2. Report Structure
Section 1
Section 2
Section 3
Section 4
Section 5
‘What’ of HRO
• Summary
• Trends & Focus 2012
Industry Speak
Ref: PeopleStrong HR Roundtables
The ‘How’ of HRO
• The HR Shared Services Way
• Ready Reckoner
• HR on Cloud
India Way by ‘Everest’
Dispelling Some Common Myths on HRO
Delivery Model &
Impact by PeopleStrong
3-6
7-18
19-30
31-37
39-43
3. 2
WearehappytobringtoyouthiseditionoftheHRTransformationseries.
The world today has become really flat,and an impact in one corner can surely put
theglobeoffbalance.Aswegothroughhighlyvolatileeconomicconditions,ithas
become almost mandatory for businesses to proactively catch on the signs of
changeandconsequentlypushforamorerigorousapproachtotransformation.
Most of the HR Leaders across the world have a changed strategy which is the
cause of the business impact they are creating. This impact is largely an outcome of two forces -
ChangingBusinessMetricsandChangingWorkforceTrends.
Both of the above immediately impact the way HR gets delivered in the organization and how HR
equity is perceived within the organization. The vital sharing of the Board Room by the HR
Leadership is just one indicator out of many. Another fundamental shift is the new HR Delivery
Structure,withaconfluenceofBusinessCoEsandDeliveryCoEsthroughHRSharedServices.
The key objective that we intend to discuss in these series is the building of HR Shared Services to
drive the change in HR delivery. This edition brings to you the views of the India HR leadership on
Transformation, which was shared in two roundtables. Also, Industry experts Everest Consulting
sharetheirviewsontheHROutsourcingIndustryatlarge.
As we go through a wave of consolidation in the Indian economy, HR Shared Services acts as a great
leverage in building consistency and efficiency in HR operational processes, together with a great
employee experience, where an employee sitting anywhere in India goes through a consistent
experienceofemployeedelight.
Governance, Scale and Building Predictability in Business - are the top three key drivers that today
compelustomovetoSharedServices.Costisoneofthekeyfactors.It,however,isnottheonlyfactor.
Thereisa10%-40%costadvantagethattheorganizationbenefitsfromovera3-4yearhorizon.
HRSSC also provides the necessary 'mindshare' and 'heart-share' to the HR teams to spend time on
trulyvalueaddedactivitiesandnotonlyonjust puretransactions.Thereisareleasein30%to40%of
thebandwidthoftheHRteams,allowingthemtofocusmoreontheBusiness.
Via these series, PeopleStrong endeavors to demystify HR Shared Services, paving the way to create
furtherbenchmarksandanevolvedroadmapinbusinesses.
Foranyinputorsuggestiontomakeitevenbetterpleasereachouttomeatshelly@peoplestrong.com
Happyreading!
ShellySingh
Co-founder&EVP
Foreword
‘What’ of HRO
• Summary
• Trends & Focus 2012
Section 1
4. 2012 - The way forward
Human Resources Outsourcing predictions for 2012
HR Outsourcing Industry Summary
Overall HRO
predictions
Multi-process
HRO (MPHRO)
Single-process
HRO (SPHRO)
•
•
•
Beyond cost-reduction focused considerations, buyers will
seek to capture more strategic value in their HR outsourcing
initiatives
The appeal of a platform and SaaS-based HRO offering will
increase
Beyond MPHRO, global sourcing will increasingly become a
keycomponentwithinSPHROaswell
•
•
•
A testing year for the comprehensive MPHRO model;
improved decision making environment will help market
reachUS$3.1billioninannualizedspend
The end-of-term cycle will play an important role in the
market evolution as deals worth US$2.7 billion will come up
forrenewalin2011
Service providers not finding success within MCPO will look
tofocusonSPHROarea(s)todrivegrowth
•
•
•
•
The recruitment process outsourcing (RPO) market will
continue to see higher growth and a more robust global RPO
solutionwillemerge
The growth in the benefits administration outsourcing (BAO)
willbedrivenbytheHealth&Welfarearea
Multi-national companies will accelerate their initiatives
aroundmulti-countrypayrolloutsourcing(MCPO)
After the lean period of the last two years, the learning
services outsourcing (LSO) market will see recovery but st a
slowerpace
The past ten years have been an epic journey of partnership between companies
outsourcing HR and for the providers of those services. Both have endured
significant challenges in their laborious endeavors in findingformulae that worked.
Intheend,thestrugglesyieldedtwoimportanttruths:
• After years of technology implementations and process improvement efforts,
mostHRfunctionsstillarefarfrombecomingoperationallyefficient.
• The benefits of HR outsourcing will not be fully realized without at least some
degree of functional transformation, such as process optimization, role redesign
orotherservicedeliveryimprovements.
As we enter the second decade of HRO, it is clear that outsourcing is here to stay: It
has become a critical component of a cost-effective delivery strategy. By building
outsourcing efforts upon the above truths, HR will be better prepared to navigate
the challenges of implementation and create a model for improved operational
effectiveness.
With the pressure on back-office support and service delivery amplifying, there is
no doubt that HR departmentsare also amplifying their focus on transitioning their
activities to high value service offerings. The need to slash transaction costs and
minimize time-inefficient activities, while developing an engaged workforce led by
transformationalleadership,hasbecometheheartofthisyear'sagenda.
54
5. 6
2012 - The Focus Areas
In2012,weareturningthespotlightontotwokeyfocusareas:
• Strategicimplementationtoalignwithbusinessgoals
• Driving value-added initiatives and evaluating cost reduction methods to
stretchROI
• Drawing the end-to-end roadmap to implement the concept of 'HR functions
alignedtobusinessgoals'successfully
• Cutting administrative tasks to deliver HR's value proposition to the rest of the
business
• Standardizingprocessesgloballytoreduceerrorsanddeliveruniformservices
• Enhancing employee self-service to reduce workload and channel efforts to
value-addactivities
• Advancing and improving HR processes, functions and delivery by focusing on
opportunitiestobeaprofitgeneratingcentre
• Understandingwhatthebusinessseesashighvalue
• Leveragingonadvancedtechnologytoimprovefunctionality&servicedelivery
• Enhancingemployeeengagementtooptimizeretentionofhighperformers
• Evaluatingthemosteffectivecharge-backstructure
• DoingMOREwithLESS
Industry Speak
Ref: PeopleStrong HR Roundtables
Section 2
6. 98
Intoday'sHRscenarios,wehavemetalotofclientsandhadadiscussionwiththemaboutthebestHR
practices.Manypeopleaskedusthattherearesomanyconferencesandseminarstodiscuss how to
implement best practices in Human Resources however, not enough debates & discussions
happeningon-whatHRreallywanttodo?
So, PeopleStrong came up with the predominant idea of organizing Roundtable, where a small and
closed group of CXOs & HR Heads from the industry have an exclusive discussion on how to
transformHRfunctions.
1st Roundtable
HRTransformation:What’sinside?
The1stRoundtablewasorganizedinMumbaion28thApril,2011.Wediscussedabout-whatarethe
keyingredients inHR functionwhichhelpsanorganizationtogrow, succeed andtransforming HR
fromasupportfunctiontostrategicfunction.
ExcerptofthefirstroundtablepublishedinPeopleMatters
HRbecomingthestrategicbusinesspartner;"enteringtheboardroom";hasbeenthekeyfocusareas
for almost a decade now for all HR Leaders. However, there are several ways to do the same: can it be
done by thought leadership, effective succession planning, leadership building and so on and so
forth?
However, the entire strategic part of HR keeps struggling to crack the secret of efficiently and
effectivelytransformingtheHRprocessestoachievethisshift.
India as a country has been evolving and hence the industries have been growing as well, with
different industries at different points in the maturity curve. It becomes very imperative in the
constantly evolving and changing dynamics to find the right balance between standardization vs
localization;growthvsconsolidation.
