Against the backdrop of Infosys’ most recent quarter-end financials announcement – of which 6.1 percent of revenue was attributed to BPO, and five to 10 percent of that BPO revenue is estimated to have come from HRO – how viable can it and its Indian brethren be in the HRO space? Despite inherent challenges and both real and perceived buyer concerns about offshoring HR processes, offshore providers are making strong investments in and “upping the ante” of their HRO capabilities.
For example, Infosys within the last several months launched a new SaaS plus BPO platform offering which supports HR processes. And other Indian providers such as Wipro, Caliber Point, Secova, Modis and TCS are partnering, primarily with Oracle and SAP, for a technological BPO backbone which supports HRO processes, and then building more standardized BPO services around that technology.
Further, to address language and cultural barrier concerns of many buyers, India-based offshore providers are understandably touting their centers in locations such as Romania and Poland as HRO delivery sites.
Finally, price points are clearly lower in India and other low-cost locations such as the Philippines in which offshore providers have centers. In today’s economy, given that providers such as Hewitt and Convergys have been challenged to meet the cost-cutting requirements of their existing clients without themselves utilizing offshore resources, there are clearly some natural opportunities for offshore providers.
But the operative word above is “some” natural opportunities. Remember, there are many concrete and ostensible inhibitors to offshore HRO. So where are offshore providers making, and can they make, their play?
At least for the relative near-term, it’s in the low-cost transactional services and low- and mid-level analytics processes. For example:
• In recruitment process outsourcing (RPO), CV/resume screening and, in some cases, candidate short-listing. But beyond these initial activities, most will require onshore hand-off
• In learning business process outsourcing (LBPO), managing course scheduling and learner assistance around which courses are suitable, etc. But with language, cultural and proximity issues, the possibility of venue management, course development and learning delivery is null to void
• In back-office processes, those which are non-voice-related, such as payroll reconciliations, accounting within pensions arrangements, fulfillment, etc., in benefits administration
• In HRO analytics, low-end processes such as monthly and quarterly reporting on employees per business unit, geography or employee population diversity; cost per hire; hiring manager satisfaction; learner satisfaction and utilization rates for decision support tools. Mid-level analytics provided by offshore providers could include loyalty and attrition modeling
• And of course the IT support around all of these HR processes
The bottom line is that offshore providers are viable contenders in the HRO space, but we believe buyers are still cautious about fully embracing offshore outsourcing, so are likely to engage only in the non-high-touch areas. If a buyer is seeking lower cost, transactional services, offshore HRO is certainly worth examining.
Helen Neale, Research Director, Human Resources Outsourcing, NelsonHall
HRO Insights 
Recent Comments