Principal, KPMG Shared Services and Outsourcing Advisory
Human Resources (HR) is somewhat of a late bloomer when it comes to outsourcing, and for good reason. While ADP has been processing payroll for more than 60 years, outsourcing HR as a whole really did not ramp up until the mid-to-late 1990s.
Like the outsourcing of that period, lower costs and labor arbitrage were seen as the end goals. So not much effort went into creating transformational processes and methodologies—but instead into “your mess for less”—leaving HR outsourced, but not transformed. Unfortunately, in many cases, even the desired goal of reducing costs became just the inverse, with global corporations seeing continuous increases in the cost of HR.
“I told you so”
Recently, we finished a three-year project with a major healthcare firm that wanted to bring HR back in house. Based on that success, many others have followed suit. What we are finding is that when they outsourced HR, they ended up losing just about everybody who knew anything about it. So a number of my clients are reporting they lack controls, processes, and efficiency; they simply do not have the expertise or the readiness to undertake HR insourcing.
Many HR outsourcing contracts are only about seven years on, so it is fresh in the memories of many who worried about losing HR competency internally. Today, they are having to rebuild all that talent by hiring, rehiring, and development. It is a significant change management challenge. So you do hear many folks utter the dreaded, “I told you this would happen.”
Do not repeat the past
|We want to make sure it does not happen again, regardless of where the HR function lies. Be it in a Global Business Services environment, several shared service centers, or as a newer, more transformational outsourced arrangement, the key is to develop the right tools, best practices, and methodologies that support a fundamentally modern, self-service, and secure program for HR and payroll.That is exactly what we did for our healthcare client. First, we crafted a sound strategy that supported their business aims and helped them understand where they should go from a service delivery model perspective. Then we helped them design processes and implement SAP accordingly.|
To date, it has been deemed by many to be the largest insourcing transformation program. Many others are looking at this example and beginning their own journeys to bring HR back in house. We believe that whatever the delivery model outcome, starting on the journey today is the right way to obtain yesteryear’s HR promises in a very new and very promising way.
Robin is an established industry leader with extensive experience in the human capital management, shared services and outsourcing industry. She has over twenty five years’ experience in leadership positions in HR/RPO service providers, HR consulting, and strategic HR roles.
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