No matter which industry or location it is, there are reference points and challenges which keep
showcasingthatHRProcessesaresomethingthatkeepgivingallHRLeaderssleeplessnights.
To unravel the riddle and to find out the 'microprocessor' inside the HR function, which is enabling
theHRenginetodrivetheorganization,wehavepickedupmultiplethreads:
• Experienceandpriorityindifferentindustries
• DesigningaHRtransformationroadmap
• HarmonizingHRpoliciesandcompliancewiththeHRServiceDeliverymodel
• GlobaltrendsofHRTransformation:SharedServices,Automation,Outsourcing
• Implementinganeffectivemodeltoroll-outHRtechnologyandprocesschanges
• Enablinganefficient,agilerecruitmentengineandreducingrecruitingcosts
• Measurement:C-Sat,productivitygains
The complex and rapidly changing business dynamics continue to pose a challenge before
organizations to transform themselves and adapt to the new realities. While HR transformation is
also a consequence of such dynamics, the benefits of transforming the way talent is hired, managed
and utilized is emerging to be a strategic differentiator in it. Many CEOs are revisiting their entire
people strategy as a result of the changing business scenario.The strategies that helped companies
succeed during the downturn will not be applicable anymore. Progressive organizations will focus
on rethinking and restructuring the HR function to align with the company's growth ambitions.This
makes HR transformation a necessity for organizations to prepare themselves for the next wave of
growth.“The moment HR can commit to output, business will accept HR as a partner because the
value they bring to the table is business critical,” says Pankaj Bansal, Co-Founder and CEO,
PeopleStrong.
Changingtalentdemographicsandtheavailabilityoftalentisalsoimpactingthewaycompaniesare
lookingattalentacquisitionandretention.Ononehand,thedemand-supplygapinIndiahasforced
organizations to pioneer new practices where HR proactively involves itself in the search for
solutions, not only for their own company but also for the overall industry. On the other hand, the
changing workforce demographics, their expectations and ambitions, require organizations to
adapt themselves to create new ways of engagement at work. “An individual today lives in a
connected world and has many different opportunities that he/she can align with and pursue,”says
Sunil Chitale, EVP and Chief Strategy & Marketing Officer, Patni Computer Systems Ltd. “In such a
scenario, business needs all the help from HR to build a compelling story that can be communicated
inawaythatwillattractandretaintherightpeoplewhoarealignedtothevisionoftheorganization,”
addsChitale.
TherulesofbusinesshavecompletelychangedaftertheLehmaneraandsomeotherinfamousones
like Satyam, and Debacle of the microfinance industry.“The ways we measure business has radically
changed,”says Shelly Singh, Co-founder & Vice President, PeopleStrong. The importance of metrics
today is not only a business need but also governance imperative. Governance is no more a
responsibility only of the legal and finance functions but it is equally a HR mandate. As KS Kumar,VP-
HR, Castrol India shares,“In the backdrop of the economic crisis, HR must emphasize on governance
and ensure that the people processes add value to the overall business and is in compliance with
corporategovernance.”
1st Roundtable
7. CEO and the boards have realized that values and culture of the organization are crucial ingredients
in building a sustainable and differentiated business. The HR function has been specifically held
accountable for embedding the culture and values in all employee lifecycle events as HR processes
provides the right levers to build the organization's culture. Therefore HR transformation
emphasizes HR's increased focus on nurturing organizational values and culture, while outsourcing
theothermoretransactionalactivities.
There is a need for HR transformation both at the strategic and operational level.“It is not an 'either-
or' decision as it requires both strategy, which is built around the corporate brand, and the business
context, along with a seamless, scalable and efficient HR operation,”says Bansal from PeopleStrong.
The critical question that CEOs and boards have for HR in devising a process to continually build on
people and organizational capability mandates a radical shift in both HR strategy as well as HR
operations. Excellence in HR operations is important because it allows HR leaders to find the
bandwidth for strategy without compromising on efficiency, scalability and predictability. The
manner in which the HR team is structured will define the extent to which they would be able to
implement the strategy in its entirety. If looked closely, 80% of HR's mindshare should be invested in
strategy whereas we see 80% time is instead focused on delivering the operational piece.“From my
interactions with organizations, I see that the HR team is structured in exactly the reverse manner of
what the business requires”, says Singh of PeopleStrong.The owner of this transformation should be
the HR teams, actively supported by the line, CEO and technology head. HR needs to be the leader
andnotthevictimofthistransformation.
HR transformation will require HR teams to define whatis 'high-touch' and whatis 'high-transaction'
whendecidingwhatiscoreandwhatisnot.Further,theymustlookatoutsourcingeverythingthatis
high-transaction. “Increasingly, we will see this trend, and the value that HR will bring to the table
would really have the ability to define whatis the best way and the best partner to deliver services to
the organization, understanding the context, culture, and history of the organization,”adds Gautam
Chainani, CPO, Aditya Birla Financial Services. While defining what is core and what is not, each
company should look at their HR processes to identify the best way to support business
requirements. HR teams hence need to 'let go' of transactional work and take on a role that supports
organizationswithstrategicinputsandexecutiontowardsbusinessplans.
DecodingHRTransformation
WhatiscoreHRandwhatisnot?
1110
1st Roundtable 1st Roundtable
Once the HR teams identifies the work that is not business critical, the next question is to find out
who will take on that work. For this, the management will have to create the mindset of service
delivery,qualityandperformanceinaninternalteam,driveSLAsanddeliverperformance;secondly,
the commitment to invest on technology is critical. Technology will play a crucial role in creating
value for the transactional team by providing bandwidth, and the commitment to invest in
technology will determine the success of this internal initiative. Finally, the organization's
accessibility to best practices in the transactional space is important in making such a decision.“In
India, in the same way that we saw the telecom revolution taking people from 'no phone' directly to
'cellphone',withoutthetraditionalstepof'landline',wewillalsoseecompaniesdirectlymovingfrom
'nosharedservices'to'outsourcedservices',”addsBansalfromPeopleStrong.
The role of HR in the new business environment is to support business transformation. The need of
the hour is for HR to spend majority of its mindshare in the 'thinking' and minority in the 'doing'.The
'thinking' aspect of HR's role will need to be kept within the organization and cannot be outsourced.
The success or failure of HR will not be based upon how long it takes to answer a call in the contact
center, rather around a much broader set of business metrics. “HR is the leader in this change
management operation; this is the opportunity for HR teams to step out from the backroom to the
boardroom,”saysSinghfromPeopleStrong.
ThenewHRfunctiontodayhasthefollowingbusinessmandates:
HRasaflawlessexecutor
The present scenario has witnessed a shrink in the strategy - execution cycle.“Operational brilliance
is the foundation for any transformation in HR”, adds Saagarika Ghoshal, Chief People Officer at
Reliance BIG Entertainment. HR can build credibility only if their internal HR execution capability is
operationallyexcellent.
HRtoalignwithbusinessandorganization
The HR team will need to focus on understanding the business realities much deeper than before
andjustifyitsinvolvementinstrategicdecision-making.
Advocacy&HRfunction
The new role will require HR to play advocate to the critical requisites of business excellence –
promote organizational value and culture to create the right alignment of employee contribution
andorganization'svision;addvaluetothetablebyenhancingpeoplecapabilities.
HRasamulti-dimensionaldiscipline
HR will need to adopt a multi-dimensional solution process approach to any business reality. For
example, when looking at attrition, it cannot address the concern by only looking at one aspect but
must view it as an integrated solution that looks at all touch points from profiling, employer
branding,compensationphilosophy,careermanagementetc.
WhatdefinestheHRfunctiontoday?
8. HRasaleadershipcoach
HR will become the coach to leadership in the company. HR's role will actively involve connecting
withbusinessleaderstohelpinternalizeHR'sroleinrealizingorganizationalstrategyandvision.
