Now that more companies are embracing HRO, the next issue of debate is whether HRO needs to be delivered on a country-by-country basis, or can an HRO deal ever truly be global?
Despite increasing interest, there are still relatively few truly “global” full-scope HRO deals in existence. Over the past months, much has been written about the challenges in doing broad-scope HRO (geography and functionality), particularly in Europe. For deals such as those signed by Dupont or BP, what enables these organizations to implement something that seems a step too far for most?
One major factor has typified the largest and broadest HRO deals during the past few years. Delivery and major solution components are organized regionally. Even when the deal is vaunted as “global” this refers to one commercial arrangement rather than one global solution.
So what is needed to enable a truly global deal and—more importantly—ensure it is sustainable?
• Technology. The role of enterprise solutions such as SAP or Oracle has been central, as these platforms can provide the necessary “glue” to enable a consistent global HR model.
• Clarity around functional scope. It is preferable to ensure that the functions to be outsourced can support the global model rather than de-scoping on a piecemeal geographic basis leading to a fragmented and potentially less economically rewarding approach.
• Benefits simplification. Complexity in HRO is driven by the unavoidable multi-jurisdiction variants. Global harmonization must be undertaken wherever possible to avoid point solutions from undermining the greater good.
The single biggest factor for the successes in the market today is enabling technologies. Whether this is Oracle, SAP, or other providers is irrelevant, but attempting to implement global HRO without a well-designed and implemented enterprise HR solution is impossible.
Second is the simplification of the range of services offered. Complexity drives cost for both the provider and subsequently the client. You will have to decide whether to compromise geographical scope or service offering. If you are really looking to achieve a consistent global roll out, all geographies need to be included; additional services can be added at a later date.
The conclusions you have to reach in watching the deals that have come to the public domain as well as through knowledge of those deals that are about to be signed are that:
• No one factor is “making” this market.
• There are real global HRO deals being signed and implemented and these will become more common over the next two years.
• The combination of simplification of benefits and enabling technologies is making global HRO viable.
• Simplification of services offered without sacrifice of the global intent gives a far easier route to future cost and synergy benefits than painful piecemeal geographic implementations.
So knowing this, what advice can be provided to those considering a global roll out?
• Know what you are trying to achieve—cost saving, improved customer service, better benefit alignment to business goals, etc. Recent research indicates that the key drivers for outsourcing HR are now less related to cost reduction and more about improving quality and making HR more strategic.
• Create a strategic development route map for HR services. Understand the scope of geography and services you want to include, when and how.
• Get advice and guidance from subject matter experts who have done similar change projects, particularly relating to European employment regulations and transition/transformation.
• Understand the key enabling or disabling decisions and technologies, and build these into the case for the project.
• Create a business case that includes everything that will have to change (e.g. benefits simplification, IT platform upgrades, etc.)
• Once you thoroughly understand why you are doing this, be open-minded as to how it will be done.
• Take references, and talk to people who have done similar things before. Even though the market is generally immature, there is still a huge amount of collective wisdom you can draw on to save you from making the same mistakes.
As the market evolves, more companies will look at global HRO. Although you always need local experts to support the idiosyncrasies of different geographies, it is possible to reach a global approach to delivery. The important thing is understanding what, if anything, you’re prepared to compromise in doing so!
