SaaS-based HRO is More than Catching On

The current economic environment is increasingly leading buy-side organizations to up-step their usage of SaaS-based, vendor-hosted applications to underpin outsourced HR services, with the adoption of new HR technology becoming an important enabler of improved HR process cost-effectiveness. NelsonHall’s recently published HRO buyer report, “HR Issues and Outsourcing Intentions,” found that 72 percent of the HR executives who participated in the study cited increased likelihood of using SaaS applications for new outsourced services. And HRO service providers responding to NelsonHall’s 1Q10 HRO Confidence survey cited that 44 percent of client prospects are seriously considering platform-based HRO. Gasp! Can you recall the last time buyers’ anticipated uptake of – well, name it – outpaced the providers’ predictions?

To properly frame HR departments’ increased utilization or consideration of SaaS, it’s important to remember HR is typically the process area in which there is greatest organizational acceptance of use of vendor technology, driven by the traditional low priority given to HR in terms of HR investment. But this historically minimal investment is exactly the point – and much of the upside – to leveraging SaaS-based HR applications. Buyers don’t need to make a capital investment in, but have access to, the most up-to-date technology without worrying about upgrades. Add to the benefits mix the elimination of multiple – and oftentimes outdated – HR and payroll systems many medium and large companies around the world still have in force, with the resulting reduced redundancy and further savings costs.

The services provided using hosted HR applications are these days largely singular in nature. For example, the HRO services enabled by supplier-hosted SAP human capital management (HCM) services are typically restricted to payroll services and employee care. There is also an increase in the use of supplier-hosted applications that support single services including learning, recruitment process outsourcing (RPO), and HR administration. For example, earlier this year MidlandHR was awarded an HR and payroll software contract by Kent County Council utilizing its iTrent software to provide several modules including learning and recruitment. And NorthgateArinso was awarded a six year contract for payroll and employee administration software by Garlands Call Centres. NorthgateArinso’s ResourceLink Aurora system will be used to support administartion of employees’ personal details and employment records, process hires and leavers, and run the payroll process for 1,500 employees.

Based on contracts I’ve seen and research I’ve conducted, I believe we will continue to see an increasingly high number of platform- and SaaS-based contracts, particularly in the mid-market. There will also be more platform- and SaaS-based HRO contracts in the large market, but they will be supported by more comprehensive BPO in terms of outsourcing of people (e.g., recruiters in BPO) in addition to technology to perform service delivery, as buyers look to maximize quality in delivery of services and further reduce headcount and costs. 

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

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Explore posts in the same categories: hr outsourcing, hr outsourcing research, hro, HRO contracts, HRO providers, hro research, learning outsourcing, nelsonhall, outsourced learning, payroll outsourcing, recruitment process outsourcing, rpo, SaaS

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