HRasaprogrammanager
A new role that will be added to the HR department will be that of 'program management', either for
HR vendor partners or for running internal shared services. HR will focus their efforts in identifying
businesscriticalactivitiesandtakeontheresponsibilityoffindingtherightvendors,managingthem
andassessingqualityofservicedelivery.
With workforce emerging as the undisputed competitive advantage across industries, HR's role will
transformdramaticallytomeetthenewdemandsofbusiness.TheessentialcompetenciesfortheHR
team going forward will be aligned to this new role.While knowledge of operations will continue to
be important, the specific understanding of the business and organizational context will be most
relevant. Just as the CEO is not an expert of all functions it is responsible for, the HR function too will
not be required to be an expert in all HR areas but they will require a good understanding of the
businessandtheorganizationalcontexttomaketherightjudgments.
In the new HR backdrop, the key competencies that HR will need to actively hone include adequate
business acumen, coaching and mentoring skills for CEO and the leadership team, ability to design
and architect service delivery models, program management (managing vendor partners),
understanding of technology trends and options in HR for driving scale and innovation, finance and
budgeting,andabilitytosellandpositionHRwithinternalandexternalstakeholders.
IsHRreadyfortherequiredtransformation?
1312
1st Roundtable Leaders/Industry speak
Scott Bayman (Ex CEO Genpact) & Dr. Santrupt Misra (CEO - Birla Carbon & Group Director HR, Aditya
st
Birla) facilitated our 1 Roundtable on HR Transformation: What’s Inside along with group of 20
CXOs&HRHeads.
We have seen this happen in the US and we are seeing the same trend
catching up in India at a faster rate. At an organizational level, there will be a
shift on how things get done.While HR will continueto be accountable, they
willnotbedeliveringalotoftheroutineandrepetitivetasks
Scott Bayman
Former CEO GE India & Chairman, Lumis Partners
The role of HR will significantly move towards being able to identify and
manage service providers while delivering strategic services that impact
BusinessPerformance
Dr. Santrupt Mishra
CEO, Carbon Black Business Director - Group HR Aditya Birla Management Corporation
Strategies will provide the direction and alignment to business goals, and
executing those strategies effectively, efficiently and as per compliance will
beinstrumentalinthesuccessofbusiness.
Gajendra Chandel
Head HR, Tata AutoCome
HR comes in the picture when we grow more than 100 people but the
challengeoverthereiswhatHRcandeliverlargelydependsontheindividual
whoisplayingthatrole.
Sandeep Sinha
Co-founder & MD, Lumis Partners
9. 1514
The stage for HR is set as workforce emerges as the greatest asset for
any company.
Judhajit Das
Chief, Human Resources ICICI Prudential Life Insurance
Increasingly, we will see this trend, and the value that HR will bring to the
table would really to have the ability to define what is the best way and the
best partner to deliver services to the organization understanding the
context,culture,andhistoryoftheorganization.
Gautam Chainani
Chief People Officer, Aditya Birla Financial Services
In the backdrop of the economic crisis, HR must emphasize on governance
andensurethatthepeopleprocessesaddvaluetotheoverallbusinessandis
incompliancewithcorporate governance.
K.S. Kumar
VP-HR, Castrol India
Rajendra Ghag
EVP HR & Administration, HDFC Life
This opportunity compels us to address the concerns of people who are
bored with the mundane and routine jobs, by seeking external expert
assistancewhocantakeoversuchtransactionalHRactivities,allowingtheHR
team to instead concentrate on engagement activities and work towards
enhancingworkforceproductivity
The businessside wants HR to transform to be able to make peopleavailable
whoareproductivefromthemomenttheyjoin.
Vijay Sinha
Sr. VP, Tata AIG
Leaders/Industry speak
HR Transformation: What's in, What's out?
ExcerptofthesecondroundtablepublishedinPeopleMatters
The growing appreciation of the value of a company's assets is steering HR to move towards metrics
and measures to gauge its contribution to business. The first PeopleStrong Roundtable series
establishedtheessenceofHRtransformationandbusinessdrivers.
The second PeopleStrong Roundtable brings together views from the business fraternity on what
HRneedstodo'moreof'and'lessof'inthisnewcontext.TheRoundtableon'HRTransformation'saw
HR and business leaders discuss the roadmap for human resources as a function in the increasingly
complex work environment.The question is whether or not HR demonstrates a clear contribution to
businessproductivity.
HR outsourcing emerged from the need to contribute to business value and move away from
focusing on transactional HR activities. This new approach helped many organizations to decrease
their administrative and transactional burden. While HR has embraced this transformation, the
questionnowisabouthowefficientlythischangecancontributetobusiness.
It is an accepted fact that HR plays a significant role in building organizational capability, a dynamic
and meritocratic culture, ownership and accountability in all the employees.To build organizational
capability, HR needs to invest time in coaching and enabling people to upgrade their capabilities,
keeping in mind the present and future business requirements. Along with that, HR must also
become'championsofchange'andcreateaculturethatwillallowittobeagiletomeetthechanging
market dynamics. To take on its new responsibility, HR has to redefine its priorities in order to make
time and bandwidth for the same. As Bhasin explains,“Much like in Genpact, while thinking of any
process or business, the discussion has been about effectiveness versus efficiency. The HR function
today must look at its role in the same light.” As a strategic business contributor, the function is
moving towards questioning how HR can be more relevant to business. In order to contribute to
business HR needs to identify its core competencies like productivity, leadership development &
coaching,capabilitybuilding,knowledgeretention,leveragingtechnology,connect&engagement,
andbusinessplanning.
In order to gain respect from business leaders, it is important that HR lays emphasis on
demonstrating productivity and value. For this, HR needs to put in place appropriate metrics to
measure its contribution to the business agenda. It is essential to align HR to the strategic objective
ofthecompany.
2nd Roundtable
The2ndRoundtablewasorganizedinDelhion18thAugust,2011.InthesecondofthePeopleStrong
roundtable series HR and business leaders discussed the road map for human resource as a function
intheincreasinglycomplexworkenvironment.
10. HR will have to concentrate more on leadership building and be able to identify the leaders in the
pipeline nurturing them for future leadership role.This will help strengthen the leadership pipeline
thatiseverreadytofuelbusinessgrowth.Developingadecisionmatrixtoidentifytherighttalent,to
manning critical positions, developing a simple yet robust process for enhancing individual &
organizational capability, and running it with precision will be the key differentiator for an
organization. HR has to bring in the right mix of science and art in decision making and for this, HR
professionals need to spend time in understanding and creating such matrices. Elizabeth Nanda,
Chief of HR & Training, Fabindia, explains, “HR needs to be focused on helping employees design
their own career paths in the organization and equip them with the tools and knowledge to be able
todoso.”
The role of HR is to create an environment of knowledge sharing through a culture that encourages
and facilitates the process of getting the right information to the right people at the right time.
Pankaj Bansal, Co-Founder & CEO, People Strong articulates, “HR should create a knowledge
warehouse consisting of the best learning practices. This will minimize the effect of attrition in an
organization,sinceitisanintegralaspectthateveryorganizationneedstocopewith.”
Payroll processing, maintenance of establishment, simple compliances and routine activities, which
do not require human interaction are better handled by such experts outside the organization
through a technical internal interface. HR necessarily needs to be involved in business planning,
formulating business strategy and driving strategic goals. It must take lead in planning for
challenges by understanding workforce trends, identifying potential resource opportunities and
gaps and developing effective initiatives. HR must focus its time and resources on strategic
imperatives and outsource administrative responsibilities. Anand explains HR's business role as,
“With new talent challenges emerging from rapidly changing workforce demographics, the HR
function can play a critical role in addressing future talent challenges by helping organizations
improve its future capabilities without a dip in productivity or morale. HR must help organizations
understand the talent market's changing requirements in order to make the employer more
attractivetotoptalent.”
