The direct cost of the HR function is generally around 1.5-2% of an organisation?s operating expense. So, even a 25% reduction in that budget line is a relatively small number. However, 40-60% or more of an organisation?s operating costs are people-related?salaries, benefits, pensions, training, travel and living, facilities, technology and the like.
A 5% improvement in workforce productivity can deliver an exponentially greater return on investment (RoI) than a simple ?HR operating expense? reduction. Focusing on workforce productivity can also accelerate ROI from the outsourcing investment, bringing the payback point forward dramatically, from five years to two years, or less in some cases. Increasing workforce productivity and performance will be a key strategy for most organisations in the current economic climate.
Talent management
Talent management imperatives are all about defining talent needs, discovering and attracting talent and hiring the best qualified, developing that talent through learning and collaboration, deploying it through the management processes that put the right people on the right tasks. Effective talent management can aid business and revenue growth.
Outsourcing management
Organisations are now realising that cost savings are just one of the many advantages of outsourcing HR business processes. Outsourcing enables organisations to reduce workforce cost by expediting poor performer?s exit, accelerating time to competency, reducing attrition and maximising productive times of employees. Well-designed and delivered, an outsourcing arrangement focused on the talent life cycle can deliver value in several new and important ways in a high-performance talent management context. Consider the insurance industry in India, players are looking at aggressive growth rates in their sales force in order to tap the largely uninsured market in India.
Many insurance companies are looking to double and triple their agent network in the next few years, across the length and breadth of the country. Therefore, the ability to recruit at scale, train the workforce on selling skills, engage and retain them, and manage their performance are a critical success factor for these firms. An outsourcing arrangement with an HR service provider could give them an industrialised capability to use talent ?on demand.?
In the current economic scenario, companies are faced with questions about measurement of growing investment in hiring and retaining key talent, direct and indirect costs of employee turnover, workforce performance management, payoff on people investment and how does an organisation prioritise, adjust, increase, or reduce HR initiatives. These are compelling companies to redefine HR departments and processes. Here, an outsourcing provider is uniquely positioned to improve the business value delivered by a company throughout the talent life cycle. With a global view across all dimensions, an outsourcing provider can be a catalyst for bringing together disparate initiatives, and a facilitator to ensure alignment and focus. This eliminates redundancies and helps the client ?multiply? talent without adding additional headcount, maximising the synergies and leveraging specialised skills across the entire organisation. The outsourcing provider?s experience across multiple clients and investment in tools helps HR departments advance a talent management agenda in specific, measurable ways while lowering the overall cost of administration for transactional services.
Innovative tools
An exciting development in reporting and analytics is in the area of ?predictive? capabilities. Instead of looking only at lagging indicators that describe past performance, firms can develop the capability to see what?s ahead. New technologies and algorithms offer the possibility of analysing mass data sets and then modelling a causal effect between how individuals are acquired, developed, managed and motivated, and how they perform more optimally. With better analytics, companies can harness innovations as they occur, delivering them back into the overall talent management system to drive better performance and a virtuous cycle of continuous improvement. With right metrics, organisations can monitor how effectively their talent and HR organisation are delivering business value through the HR outsourcing engagement. An effective, efficient, engaged workforce provides the single greatest competitive advantage to any organisation. It is critical organisations optimise their workforce, implement right employee engagement, development strategies, and make the best of human capital investments. Employers need to focus on what is important for business and staff. HR outsourcing has evolved beyond cost reduction, and now represents a critical tool to help organisations improve workforce productivity and deliver meaningful business results in a challenging economic environment.
The author is BPO lead at Accenture India
