HRO and Shared Service Organizations: Integrated Business Service Partners
I used to speak frequently at shared service and HRO conferences based on my experience as a HR director and contract manager of one of the early major HRO outsourcing deals. I soon found I had to turn down most requests to speak at HR shared services events as it wasn’t a good use of my time. HR outsourcing was seen as a competitor to internal shared services and I sometimes spoke to nearly empty rooms.
Business process outsourcing and shared service organizations (SSOs) have both evolved, and more and more leaders are seeing that the two can go hand-in-hand and become synergistic partners. In a new study by Accenture, “Trends in Shared Services: Unlocking the Full Potential,” more than two-thirds (69%) of the executives interviewed said their organizations began using outsourcing to meet their global service requirements within the first four years of establishing shared services programs. Accenture, a leader in providing large market global multi-process HRO according to the NelsonHall’s 2011 Targeting Multi-Process HRO report, recently shared the research at its 11th annual global shared services conference.
Executives who lead SSOs are increasingly accountable to the corporate C-suite. The number of SSO executives directly reporting to the CEO has doubled in the last two years, up from 8% to 17%. Overall, 59% report to C-suites officers including finance, operations, human resources, and information technology.
As shared service programs have become more proven and popular, they are being designed to deliver services that require more skills than basic administrative functions. And within the next five years, 49% of executives said their SSOs intend to deliver innovation services as well as other value-add services such as data analytics and research. Also, SSOs tend to grow; 90% of the executives are reporting that they are already delivering services to more geographies and markets.
At the same time, internal SSOs can find it hard to create, maintain, and continually invest in services that achieve both process excellence and quality excellence. This can become a barrier to moving into a more strategic role. HR policies had been standardized by 26% of respondents and 25% lacked the needed supporting systems. While 78% said their organizations define processes globally, 48% still implement locally. HRO can be very useful in standardizing services and processes, accessing and managing rapidly changing technology, and providing services globally at a lower total cost.
Integrated business services that leverage global corporate resources and contract with outsourcing partners are already being seen in the more advanced SSOs. The question is no longer internal shared services or outsourcing, and it is no longer sufficient to simply silo processes running in them in isolation. To take advantage of increased C-suite interest and expectations, it is time to build strategic SSOs and HRO partnerships to provide business results in ways and at costs neither could achieve alone.
Are you building integrated business service partnerships with the strengths of both?
Linda Merritt, Research Analyst, HRO, NelsonHall
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