HR has to move away from its power-centric mindset and be open to the use of technology to bring
inmoretransparencyinoperations.AsP.Dwarakanath,Director–Group,HumanCapitalofMaxIndia
says,“HRneedstocomeoutofthemindsetissuethatmanagingpayrollwillgivethempower.”HRwill
also have to take note that one size will not fit all. By using self service and flexible offerings, there is
an opportunity for HR to meet diverse needs of a multi-generational workforce, which needs to be
customized so as to meet the requirement of its employee base. In this backdrop, HR will have to
prioritizeanddoawaywithcertainactivitieswhichwillderivethesamevalueevenwhenoutsourced
orautomated.
Transactional HR: HR processes which are transactional in nature like payroll processing,
maintenance of establishment, simple compliances and routine activities which do not require
human interaction, are better handled by experts outside the organization and can be done
efficiently through automation and hence can be easily outsourced. There is no merit in spending
time on transactional activities which can be better managed by experts who can handle it for
multipleorganizations,thusaggregatingitforcostbenefits.
1716
2nd Roundtable
HR should create an effective environment where business can happen
efficiently and to add more space to strategic function of HR, mass
hiring/commodity hiring should be avoided in house & outsource to a
specialisttobemoreoutcomedriven.
SureshTripathi
President - HR, SRF
HR needs to look itself and focus more on the strategic part rather than
spending on the operationpart which is transactional in nature. HR needs to
beconvertedfromlinestafftobusinessviewwheretheycanalignitwiththe
business strategy and bring talent, leadership and various kinds of value
addedtotheorganization.
S Varadarajan
Head HR, Tata Teleservicesa
Leaders/Industry speak
Pramod Basin
Non-ExecutiveVice Chairman and
former President & CEO, Genpact
HR needs to redefine the counters and be sure that what they should do to
add the value to the business and what they should give to somebody else.
TransformationisrequiredinHRtobeeffectiveandplayastrategicroleinthe
businessandtakeittothenextlevel.
N S Rajan
Partner - Global Leader,
People & Organization, Ernst & Young
What are we trying to achieve qualitatively vs. what we end up measuring?
HR should focus on up scaling the organization and spend more time on
talent building, knowledge management & capability development.
11. 18
It is a mindset issue before capability, and HR needs to come out of the mindset
that managing payroll will give them power. For HR to become strategic it
requirestherespectandtrustfromtheCEO,leadershipandcolleagues.HRmust
earn its seat at the strategy table. In the last 10 years, HR people have become
arrogant.
P Dwarkanath
Director-Group Human Capital, Max India
HR needs to look itself and focus more on the strategic part rather than
spending on the operationpart which is transactional in nature. HR needs to
beconvertedfromlinestafftobusinessviewwheretheycanalignitwiththe
business strategy and bring talent, leadership and various kinds of value
addedtotheorganization.
SY Siddiqui
MEO (Admn, Finance, IT & HR), Maruti Suzuki Ltd
The competencies required by the HR team have to be changed. HR should
understand the organization needs and then design their own goals and
offeringinthegivencontext.Withtheknowledgeoforganizationneedsand
expectation they can access their own effectiveness with their own
expectation.
Elizabeth Nanda
Chief of HR & Training, FabIndia
Outsourcing will make meaning of work more relevant for employees as it
will make them concentrate and involve in the core business activities with
non-core ones being outsourced. In the next orbit, employees will assume
theroleof‘volunteers’andsalarieswillbebasedondeliveryofwork/output.
Pankaj Bansal
CEO, PeopleStrong
Leaders/Industry speak
The ‘How’ of HRO
• The HR Shared Services Way
• Ready Reckoner
• HR on Cloud
Section 3
12. Human resource management is a process of bringing people and organizations together so that
the goals of each other are met.The role of the HR manager is shifting from that of an administrator
andscreenertotheroleofaplannerandchangeagent.
Charles Handy also advocated future organizational models. Such organizational models focus on
peoplecentricissuesandcallforredefiningthefutureroleofHRprofessionals.
CEO's envision that the HR function should be focused entirely on strategic activities, and not on
performing regular transactional activities. This mandate from the CEOin no way compromises
employee related transactions that sustain the satisfaction for employees, but is based on the well
provenpremisethatcontributionandrealvalueforHRlieelsewhere.
The structure which emerges for HR is a team consisting of high-level contributors, perhaps internal
consultants, HR process designers and change champions — leaving all the transactional and
administrativeactivitiestovendorsforwhichthoseprocessesarecore.
More than a decade after large U.S. companies began to adopt shared services in human resources
(HR), this delivery model has proven its worth by cutting administrative costs, reducing transaction
errors and generating greater employee satisfaction with basic HR processes. In India as well,
companies form their human resources vision and charter to give them a competitive edge in talent
acquisition, retention and management, and developing / aligning employees to meet business
goals.HRsharedserviceshasthusenteredaneraofincreasedrelevanceandvalue.
World over, Shared Services is the key trend shaping the future of HR. Traditionally, HR has been a
support function to support business critical processes. But, as organizations are striving to be best
in both growing and maturing markets, the focus on performance and efficiency has grown
manifold. And companies are increasingly looking to partner with vendors that provide the know-
how and expertise to take it forwards, which has led to overall rise of HR Outsourcing. In such
relationships,acompanycontractswithavendorthatrentsitsskills,knowledge,technology,service
andmanpowerforanagreed-uponpriceandperiodtoperformfunctionstheclientnolongerwants
todo.
With increasing focus on HR, there are business benefits to specific standards for HR Shared Services
(HRSSC), further enabling movement up the value chain by leveraging an equally shared
partnershipbetweenthesupplierandbuyer.AsHRSSSCevolves,organizationshavenewchoicesfor
delivery options that reflect the strengths of their prospective role of a business partner. Some of
these investments will produce real benefits for the HR industry in general. It is up to you to make
criticaldecisionsabouthowtheywillimpactyourorganization.
HR Transformation: The HR Shared Services Way
New wheels of HR - Shared Services Way
10
9
8
7
6
5
4
3
2
1
High High High High High High
Low Low Low Low Low Low
Compliance
Transform
HR’s role
Support
growth
Reduce
cost
HR
metrics
Standardization
Iftherankoffirst4barsisabove5,itmakesagoodBusinesscaseforHRSharedServices.
HR Shared Services varies based on company-specific circumstances. However, certain common
elementsareusuallypresentwhenyouarethinkingtooutsourcethefunction:
• Companywide consistent policies and processes, from which standardized, automated
transactionprocessingcanbeachieved
• Acentralknowledgebase
• Embeddedplatformofemployeeandmanagerself-serviceapplicationsfromaWebportal
• AsingleHRISplatform
• Acontactcenter,internaloroutsourced,forfieldingqueriesandhandlingothertasksbyphone,e-
mailandchat
WhatdoesHRSharedServicesmean?
2120
What is it really that makes you dwell on the thought to move to a HR Shared Services Structure?To
understandthis,letuslookatthediagrambelow:
HR Transformation: The HR Shared Services Way
13. HR Shared Services Leads to an Overall ImpactFunctional Scope
HR Transformation: The HR Shared Services Way
Relocation
Expat
Management
Employee
Relations
HR Reporting & Analytics
Performance Administration
HRIS Support
Leave Administration
Compensation
Administration
Training Administration
Benefit Administration
Compliance
Retirals
Staffing & Recruiting
Payroll
Personnel/Data
Administration
Less Prevalent More Prevalent
Asonewouldmakethedecision,therearecertainperceptionsandconcernsthatanHRleader
wouldneedtobetakingcareof
Lossofcontrol
Loss of control is typically seen as a fear in the stakeholder's mind of losing control over the provider
and that the function will be now dependent on the vendor (whether internal or external – perhaps
leading to loss of cross functional skills, informal networks and corporate learning. Also, most
prominently,theconflictofinterestbetweenthepartieswillneverwork.
