As HROA’s leadership changes, I reflect on the rapid-fire pace of evolution in the HRO World.
For nearly three years, I’ve had the opportunity to help chart the course of HRO’s growth, one month at a time in this space.In the beginning, there was no industry data, no understanding of best practices, and no accepted profession. No one had any interest in covering us in the business press, let alone create publications for us. As for my monthly columns, I felt the freedom to dream and invent at will; after all, who knew what this industry was or where it is going?
In January, I will turn over the chairmanship of the HR Outsourcing Association, not to another provider executive but to an enthusiastic early adopter of HRO: Sharon Taylor, the senior vice president of human resources for Prudential Financial. As one of the first large-scale HRO clients, she is committed to HRO’s practice and evolution, and her elevation to this position proves that HR outsourcing no longer needs to hype itself; it simply needs to keep evolving to meet customer needs.
This evolution has been so swift and dramatic that we forget just how radically customers have altered the HRO landscape. When all of us began the industry and tried to explain to our former colleagues what we were getting into, we saw a lot of blank stares. Now they come to our table throwing around terms like HRO and strategic sourcing with a bravado we never dared to show a few years ago.
We started with just a handful of commercial firms and progressive governments kicking our tires. Now all major providers are aware of hundreds of serious buyers, including governments.
Speaking of government, we had our first lesson in politics. Offshoring came and went as a hot-button political issue. Customers now see it as an imperative, a way of building a 24/7 business. Today, companies of all sizes are considering offshoring. That’s incredible when you consider that just a few years ago, only the biggest of the big would even take a meeting about HRO.
Customers big and small are redefining not only the marketplace but the providers of those services. Companies are merging or redefining their missions on a dime to fit what the market demands. Customers not only have the knowledge to drive the process, but they also have the power and are using it.
HRO education has become a big business. University curricula have now been built around our industry. Perhaps even more importantly, a whole new industry has emerged—sourcing advisors—and this segment of HRO is already worth hundreds of millions of dollars.
Another way customers are defining the marketplace is by latching onto end-to-end HRO. Customers want “one throat to choke”—it’s just easier to manage one big relationship than a series of outsourcing arrangements. Integrated solutions also make it much easier to put the oceans of data to work … getting the data from one source simplifies matters substantially.
To meet customer demands, some of the larger firms went on buying sprees. Others began offering total human capital management, with HRO as part of it. Others are now offering multi-tower BPO, handling all of firms’ back-office operations. All of these changes are customer-driven.
And with a new breed of customers, more industry change is inevitable. The next wave of competitors may be government organizations, and they are establishing shared-services centers and delivering at a profit to departments and agencies. Unions are considering joining the fray of HRO providers as a means of maintaining and growing membership.
Customers could take this industry in a variety of different directions—such as more industry vertical experts. And as customers demand that we change, ERP providers will have no choice but to change the way they face the market. The combined power of HRO providers and customers will, inevitably, force that industry to change its model to something a little more accommodating to us.
Today, the HRO industry has matured beyond the era of visions and hype to one of genuine market power. Customers are reshaping providers and, in turn, providers are reshaping global business.
It is apt for me to hand off the reins of the HR Outsourcing Association chairmanship to our most aggressive, enthusiastic customer. As chairman emeritus and an industry-sourcing advisor, from now on, I’ll eagerly await my monthly progress reports from Sharon Taylor, and I hope you will too.
