Accenture:Accelerating New contracts

Accenture has added another client to its Human resources outsourcing portfolio. The client is North American based Kimberly Clark corporation. Accenture entered into a 7 year contract to provide non-strategic human resources outsourcing services with the latter. As part of the understanding, Accenture will be providing Kimberly with Recruitment Services, Payroll Administration, Workforce Reporting, Employee Data Management, and Training and Development. In addition to these services, Accenture will be developing a customized and enhanced web portal to provide Kimberly’s workforce with online benefit and education materials. This is something which I was stressing in my earlier articles. HRO providers should be going an extra mile in their service orientation to clients.

The Importance Of Training

Training has evolved as a process in almost every organization, small or large. Many large organizations allocate millions of dollars towards spending on the training & development of their employees every year. The objective and tone for all organizations on the importance of training does not need to be separately outlined here in this discussion. However, we do need to understand how organizations are deploying sophisticated methods to meet their training needs. To cite just one example - I could say that certain organizations are using Podcast as a Training tool. Anything is possible with our cutting-edge technology and sharp IT brains. From the 1990s instructor led training to Podcast Training methods is a huge leap. Though Podcast is still a novice to many, everyone would agree with me when I say that WBT is considered to be the best productive tool so far in this modern era. A WBT helps trainees undergo their training through a self learning approach which improves their thought process and problem resolution skills in their own time. Moreover, you’d save a lot of productive training as well as trainee hours through this method. You could ensure your training data is secured through this method too unlike the printed materials which always pose a vulnerability to duplication by someone. Discussing on this, let’s think on what areas organizations need to have training in place. Basically, the modern day organizations are assessing the employees in terms of competencies. These competencies are further divided into Process Competencies and Core Competencies. Process competencies stand for the level of process knowledge an employee displays. Core competencies stand for the behavioral skills performance and Productivity accomplishment of an employee. Many organizations are designing their training Modus Operandi on the basis of these two competencies. These training systems are designed in such a way so as to ensure each employee in the organization displays the expected level of both these competencies. Any gaps are recognized which will ultimately trigger to the training for that respective employee. What we discussed now is just one approach out of any number of distinct and different approaches available with the organizations to adopt. However, the objective of all the modern day organizations and mission remains the same with respect to recognizing the best training systems - to promote the efficiency and productivity of all employees in both processes as well as core competencies.

Human Resources Information Systems

HRIS (Human Resources Information systems) is becoming increasingly popular in corporate HR. The responsibilities of corporate HR are extending beyond the traditional areas like compensation & benefits and recruitment with many corporate infrastructures insisting on the HR to be transformational to the growing technology needs. A systematic HRIS built within the corporate infrastructure helps a smooth information flow of HR data through out the organization. The role of IT is to provide the infrastructure and platform while the role of HRIS is to ensure the management of information flow. HRIS helps build an HR data-warehouse which ultimately helps the HR to bring the HR policies implementation within the corporate objectives. So far we have discussed how a dedicated HRIS role can increase the efficiency of organizations. But how can this HRIS help HRO providers improve their penetration into the businesses? Most companies, small or large, do not have a dedicated HRIS team to take care of their information needs. When HRO providers approach these clients, they can offer to build a HRIS for the respective adopters of HRO. They can help these clients build customized HR information solutions which will definitely improve the efficiency of operations of those clients. Moreover many large organizations are demanding the HRIS from HRO providers. A professional HRIS team with a blend of HR & IT professionals present in an HRO provider would help these providers differentiate the additional offerings to their clients in comparison to their peers. Based on this discussion it could be fairly stated that HRO providers can look forward to continue having a dedicated HRIS staff to support their clients needs which could ultimately result in their penetration levels.

Blogs: The New Marketing Tool for HRO

According to a report, HR Buyers’ Behavior, by marketing services firm HRMarketer, HRO buyers are increasingly relying on the Internet for their purchase decisions and vendor selections. Blogs are considered to receive the most attention from these buyers currently and are expected to receive the bulk of attention in the upcoming future. Most companies in the HR sphere have just begun to use external blogs although blogs themselves have existed since the 1990s. In a survey finding, it was reported that 49% of all professionals read blogs. Blogs will, no doubt, provide much more needed information than any other web tool. It is an information exchange built on various intellectuals’ views and opinions. The chances are good that HRO buyers will be looking to blogs in help with making informed decisions.