Confusionamongemployeesanddissatisfaction
Change management may never work as the perceptions would need to be managed upfront, for
example, a) it is easy to walk over to the desk of an HR representative than raising a request to an
HRSSCCentre,b)thepersonansweringmycall/handlingmyrequestisnotknowntomeandIcannot
disclose sensitive information to an outsider, and c) there would be too much back and forth
betweentwoparties.
Generaltendencies
Besides the above mentioned points, some generic apprehensions always come from various
stakeholderswhowanttoensurenostoneisleftunturnedbeforethedecisionismade,suchas–Will
this step fail to fulfil corporate responsibilities to preserve jobs, this may undermine loyalty across
organization and perhaps we would never terminate the employees who would not transfer to the
provider. Secondly, concerns around how our customers will take this step, is there a risk of losing
them? As per our observation, a majority of times, stakeholders would want to first get completely
convincedbyrunningasmallpieceasapilottoprovethatthisideaworks.
HR-SSC empowers leaders to have real-time views of their organizations for their vision and charter.
Attheendoftheday,thesuccessorfailureofHRwillnotbebaseduponhowlongittakestoanswera
callinthecontactcenterbutratheraroundamuchbroadersetofbusinessmetrics.
You may call it as a“Business process outsourcing”“Business Improvement”or may be reengineering
for that matter. Maybe“HR transformation,”or something else entirely?Whatever you choose to call
it, the name signifies a lot about mindset, objectives, and approach to implementing HR Shared
Services.
None of the above is accomplished without some pain. Standardizing and then centralizing
processes are the first two steps toward creating an HR Shared Services model, whether internal or
outsourced.Inhighlydecentralizedcompanies,thiscantakeseveralmonths.Someadopterschoose
tobeginwithonlycertainaspectsfirst,anddotherestovertime.
Already, areas of HR that lend themselves to better standards via HR Shared Services include the
obvious services surrounding employee recruiting commonly known as RPO, payroll and other
Retiralsadministrationactivities,aswellasidentificationand administrationofbenefitsplans.
In addition, HR Shared Services are developing capabilities that will help oragnisations produce
better results when it comes to managing workforce productivity, reducing liability exposure for
employeerelationsissues,orbeingabletomodelglobalworkforcechangestomirrorchangesinthe
businessrequirements.
ThejourneyofHROprocesswouldevolveinthreestagestoreaptheactualbenefits:
Building Blocks for HRO
Standardization
• Standardize processes and policies
• Minimize variances across policies,
systems and processes
Centralization
• Move to a Single location
• Streamline Roles, Processes
• Outsourcing/ Co-Sourcing
Redesign
• Establish a service culture
• Organize around end-to-end processes
• Benchmark to best practice processes
Examples
• Have one system across locations
• Implement global standards
• Digitization of processes
• Central shared service center
• Lean Processes
• Defined roles for HR Specialist
• Process driven organization
• Key Performance Indicators through
exhaustive service levels
2322
HR Transformation: The HR Shared Services Way
14. As one prepares to launch this transformational exercise, one needs to check the
preparednessbothinthoughtandprocess.
• Thisisaredesignoftheservicedeliverymodel
• InternalHRteamhadnewresponsibilities
• HRSCistobuildonandimproveHR'sexperienceinleadingchangeefforts
Whatneedstobedonenextonceyouhavemadethedecision?Therearefourkeyfactorsthatwould
need to be kept in mind while you are to follow the next steps. Four parallel tracks would need to be
developedtoensuretherearenoloopholes,whichare:
HR Transformation: The HR Shared Services Way
Implementation & Readiness
Communication
The HRO solution includes a new HR service centre, several new technology applications such as an
applicant tracking system, increased manager and employee self-service, a new benefits
management tool, a new time and attendance system, and the transfer of contact center
responsibilitiesandtechnologymaintenancetoPeopleStrong.
HRSC requires that the joint client/PeopleStrong team implement many new processes, tools, and
responsibilities.
A Steering Committee comprising senior client and PeopleStrong executives oversaw the project. A
businesscase,showingtheinvestmentsandreturnsexpected,wasapproved.
There was also a significant redesign of the retained HR generalist organization. Previously, these
generalists had supported all types of HR activities, including administration, delivery, employee
relations, staffing, training delivery, and, when possible, strategic consulting to the business. Now,
however, the new technology and self-service capabilities from HRSC allowed for fewer generalists
focusedonhighervalueactivitiesforthebusiness.
Because of the significant changes involved, HRSC also requires upfront and ongoing stakeholder
communication and change management. There are many stakeholders affected by HRSC,
includingseniorexecutives,HRemployees,linemanagers,employees,otherexternalvendors,anda
host of people involved in the project itself. HRSC employs a change and communication plan, with
dedicatedresources,tohelpensurethestakeholders'understandingandreadiness.
A separate, but related, effort is needed to implement the new HR generalist organization. This
included redesign of the future roles and competencies, as well as evaluation of the current team on
capabilityandassessmentinlinewithnewstructure.
Some team members will be reassigned within HR or outside HR. Rigorous communication and
traininghelpspreparetheteamfortheirnewroles,processes,tools,andrelationships.
Integrating change management and communication activities into the overall project plan helped
tomakestakeholdersawareof,andinvolvedin,theimplementation.
AcompanycanlaunchHRsharedserviceswithmorethanoneplatform,butitisn'teasy.Itisfarbetter
tostandardizeonasingleplatformforpayrollandHRMdatabases.Acompanyneedstobudgettime
andmoneyifthemovetoHROwillrequireanewimplementationofstandardsoftware.
Examplesoftheseactivitiesinclude:
• Regular broad communications from the senior Head of HR, to different stakeholders in the
process–verykeytoaddresstheBusinessleadershipteam
• Monthly “awareness sessions” with HR leaders and their customers (i.e., business managers)
focusingonthechangesaffectingthem
• An email box to solicit ongoing feedback and questions from key stakeholders, used to compile
FAQs; Involvement of end-users during design validation sessions (e.g., different stakeholders
validatingtheprocessworkflows)
• Focusgroups/interviewswitheachprocessregardingstakeholderimpact
• Throughout, in the process it was made sure that stakeholders' needs were met and that teams
werecoordinatedtowardthebroaderbusinessgoals
People
Technology
People
Communication
Process
Technology
• Scope of work
• Service levels
• Service delivery model
• In house system
• Case management tool
• Voice system
• Infrastructure
• Servers
• Roles
• Aspirations
• Deployment
• New way of working
• Business expectations
• Cross functional support
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HR Transformation: The HR Shared Services Way
15. 2726
Processes
One of the pluses of going through the design process is that you will learn much about your
organization.
The Shared Services process forces you to understand how your processes are being handled
currently and how they compare to others in the industry. A detailed “As is understanding” of the
processthroughscientificdiagnostictoolshelpstoevaluatewhereyoucurrentlystand.
This end result will not be some fancy consulting report but a set of expectations that will chart out
deliverables for Business. These decisions will really focus thoughts about what you need or do not
need,sinceyouwillbeimmediatelytranslatingthemintorealmoney.
Let us take the example of Recruitment process – One has traditionally looked at“cost per hire”and
“time to fill”. However, a measurement through HRO throws some startling metrics to watch out for.
Onecouldcalculatethecostofeveryresumethatisputintheprocess.Withoutsourcingthisprocess
–onewillhaveasavingof30%andprocessingcostofeachresumeis0.7x,youhaveputsomemoney
onthetabletothinkabout.
To illustrate this further, let us say on an average your HR junior management team spends 40% of
their time on employee query management and your middle management tier is spending 20% of
their average time on escalation related to employee queries. With an HR team of 20 people with 3
managers,yourorganizationspendis8.6FTE(Fulltimeequivalent).
And on top of this there is no definitive service level measurement. However, with an Outsourcing
relationship, HR decision maker is empowered with that information and can demand about service
level measurements: not whether they should be 99.5 percent versus 99.9 percent but whether
thesearethemeasurementsthatreallyimpactthemissionoftheorganization.
