Organizations are looking to leverage intelligent technologiesÂ in order to increase efficiency in HR delivery models.
By Pete Tiliakos
With digitalization at the forefront for most businessÂ leaders today, the demand for advancing technologyÂ capability continues to intensify. Many organizations areÂ diligently executing on digital strategies with the goalÂ of transforming and advancing their operations, bothÂ client facing and back office, toward a more future-proofÂ model. In HR, the need for transformation is longÂ overdue and more critical than ever.
As a result, organizations of all sizes are seeking digitalÂ HR transformation to enable a high-performance deliveryÂ model. It needs to support competing for, attracting,Â developing, and retaining top talent by providing nextÂ generation HR capabilities. Now more than ever, HR isÂ playing a critical role in enabling businesses to remainÂ competitive in what is arguably the most challengingÂ labor market in decades.
However, there is still a great deal of opportunity inÂ process optimization within HR and payroll deliveryÂ models where historically, teams have operated in aÂ highly manual, labor-intensive, and often imperfectÂ environment. So itâs no surprise that intelligentÂ technologies like robotic process automation (RPA),Â artificial intelligence (AI), and machine learning (ML) areÂ steadily increasing in demand as organizations seek toÂ leverage the advancing capabilities to drive HR deliveryÂ model efficiency and effectiveness, support scalability,Â and lower costs.
While HR leadersâ curiosity and demand for advancingÂ technology is steadily increasing across all industries,Â most do not know what is possible or where to begin.Â Investments in RPA initiatives for HR are primarilyÂ being taken on by enterprise-sized organizations sinceÂ automation programs can handle high volumes ofÂ employees and transactions, high HR operating costs, andÂ deep pools of HR data. Therefore, unless an organizationÂ has a sizable population and the means to supportÂ internal RPA programs, achieving a case for investing inÂ automation for HRâs unique needs is more challenging.
HR Service Partnersâ Role in RPA and AI Progression
The breadth of current investments and the advancementÂ of automation capabilities in HR is primarily coming fromÂ HR service partners. Those in the space are fundamentallyÂ pioneering the advancement of RPA and AI, andÂ directly impacting the digitalization of HR, enablingÂ organizations of all sizes to access turnkey HR automationÂ programs without the need for major investments.
NelsonHallâs research finds that RPA and AI capabilityÂ in HR is in the early stages of maturity but progressingÂ quickly as early adopters work to solve the most commonÂ and impactful use cases first. While cost reduction is aÂ key consideration, it is not currently the primary driver.Â Organizations are focused on delivering enhanced HRÂ outcomes and user experiences across the HR deliveryÂ model.
HR service partners have only begun to impact theirÂ full suite of HR processes through automation, withÂ most automating less than 10 percent of processes toÂ date. At this stage, talent management leads the wayÂ for RPA and AI advancement, with recruiting currentlyÂ leading all other HR towers in the maturity of RPA and AIÂ adoption due to high demand for enhanced candidateÂ experiences to attract top talent. The highly complexÂ nature of payroll and benefits administration has led toÂ slower RPA adoption. However, HR service partners areÂ rapidly developing automation that reducesÂ the risks of these critical processes,Â with multiple major players in theÂ payroll space actively investingÂ in and progressing toward aÂ fully autonomous payrollÂ processing solution.
Organizational adoptionÂ of RPA and AI vary widely,Â with the highest levelsÂ achieved by more matureÂ HR service lines, likeÂ recruiting, compared toÂ less mature HR serviceÂ lines like payroll. HR serviceÂ partners expect to increaseÂ the use of automation byÂ client organizations in theÂ coming year. Nearly 40 percentÂ that have yet to reach their entireÂ client base expect to achieve this over theÂ next 12 to 18 months.
The Outlook for RPA and AI in HR
Over the coming 12 to 18 months, HR service partnersÂ expect to expand their RPA and AI capabilities in theÂ following ways:
- adding new bots and expanding the capability ofÂ existing bots to manage and handle a wider scope of HRÂ processes;
- introducing ML, AI, and natural language processingÂ (NLP) to enhance cognitive capabilities;
- leveraging NLP to support âconversational HRâÂ capability through virtual assistants;
- infusing more predictive and prescriptive analyticÂ capabilities to improve candidate experience throughÂ personalized, prescriptive guidance and insights;
- developing additional capabilities such as opticalÂ cognitive recognition for unstructuredÂ document processing and facialÂ recognition capabilities (for use inÂ time and attendance clocking,Â interviewing, security, etc.);Â and
- exploring the use ofÂ blockchain capabilities inÂ HR processes.
NelsonHall expects thatÂ organizational adoptionÂ of RPA and AI in HRO willÂ escalate steadily, with solutionsÂ addressing the full spectrumÂ of HR processes. Currently, nearlyÂ 80 percent of HR service partnersÂ indicate an increase in demand for theirÂ primary HR services as a result of organizations seekingÂ to incorporate more intelligent technology capabilitiesÂ in their HR delivery models. Service partners in theÂ recruitment process outsourcing (RPO) space are seeingÂ as much as five times the number RFPs and cite aÂ significant increase in wins for RPO services as a result.
Stand-alone âHR automation as a serviceâ offeringsÂ will likely become common in the marketplace, offeringÂ clients the ability to license the capability and operateÂ independently or a mix of point solutions and offerings.Â In fact, in October, the market saw the introduction ofÂ the first HR specific RPA-as-a-Service offering targeted toÂ the middle market buyer.
Pete Tiliakos is principal analyst of HRO for NelsonHall.