HR, which provides HR consultancy and outsourcing to organizations across a range of business sectors, argues that HROs who don’t wrap their services around a Cloud HR solution are creating an added expense for their customers:
“The hybrid model is massively more efficient, allowing us to share data more easily so we can take out the cost of the service. It acts as an electronic interface between the consultant and the customer, ensuring a high-quality service delivery 24/7.”
The hybrid HRO and Cloud HR model comes
with considerable cost-efficiencies.
4. Data ‘on-demand’
In today’s business environment, where access to real-time data is increasingly essential to ‘in-the-minute’ decision making, business leaders expect their outsourced HR partners to be able to provide instant answers to key questions.
With the hybrid HRO model, information is centralized, and critical information is available 24/7.
As an example, Mike cites being able to step in to help a customer deal with tricky contractual issues when on the move, as he was able to log in to the customer’s system remotely via his mobile and pull up the necessary documentation and employee history.
5. Risk reduction
Mike also argues that by basing their HR service on a third-party Cloud HR platform, in-house HR teams never have to worry that their data or documents being mislaid, or even held hostage, by their HRO partner. “Whereas in the past, when paper-based HR data was often kept in consultants’ cabinets, all of our clients data is securely stored in the Cloud. It is accessible to both us and our clients.”
Alongside operating a paper-free office, Mike explains that a lot of the value is embedded in the system: “For example, we’ve created scores of forms to help with compliance issues; all documents, like contracts, are stored centrally; and the system is set up to follow best practice processes – for example, to send an automatic notification if a right to work check is due or a probation review is imminent.”
Should the client decide not to continue to work with Mike and his team, they can still choose to retain the HR system, and so avoid HR havoc.
All evidence points to the fact that the appetite for HR outsourcing on the back of a modern technology platform is growing. Organizations have recognized that trapping HR in an endless cycle of paper-pushing and HR admin is not effective.
The combined HRO and Cloud HR model can be plugged into an existing HR operation with ease, with technology being applied to automate the most time-consuming aspects of HR administration at the same time as providing services that complement the in-house HR service.
Furthermore, the organization retains the personal touch of having its own HR professionals in place to focus on the more value-added activities, like employee engagement and performance development, but has the safety net of a service provider to fall back on if an in-house HR leaves, or if they need additional help with specific projects or challenges.
It’s certainly a match that makes a lot of sense.
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