Multi-process HRSourcing

Building a ‘Bestshoring’ Solution for HRO

Chris Rittenmeyer, the new head of ExcellerateHRO’s EMEA region, reflects on globalization and the accompanying challenges facing HR leaders and HRO providers worldwide.

by Peggy Cope

Chris Rittenmeyer, ExcellerateHRO’s vice president for Europe, the Middle East, and Africa, finds it difficult to talk about the region as a whole unit when it comes to HRO. The nature of this market, he explained, is so diverse that it’s not possible to discuss its development in homogenous terms.

“When we talk about the EU in general, just by the nature of what it is, it’s a diverse population,” Rittenmeyer said. And he should know, having served from 2001 to 2005 at ExcellerateHRO parent EDS, where he developed and led global strategy teams that implemented programs to increase operational effectiveness and provide cost savings.

Rittenmeyer was recently named vice president of EMEA at ExcellerateHRO after serving as the company’s director of global transformation, and he shared with HRO Today his vision of the EU common market, the growth of HRO, and the impact of globalization. ExcellerateHRO, a joint venture between consulting giant Towers Perrin and outsourcing provider EDS, has been a key player in the European HRO market. Although Rittenmeyer’s responsibilities are strictly for Europe, the fact is that just about every large-scale HR transformation deal today involves global operations, so regardless of where the HRO buyer is based—the U.S., EMEA, Asia, or elsewhere—his or her engagement is almost assured of touching lives on many shores.

Global Footprint Needed
Rittenmeyer, who is the son of EDS CEO Ronald Rittenmeyer, noted that many of the barriers that still hold back outsourcing efforts are very country-specific, whether those pertain to legislation or culture. Nevertheless, he noted, “In order to be a successful supplier and add value on a global level, you have to have a large global presence yourself; in doing that you can understand what the companies you provide services to are going through day to day.”

The challenges faced by HRO efforts in many parts of the EMEA include data privacy and security, which can be more stringent in countries such as Germany than in the U.K., Rittenmeyer noted. In addition, he said, labor laws vary from country to country. “I think, looking at union labors, you really have to understand the specifics on a country level. That’s not transferable—you can’t say ‘The EU’ as a whole.”

Across EMEA, Rittenmeyer said outsourcing is broadly equated to offshoring or, as he denoted, “bestshoring,” which he looks on as a reality of the global economy.

“If you talk about having a bestshoring center in India, they will have many companies in India. If you ask those employees whether they are bestshored, they’ll say, no, they are on-shored,” Rittenmeyer added.

This attitude is perhaps indicative of globalization in the truest sense. According to Rittenmeyer, as markets become more globalized, suppliers have to be ready to provide the required capabilities. “I really view bestshoring as suppliers preparing themselves and their clients for globalization, rather than shifting work back and forth,” he said. “We have global centers of excellence. More companies will continue to expand into more countries. We need to make our clients more competitive, and we have to be there to do that.”

When it comes to barriers to HRO adoption, Rittenmeyer urged, think about why companies outsource HR, IT, or F&A services. The reasons range from gaining new capabilities to positioning the company for growth or other major changes; scaling up or down; changing risk profiles; and more.

“Then there’s the favorite: cost reduction,” said Rittenmeyer. When a company seeks cost reduction, he said, “Really, we are transforming businesses. In HRO, typically we work with the HR capability of a company, which provides service to a business. What we do is provide service to their business, which transforms how they look at and use HR to enable the business to be more competitive. When you take those in mind then go back and look at cultural differences, companies will never have a blanket reason to outsource.”

Here again, the market has evolved differently and incorporated different solutions. The EMEA HRO market is much less mature than the U.S. market, said Rittenmeyer, because it was founded on the backs of global contracts signed by pioneering U.S. companies. But lately, European companies are showing that they are more effectively putting outsourcing to work—either through selective engagements or end-to-end contracts—to achieve HR transformation.

One Customer, Various Needs
Even large companies are conglomerations of different populations with different needs—an essential nuance that’s often overlooked. That means different operations fall under different regulations as well as differing perceptions of what is core to corporate strategy. At the end of the day, cultural barriers are usually the result of pockets of education, based on fact rather than perception and fear. It’s a question of familiarity, comfort levels, trust, and partnership, he said.