A case in point, one of the Financial Services Company, Business leaders initially resisted because
they wanted their HR people to work on their problems. HR had to lead the way saying 'HR will solve
theproblems,it'sjustgoingtobeinadifferentfashion–amorepredictableanddedicatedchannel”.
The company wanted HR team at the business units to focus on human capital issues not on
administrative tasks and that mandate had to be driven with both HR teams and the Business Line
Managersaswell.
SomeofthetangiblebenefitsofHRSharedServicesaregoingtobe:
• Streamingprocessworkflowandoptimizeifapplicable
• Improveddataandcontentaccuracy
• Automateredundanttasksandeliminateerrorsandreworkto100%.
• Reducing/eliminatingprint,distribution(forms,manuals,newsletters,etc.)
• IdentifynonvalueaddHRoperationalactivities.
HR Transformation: The HR Shared Services Way
And the most importantis the cost benefit for the savings from
centralization. It could range anything in range of 10% to 40%
depending on the stage of the organisation. One metric is the
HR FTE to employee ratio- which one could use to measure the
obviousROIfromanHROmodel.
The figure illustrates one of the most widely researched ROI for
effectivenessofHROintermsofdirectcostsavings.
The savings most often come from reduced staffing in HR. In
the Hackett study, "world-class" HR organizations-defined as
the top quartile of 125 companies benchmarked- spent on
average 13% less on HR per employee (see chart 1, "Total HR
Cost per Employee," above) and they had 15% fewer full-time
HRstaffper1,000employeesthantheothersinthestudy.
Total HR cost per
employee, 2006
World class organizations spent 13% less
on human resources coasts per employee
than the peer group in 2006.
Source: The Hackett Group
Peer Group
World-class
Difference between peer and world-class
$1,864
$1,614
13%
ReadyReckoner
• HRSSCisanoverallstrategicgoalbusinessfirstandthenforHR
• Build around four key ingredients - Process, Technology,
CommunicationandPeople-notasaseparateinitiative
• Internal HR organization needs to complement the new processes and
technology-withalignedrolesandtraining
• Communicationisthegamechanger-consistentsetofkeymessages
• Governanceframeworkneedstobefollowedreligiously
• The change process is stressful, so be proactive in helping people
maintain performance and build their readiness - do not wait for
reactions
• Branditwell
HR Transformation: The HR Shared Services Way
16. 2928
HR on Cloud
TechnologyinnovationlikeCloudcomputinghasbeenchanginghowmostpeopleusetheweband
how they store their information and the advantages of using a cloud computing HR system is an
acknowledged fact. You do not need any infrastructure, you do not need maintenance, you do not
need storage space, you do not need extensive training, you do not need ultra fast connections and
you do not need expensive software. All you need is a simple web browser like Internet Explorer or
Firefoxandyoucanconnecttoanycloudsystemanduseallthesefacilitiesonline.
Cloud computing is the delivery of computing as a service rather than a product, whereby shared
resources, software and information are provided to computers and other devices as a utility (very
muchlikeelectricity)overinternet.
That's a long-winding definition; simply put it the package of applications delivered through web
without having to worry about where to host, how to host and what to host.The most famous is the
facebook,youjustareauserandneednotbotheraboutalltheparaphernalia.
When web applications hosted by an application service provider are delivered over Cloud, it is
calledSoftware-as-a-Service(SaaS).
SaaSapplicationscomeinvariousflavors,themostscalablebeingtheonesdevelopedusingamulti-
tenant architecture. A good analogy to a multi-tenant architecture is an Apartment where multiple
Tenants (or Customers) share various common services and infrastructure, because of which the
overall cost of an apartment considerably reduces & quality of life significantly increases vis-a-vis an
independent unit. Also, similar to an apartment, there are multiple layers of security in a SaaS
applicationmakingitmuchmoresecurethanatraditionalon-premiseapplication.
SaaSHRapplicationsdeliveredoverCloudarerapidlydisruptingthemarkettraditionallydominated
byonpremiseHRapplications.ThebenefitsofHRonCloudaremanifold:
• Itiseasytodeployanduse(youjustneedawebbrowserandaninternetconnection)
• There is no need to procure & manage IT Infrastructure resulting in savings on administrative
costs&overheads
• Upgrades are instant and far less cumbersome as it is done by the service provider behind the
scenes
• Theelasticityofacloudplatformmakesthesolutionscalableasyourcompanygrows
• Pricingmodelissimple,predictable(typicallyperemployeepermonth)andcost-effective
An integrated Product Suite for Human Resource Management, Payroll, Recruitment & Helpdesk
withcapabilitiesrivalingbest-in-breedpointsolutions.TheobjectiveistorelieveOrganizationsfrom
the complexity of managing multiple HR technology & service providers with a single compelling
solution.
DemystifyingtheCloud
Employee
Self Service
Frontend
Interfaces
Survey
Payroll
Leave
Time &
Attendance
Exit
Helpdesk
Recruitment
HRIS
Performance Learning
On
Premise
Apps
Backend Integration with
ERP / Biometric systems
Manager
Self Service
HR on cloud
LeveragingtheCloud
Flexibility
Built on a scalable, multi-tenant architecture that helps us in securely & efficiently managing &
supportinghundredsofcustomerstherebymakingthesolutionverycost-effective.
Over the years with an experience of working with multiple customers across various industries, we
havemadeoursolutionveryconfigurabletomeeteverycustomerneed.Configuringtheflowofany
businessprocess,notifications,rulesetc.isabreezewithourworkflowengine.
HR on Cloud
17. 30
India Way by ‘Everest’
Dispelling Some Common Myths on HRO
PowerofInsight
Interoperability
Growswithyou
BIEnginemonitorstheentireEmployeelifecyclefromRecruitmenttoExitandprovidesinsightsthat
help Organization to manage & retain the Talent. Reports & dashboards enable HR & Leadership to
taketherightbusinessdecisions
The solution is built on a service-oriented architecture and support industry standard HR-XML
formats. It enables web service based integration with multiple ERP software / Biometric systems for
seamlessdeliveryofbusinessprocesses.
With modular approach, it is possible to start with any module and as the business grows other
modules can be added at the click of a button. The integrated service-cum-technology approach
gives Customers the power to outsource their entire HR process management to us whenever they
arereadyforthat.
Finally,therearetwofactorswhichwillhelpyoutakeoffthissmoothly
ROI: It's a subscription-based model, one do not have to spend on Infrastructure and heavy license
cost, and there is zero Capex that company has to spend. The purchase decision becomes easier
throughthischange
Service to end users: The system is intuitive and easy to use that you do not have to invest huge
training time to drive adoption and employees effectively use the new functionality. The system is
highly configurable to ensure that features and functionalities can be updated based on end-user
feedback.
HR on Cloud
Section 4
18. 3332
India Way by Everest
Adopting HR Outsourcing (HRO) in India
– Dispelling Some Common Myths
Rajesh Ranjan, Research Director, Everest Group
Amidst the continued uncertainty around the global economic recovery, the Indian economy
growth remains robust with even pessimistic estimates suggesting a GDP growth of at least 7.5 %.
Such growth, while providing considerable opportunities, also gives rise to challenges and risks that
need to be managed well. This holds particularly true for human resources management.
Organizations increasingly demand their HR function to play a pro-active role in meeting their
organizational growth aspirations as opposed to just reacting to business decisions. Such
requirements call for re-looking at the HR organization design, role, and the adopted practices. HR
Outsourcing (HRO) is one of such practices that can help HR managers and leaders to focus on
strategicareassuchasworkforceplanningandtalentmanagement.
