The intersection between HR strategy and HR technology


HRO and non-cost decision drivers

systematicHR Avatar

First of all, if you have never looked here – check out Cap Gemeni’s library.

So Cap Gemeni comes out with a survey that organizations looking to outsource really have other objectives other than cost savings. Obviously these have to do with efficiency and their ability to drive strategy and core business focus. They also want the vendor to share some of the compliance risk associated with doing business. For example, if benefit administration cost reductions in the SLA’s are not acheived, the client may receive reduced fees, or Sarbanes Oxley compliance might already be in place for an outsourced payroll vendor.

My issue is not with the survey, but with the client expecations and execution of the non-financial drivers.
First, when you plan to convert your existing workforce to a less transactional group, how do you displace these workers as there will always be a need for some transactional level on-site.
Second, these transactional workers may not have the skills needed for strategic execution. Thus, you can’t displace them, but you can’t use them either. This means you are hiring additional unexpected headcount.
Third, are you planning process change and change management around the outsourcing environment? If not, how do you actually expect to convert your organization to this stragegic group?

Just something to think about. Most organizations know exactly what cost savings they will achieve, but they haven’t planned how to EXECUTE the non-cost decision drivers.

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