Our experts make bold predictions about the HRO industry.
By Debbie Bolla
While looking back at the last 10 years of outsourcing, we got the itch to look forward to the next five years. How will today’s recent trends affect tomorrow’s biggest business transactions? Here are the biggest trends that our experts predicted—and trust us, we’ll be checking back with them in 2017.
More integration. “Outsourcers will work as more of a sealed unit, and lines will continue to blur between the client and HRO provider. It will be a great thing—this cohesiveness enables more elasticity,” notes Brian Platz, executive vice president and chief operating officer of Silkroad. “For example, it’ll mean less of the massive, many-year HRO contracts, because outsourcers and companies will be working alongside one another as a team, not separately.”
Globalization will trump regionalization. “Rather than split business across regions with multiple systems and processes that must be integrated together, companies will continue to push for HRO relationships with global capabilities that facilitate standardization of processes within an HR application solution while adapting to local configurations as required,” says Charlene Parsons, vice president of talent optimization for Cigna.
Technology will empower choice, again. “Technology platforms work together today better than ever, and that trend will continue,” reports Greg Dubecky, president of Corporate Screening Services. “Buyers that wanted all their processes integrated into one platform, like HRIS and talent management systems, were many times at the mercy of their vendor whose platform they selected, which forced them to use that provider’s partners for ancillary services like search, screening, assessment, payroll, time-and-attendance, etc. Now, buyers again have the power of choice. They can make selections of their own, instead of that decision being made for them.”
Contract shrinkage. “We haven’t seen the bottom in terms of large deals—people won’t want to do that,” says Lisa Knutson, chief administrative officer for The E.W. Scripps Company. “Commodity-based outsourcing will be compounded into one contract, while buyers will continue to look elsewhere for best-in-breed providers for talent management and recruiting. A lot of contracts are going through renewals right now. They will tend to be five- to seven-year increments. But even seven years is a long time to be locked in a contract.”
Eyes on healthcare. “Healthcare will continue to be a wildcard for the next five years in the U.S.,” reports Michael Beygelman, president of Adecco RPO, North America (and a columnist for this magazine). “The employment regulatory environment will come under increasing pressure globally, because in some zones unemployment will stay rather high, while in other zones lack of available talent will put pressure on economies and increase the appetite for employment regulatory change.”
Transparency fosters growth. “The industry as a whole is more benchmarked, making it easier for buyers to make the decision to move to outsourcing because the metrics and results are public,” explains Paul Harty, president of SevenStep Recruiting. “Access to research, case studies, consultants and information has multiplied, whereas 10 years ago this decision was a risk with uncertainties. The industry will continue to grow over the next five years because of visibility on what does and doesn’t work, and the explosion of information to help make an informed decision and govern the relationship between provider and customer.”
Multi-process momentum. “As service providers build and acquire robust capabilities across HRO towers, buyers will have better options to choose from,” says Rajesh Ranjan, vice president of Everest Group. “That will help the MPHRO market to regain momentum that it lost in recent times.”
Andrew Grant, executive vice president of Allegis Talent2, agrees. “With the increasing need to be competitive in a global market and the evolution of technology enablers and the cloud, we’ll continue to see an increase in MPHRO on a global scale,” he says. “Some analysts are predicting an increase of up to five percent in the next five years.”
Data baby! “Big data is the future of HR and HRO,” says Sue Marks, president of Pinstripe. “It’s a ‘desert’ out there today in terms of data—meaningful data. We’ve got gigabytes of data points about talent, employees, preferences, etc., but there’s no easy way to access it and organize it now. Most often it sits in different, disparate systems, and even when it doesn’t, we haven’t yet captured the strategic value it will ultimately deliver. In the next five years, big data will help organizations find the best and brightest talent and gather predictive insights on marketplace developments, employee retention, customer preferences, and risk management to enhance the strategic value and overall efficacy of HR.”