HRO is defined as“transfer of ownership of one or multiple HR processes to a third-party on an on-
going basis”. While globally, and especially in the western economies, HRO is already a mature
practice now, it is still in the pioneering stage in India. This is truer for multi-process HRO where
organizations outsource multiple HR processes (e.g., employee data administration, payroll,
recruitment administration). As increasing number of organizations in India evaluate HRO as a
strategicoption,itisimportantforthemtounderstandtherealitybeyondhypeormythstomakethe
rightdecisions.
Let us look at these myths and understand the reality across the HRO adoption lifecycle – planning,
serviceproviderselection/contracting,transitionanddelivery,andend-of-term.
Rajesh Ranjan, Research Director, is a leader of Everest Group's Business
Process Outsourcing (BPO) research program. Leveraging his strong
consulting, business analysis, and outsourcing industry expertise, he drives
the agenda for syndicated research program, and has played a key role in
creating industry-leading reports on various BPO market segments
includingHROutsourcing.HehasadvisednumerousglobalaswellasIndian
buyers in their service provider selection, market maturity assessments,
price and service level benchmarking, and end-of-term considerations. Additionally, he has
helpedseveralserviceprovidersandinvestorsinmarketopportunityassessment,competitive
positioning analysis, and acquisition target analyses. He is also a frequent participant and
presenteratindustryforums.
Prior to joining Everest Group, Rajesh was a consultant at Wipro Technologies, performing
process consulting and business analysis for Fortune 500 clients. He was also a key player in
pursuing and crafting solutions for new business opportunities. He started his career as a
softwareengineeratInfosysTechnologies.HeholdsanMBAfromtheXLRI,Jamshedpur,India,
andaBachelorofTechnologyfromISM,Dhanbad,India.
Exhibit 1: HR Pyramid
Source: Everest Group (2011)
Planningphase
In this phase, organizations need to evaluate if HRO is appropriate for them or not. Among other
things, it includes assessing the applicability, organizational readiness, business case creation, and
stakeholderbuy-in. Somecommonmythsinclude:
HRiscorepartoforganizationandcannotbeoutsourced
The reality lies in the details. HR consists of multiple processes that differ significantly from each
otherintheirnature(seeexhibit1).Somearetransaction-intensivewhilesomeothersarejudgment-
oriented. Some are employee facing while others are back-office in nature. Effectiveness of services
is more importantfor some processes while efficiency is more importantin others. Hence, to decide
what is core and what is not, leading organizations globally are asking “Is running a particular
process in-house provides us competitive differentiation?” A “yes” answer calls for keeping it in-
house while a process that does not is increasingly evaluated to be sourced externally. In fact, in
some cases, outsourcing itself can create competitive differentiation. For example, in the more
mature IT outsourcing space, Bharti-IBM IT outsourcing helped create a competitive differentiation
forBharti
Myth1
Reality
India Way by Everest
19. 3534
Myth2
Reality
Myth3
Reality
Myth4
Reality
HROisawesternmarketphenomenon,notapplicableintheIndiancontext
Clearly HRO started in the US and is most prevalent in the North American and the European
markets. However, its value proposition is universal. Additionally, unlike some other business
process outsourcing (BPO) areas, labour arbitrage is not necessarily the central value lever in HRO
within the western market. The value levers include leveraging economies of scale advantage
through standardization, centralization, and effective deployment of underlying technology. This
makesitquiteapplicablewithintheIndiancontextwherelabourarbitrageislargelyabsent.
Inadditiontoservingtheirlocalemployees,quiteafewUS/Europeanheadquarteredorganizations
utilized HRO to better manage mergers and acquisitions as well as quickly expand into other
geographies. As India-headquartered organizations increasingly expand globally, they can
potentiallylooktoreplicatesomeofthesebestpracticeswithcustomizationasappropriate.
NeedtochooseeitherinternalsharedservicesORthird-partyoutsourcing
Both these approaches are ways to achieve similar outcomes with their own strengths and
weaknesses. However, they need not be mutually exclusive. Hybrid sourcing, which leverages both
internal shared services and third-party outsourcing, is a model that supports the flexibility and
adaptability required by dynamic economic conditions, and that can be proactively managed as a
portfolio. The actual portfolio mix between internal shared services and third-party outsourcing
shouldbebasedonmultipleconsiderationssuchasthenatureoftheprocessesunderconsideration,
speed to value, internal investment and capabilities, need for IP protection, third-party market
maturity,etc.
Thebusinesscaseshouldbecentredarounddirectcostreduction
The real benefit of HRO rely on creating a holistic business case that not only looks at direct cost
impact (i.e. operational HR cost), but also takes into account the potential business and strategic
impact(seeExhibit2).Sometimesthecostmayincreasebutthevaluetothebusinesscomefromthe
consistencyinprocessandpractice. Amyopicviewcentredondirectcostreductioncanleadtosub-
optimaloutcomes.
India Way by Everest
Exhibit 2
SM
Everest Group’s Total Value Equation (TVE ) framework for HRO
Strategic impact
Business impact
Cost impact
Impact on a company’s...
• Key process or applications
• Quality
• Productivity
• Cost reduction
• Process efficiency
Typical resultThree levels of TVE
• Market differentiators
• Organizational structure
• Direct-cost base
• Internal customers
• HR aligned with
business
• Employer of choice
by attracting and
retaining talent
• Quality improvement
• Increased
effectiveness of the
service
Myth5
Reality
HROresultsinlossofcontrol
This perception is primarily a result of lack of clarity or understanding of the respective roles and
responsibilitiesofbuyer(i.e.outsourcingorganization)andserviceprovider.Whiletheproviderdoes
own the day-to-day operation, it is still accountable to the buyer for the outcome. A strong
governance model that engages key stakeholders of both parties at the operational and strategic
levelandclearlydocumentedprocessesandhandsoffensuresthatfocusisonoutcome.
India Way by Everest
20. 3736
Serviceproviderselection/contractingphase
In this phase service providers are evaluated, selected, and the contract is executed. Some of the
mythswithinthisphaseare:
Theserviceproviderlandscapeisquiteimmature
It is true that only a very select set of providers currently have the experience of delivering multiple
HR processes with the similar level of quality and consistency. However, the story is different when
the focus is on single process - payroll, core HR administration, recruitment, etc. - with credible
options available within each of these segments individually. Further, service provider capability is
also evolving fast to serve the multi-process HRO needs. In the last few years, several providers have
madeinvestmentstobroadentheircapabilities.ThechoicesarealsobroadeningwithnotonlyIndia-
focused providers but the global ones also coming out with solutions addressing the Indian market
needs.
Asingleprovidersolutionistheonly/bestsolution
The choice between a single vendor and multi-vendor really depends on the scale and scope of
outsourcing,internalorganizationsophisticationandexternalmarketoptions. Largerscope,higher
organizationsophistication,andlackofprovideroptionswithbroad-basedcapabilitieswouldmean
thatabest-of-breedsolutioncanpotentiallybeabetteroption.
Needtohaveanarm'slengthrelationshipwiththeserviceprovider
Many companies fail to capture opportunities brought by a HRO provider by focusing purely on the
commercial and procurement aspects of any solution. Lot many times organizations are too rigid in
their service delivery / solution design considerations and simply dictate what they need. This
prevents them from leveraging HRO providers' wider experience and knowledge which they have
acquired by working with several other organizations. It is important to create a partnership based
relationshipwiththeserviceprovidertocapturethelongtermvalue.
Transitionandservicedeliveryphase
In this phase the new service delivery model is implemented and services are transitioned to the
provider.Somemythstoaddressinthisphaseinclude
Myth6
Reality
Myth7
Reality
Myth8
Reality
India Way by Everest
Myth 9
Reality
Myth10
Reality
Myth11
Reality
"Change" onlyappliestotheoutsourcedservices
Internal change management is the most underestimated but probably most important areas with
significant bearing on end-user satisfaction. HRO is a fundamentally different way receiving HR
services and retained HR organization as well as employees / managers need to be prepared for the
same. Post-outsourcing, the role of the retained HR department changes from administering the HR
servicestoutilizingtheinformationtomakestrategicdecisions.Thiscallsforadifferentmind-setand
skills. Adoption of self-service portals, centralized help desk services etc. mean that employees also
need to change their expectation and practices. A well-planned communication plan, identification
of appropriate change agents, and execution of the change management plan goes a long way in
ensuringsuccess.