“Outsourcing inherently is change,” Rittenmeyer added. “You are going to find countries that are more averse to the concept of outsourcing, but once they see why they are doing it and what they are trying to accomplish, that becomes less scary.”

The EMEA markets, according to Rittenmeyer, require a very complicated solution compared with that of the U.S. While EMEA companies have learned from their U.S. counterparts, vendors must also understand the differences between the companies, embrace those, and create solutions based on the supplier’s capability.

While shared-services centers are viewed as a popular interim step to outsourcing in much of the EMEA, Rittenmeyer doesn’t think they are absolutely necessary. Through shared services, companies look for ways to reduce the cost base and leverage best practices. But whether an organization should start with a shared-services solution before outsourcing depends on its needs and the capabilities of the outsourced market.

In addition, said Rittenmeyer, it depends on a company’s appetite for risk and how much it’s willing to pay. If a company decides to go the shared-services route, it will make investments internally that a supplier would have provided, with the key difference that the company will maintain direct control of the center. For an organization hesitant to outsource, shared services can be an easier concept to wrap brains and resources around.

“It’s incumbent on us, as suppliers, to have an opinion on the best way to create leverage and eliminate that fear,” said Rittenmeyer, noting that ExcellerateHRO has done just that for years. “And we do it well.”

The middle market will take off faster than its larger brethren when it comes to HRO in the EMEA, according to Rittenmeyer. Because the outsourcing picture in the EU is more complex with more regulatory requirements, it’s common to find smaller pockets of capability among niche players; therefore, more mid-market solutions are called for.

Vendors serving EMEA should be transparent about their capabilities, providing the base case and looking at the employee population on the client side, said Rittenmeyer. With the war for talent raging across EMEA, he said, it’s essential that suppliers offer solutions specific to the needs or trends within a company or a country to help them acquire and manage human capital.

During the time he served as director of ExcellerateHRO’s global transformation, Rittenmeyer restructured the company’s global delivery strategy and directed its improvement endeavors. He also led teams that implemented business plans for key accounts, aligning their operations with ExcellerateHRO’s broader corporate strategic plan. While the U.K. is the largest market, he cites other studies that forecast high growth in Spain and Germany. To date, ExcellerateHRO has focused on the U.K., with some activity in Germany and France, as well as the Netherlands in the benefits sector. The company is also eyeing the outsourcing potential of Spain. Outside of those markets, the company will pursue opportunities depending on the target clients and the products they need.

Thanks to the ownership of EDS and Towers Perrin, ExcellerateHRO has many resources at its disposal, including presence in more than 25 countries throughout Europe.

Whether the solution encompasses IT, HR, or other processes or functions, vendors in the HRO market need to deconstruct the existing corporate ecosystem, look for efficiencies, and implement better ways of operating.

“With the knowledge our people have and the technology we have developed, plus domain expertise from doing transformations combined with core competencies in IT, we have a really interesting story to tell,” Rittenmeyer contended.

Partnerships a necessity
He acknowledged that there is not a single supplier in the market today that can provide all services in all regions. Therefore, consolidation will be necessary. “But you will see it in a variety of vehicles,” he said.

He predicted the most prevalent models will be alliances, consortia, and other partnerships. “I think you’ll see more creative, less capital-intensive plays to create a one-stop-shopping approach,” Rittenmeyer said, adding that acquisitions can make sense as long as they are carefully thought out.

“Any time you make an acquisition, you have to fit the long-term strategy,” he said. “It’s easy to buy the CD for one song, but sometimes you need an iTunes solution. Why make a huge investment when you only need one thing?”

As a final thought, Rittenmeyer compared building capability in this market to an egg-and-spoon race—one in which speed is a necessity but not the only deciding factor in winning the race.

“You want to win, but you don’t want to be so fast you drop the egg. Everyone wants to provide deeper breadth of global HRO

capability, coming in from different directions and developing operational capabilities resulting in pure-play HR firms,” he said. But “it’s not how fast you run, it’s which race you are running in.”

Tags: Multi-process HR, Sourcing

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