Therewon'tbeanyadditionalfeesbeyondwhatwascontractedfor
While all care should be taken to fully define the scope of services and associated fees, it is virtually
impossible to detail out each and every detail. Further, it is practical to assume that some of the
assumptions made during the contracting process may not remain valid or some of the business
requirementsmay change. All these mean that"change requests" will happen. Organizationswould
dowelltokeepsuchbufferintheirbusinesscaseandutilizethosejudiciouslyduringthetransitionas
wellason-goingdeliveryphases.
End-of-termphase
This is the phase where the existingcontract term period is nearing completion. Organizationsneed
todecidethenextevolutionoftheirHROjourneyduringthisphase.
End-of-termstrategyneedtodevisedclosertothecontractenddate
Typically a HRO relationship is a multi-year arrangement. Typically, organization needs as well as
external market options will evolve within this time period. Hence, many a times, it makes sense to
re-lookattheexistingsolutioninaholisticfashionandplanforthissufficientlyinadvance.Itensures
that the organization does not end up auto-renewing the contract with the existing provider due to
insufficienttimetoevaluatealternateoptionsalignedtotheirfuturerequirements.
Clearly, as HR departments in India look to cement the move from "backroom to boardroom", a well-
informedHROdecisioncanhelpacceleratethat.
India Way by Everest
22. 4140
PeopleStrong Delivery model (Business-Operations-Model)
PeopleStrong is the first mover in the Indian market in terms of India to India HR Outsourcing. Being
the leaders and front movers, PeopleStrong has matured to an engagement model where
PeopleStrongisabletobringbusinessfocusinperformingHRrelatedtransactions.
This evolution was also brought into the picture since the workforce in India was moving from
metros and tier 1 cities to remote locations and 'the pin code' areas were becoming the focus for the
companies in the fastest growing industries. These companies were struggling with the spread of
the workforce and so ever increasing support cost and the homogeneity of the service delivery and
employeeexperience.
PeopleStrong implemented what was already common in the BPO world, by introducing offshore,
near-shoreandonshoremodelofdeliverywithinIndia.So,80%oftheteamoperatesoutofthestate-
of-the–art Gurgaon delivery center, 15% of team work from near shore locations like Mumbai,
Hyderabad and rest of the team is deployed onshore to manage the location depended activity and
connectwithclient.
Theentiredeliveryengineissupportedthroughstrongtechnologyframeworkandabusinessgroup
whoenablesthestrengthenedengagementwiththeclientHRorganization.
PeopleStrongforesawthatperformingtheHRtransactionsinanoutsourcedfashionwouldrequirea
definiteabilityto:
• Designing more efficient processes - The transitions team of PeopleStrong works as the brain
and R&D unit of PeopleStrong and re-design the processes to remove bottleneck using latest
processimprovementmethodologies.
• Providemeaningfuldashboards-TheMISandreportingneedtobestrengtheningthedecision
makingandbusinessintelligenceoftheCXO.Findingsuchinputsinmostpresentablewaywould
bethekeydifferentiator.
• Maintain strategic element - The engagement gets started through a vision and charter
mapped out by the project sponsor team. It remains a constant endeavor of the PeopleStrong
team to ensure that the strategic focus is not missed while performing the day-to-day
transactions. PeopleStrong thus transforms from being just a true partner to becoming a
strategicpartnertoalltheHRrelatedneedsoftheclientorganization.
• Strong governance framework - The perceived risks are best mitigated by having a strong
governance mechanism in place which ensures that the right things are discussed and resolved
attherespectivelevelsatapre-definedfrequency.
To take care of the above mentioned needs, not to forget the basic expectations of the client to
deliverrightevery-time,on-timeinthebestpossiblefashion,PeopleStrongpresentsauniquemodel
of engagement to its customers known as BOM (Business-Operations-Model). This unique model
starts functioning from the time even before starting the real engagement and signing of the
contract.GivenbelowistheBOMmodelfordeliveringHRSharedServicesatPeopleStrong:
TheBusinessGroupconsistsof:
Transitions Managers - This team consists of process design experts. They are generally trained in
PCMM, 6 Sigma and other frameworks and keep working closely with the Operations group and
client stakeholders to continuously improve processes and bring new processes within the delivery
framework
Business Managers -This team is the combination of sales and HR domain experts who initiate the
discussions with clients and create the solutions for them. This team plays the key role since they
enables clients to traverse the journey from need identification to implementation. They have the
full visibility of the entire engagement and perform the hand-holding role throughout the
engagement.
TheOperationsgroupconsistsof:
OperationCenterofExcellence-ThisgrouphasagalaxyofHROexpertswhohaveperformedstrong
operational delivery role in varied relevant industries. The team is headed by the Chief of Service
Deliveryalongwithservicedeliveryleadersforeachvertical.
ServiceDeliveryLeads-Thissetofteamareresponsibleforoveralldeliveryofeachoftheclientsand
ensurethattheSLAsaremeteffectivelyfortheoverallfunction.
Client Managers - This team is dedicated to each account and performs the activities in most
efficientway.Theyaretheextendedarmsoftheclientdeliveryowners.
This integrated approach of Business and Operations facilitates ensures that the Transformation is
happeningfortheclientinmostcostefficientwayandbriningtheoptimalresults.
BOM is a major factor in PeopleStrong's high retention rate of customers and ever increasing scope
of the relationships. It is aligned to PeopleStrong's values and has become a way of life for every
associateatPeopleStrong-righttillthelastmanstanding.
Business Group
Business Managers
Transitions Team
Client
Delivery Lead
CXOs
Line Managers
Operations Group
Operation center
of excellence
Quality
Strong engagement model
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HR Shared Services : The PeopleStrong impact
• More than 15 implementations in HR Shared Services
• 44, 000 calls & emails answered per month
•
• 51,000 transactional activities done per month
• 1 activity every 4.82 sec
• 1,00,000 employees’HR needs being catered
• 5 delivery locations
• India's first 1800 multi-lingual toll free number
• HR on cloud for over 1.5 lac employees
• 320 HR processes implemented
• 400 locations across India serviced through Shared Services
1 employee query resolved every 4.9 Sec
PeopleStrong HR Services is a leading India based HR Outsourcing
company specializing in HR Shared Services, Consulting, Payroll
ManagementandRecruitmentsolutions.
PeopleStrong offers the best of the breed HR business solutions across
verticals,cateringtoover40multinationalclients.
PeopleStrong is a venture capital funded company and our investors
include CXOs of top global companies such as Quatrro, IBM, Aditya Birla
GroupandViacom.Withintwoyearsofitsinception,PeopleStrong was rated
as anemerging RPOLeaderfromAsiabyHROTodaymagazine.
Within its first three years, PeopleStrong had won severalmarqueeclients
like Nokia, CommonWealth Games 2010, L&T, SRF, Maruti-Suzuki, Aditya
Birla Financial Services, Tata Sons, Microsoft, Zapper and Nokia Siemens
Networks.
TheeconomicslowdownhasfailedtoactasadeterrentforPeopleStrong,and
we have been able to maintain a healthy growth rate with our persistent
efforts.
For more than 6 years, our unique combination of domain expertise,
operational excellence and innovative technology has delivered happiness
among our customers as well as their employees by caringly managing all
transactional activities in HR, thus causing an increase in the strategic space
meant for developing innovation within their organization. This has lead to
higher gain margins, efficient business functions, increased productivity,
better ROI and above all 'Happy Employees' for the serviced organization.
PeopleStrongisdedicatedin thepursuitofCreatingHappyOrganizations!
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