Back Office HRO Solutions

In recent news, NJ based Netfabrics Holdings Inc. announced it has set up an Indian subsidiary, Netfabric Technologies India P Ltd to deliver BPO and HRO solutions for its clients. Aviva, the British insurance company, plans to move nearly 2,900 business process outsourcing (BPO) seats from third-party providers EXL and WNS to Aviva Global Services (AGS). Aviva has already transferred 1,600 employees from a third partner, 24/7 Customer, to AGS.
Many others like the above companies operating in the US and the UK are opting to set up their own companies in countries like India as subsidiaries to carry on their back office processes. They consider it a wise move to give outsourcing contracts to their own set ups so that they can retain the profits within the company and it also ensures the interest of security of data. This move is particularly seen with larger listed companies so that they can persuade their shareholders easily. A holding and subsidiary relationship is what companies are seeking in today’s world considering the fact that outsourcing to a third party is not giving them the right profits as budgeted. This is an easy option, especially in India, because all companies operating under service category (with certain exceptions) enjoy the 100% automatic route of foreign investment. However, in certain cases, companies do not prefer this move on account of the fact that this attracts the transfer pricing and taxes may be dearer for them. There are plenty outsourcing companies which are operating as a captive units of their parent companies in India. The advantages these companies enjoy are enormous. They can choose the right talent for the right job, they escape paying the service fee from third party companies, they can be assured with data security and they can also build a global organization with the same core values across the company irrespective of location. They can be ensured that their process knowledge can be retained within the company since they adopt in-house training rather than train a third party company staff. Moreover, HRO change management becomes an easy exercise with this option.

Latest HRO Deals in India

Caliber Point, the BPO arm of Hexaware Technologies, has been chosen by US based HR outsourcing firm HRAmerica to offer comprehensive employee administration solutions and other HR services to clients located in the USA.

Sundaram Business Services (SBS), the BPO arm of Sundaram Finance Ltd, is expanding its pay roll outsourcing business in the domestic market with the signing of outsourcing contracts with two global companies in manufacturing. The company will provide payroll services to its global clients, who have significant Indian presence, for their Indian offices as well.

PEO Pricing Strategies

The majority of PEOs based in the US have been smart enough to outsource their processes, realizing the advantages offered by outsourcing and addressing the pricing pressures as well, since 2000. However, what is not happening is the adjustment of the average administration cost per employee charged on client companies for administering their employees. According to some statistics that are currently available, it is calculated that an estimated $700 to $1200 is charged per employee per year by a PEO. This figure varies in accordance to the number of employees in the client company, the number of services like health coverage, 401K administration, etc. Due to outsourcing, the operational costs are brought down tremendously by these PEOs which ultimately leads to a dollar savings to these companies. If at least 10% of this cost savings is passed on to the client companies, we will ultimately see a lower charge. This must be a driving factor to them in sustaining a long term relationship with PEOs. Every year it is projected that a projected that a 15% client turnover is experienced solely due to the pricing difference between PEOs which forces client companies to switch over to other PEOs. Companies like ADP are in full form utilizing the outsourcing advantage, passing on the cost saving to clients through offering cheaper administrative costs which are helping it build and maintain an increasing client base. It’s a simple economics which says higher volumes led by lower costs will result in increased margins to the business. If the same logic is applied to an outsourced PEO business, existing client retention and new client additions through competitive pricing structures should boost their margins making them leaders in the PEO space. This is one strategy that will continue to grow organically for the PEOs.

How Dexterous Are Offshore Companies?

The term dexterous can be otherwise stated as how competent the offshore companies are in handling HRO. We hear companies boasting about their competencies in implementation of various outsourcing processes and HRO is no exception to this boasting exercise by HRO provider companies. Mostly we hear companies telling us stories they do have enough talent (skilled employees) rich in process competencies, but in realty, they don’t. After all, one has to understand that HRO is an emerging story which is still restricted to few large size and mid-size companies. We have yet to see a stabilization or consolidation in this industry. With this being the case could we agree to a new entry HRO provider company if it says it competent? The answer is strictly no. These companies ultimately rely on the HRO adopter company to train their staff on the processes which ultimately is an indirect transfer of knowledge. It’s a matter of fact that it takes a while before these employees come in handy to the process. In other words, it is time for bound processes for these employees to become practice oriented from a training oriented phase. Companies often ignore this time factor. We see both adopters and providers hurrying to carry on the HRO transition without even analyzing the staff compatibility on the longer term. HRO as such is a complex process which demands high competencies, enough practice. Ultimately what we see due to this negligence on the part of companies to ignore the time factor is the desired or expected service levels drafted as per SLA’s go for a task which is dangerous to both parties. In this context, it is a known fact that the outsourcing industry as a whole irrespective of the process doesn’t have specific performance benchmarking methods set in place (This is in progress in India). However, should adopters not outsource due to these constraints? No. They just need to overcome these constraints by measuring internally the productivity and efficiency of the provider companies through careful scrutiny. So when you think of HRO to a provider, scrutinize the dexterity of the provider before signing the contract.

Is QOS Declining?

When we are definitely in the position where outsourcing is the success mantra for all corporates, you may wonder about whether or not Quality of Service is on a decline in outsourcing companies, especially HR outsourcing companies. Well, I could put the answer to this question in various forms based on several expert opinions as well as my own research into several companies.
First we need to understand that Human Resources Outsourcing is a complex model that is simply unlike other outsourcing models. I say it is complex because it involves a proper understanding of the client companies’ home country laws and regulations as well as their policies and procedures. Adding to this, it needs a high level of expertise for implementing HR Outsourcing. The question to be asked to the outsourcing company here is whether or not it has the expertise and resources that are required to handle the processes.
Many companies do accept the fact that whatever human resources they hire, they need proper training before they can actually handle the required tasks. This again raises the question of competency, otherwise known as process knowledge.
Companies overcome this competency issue through several training methods provided by the client company. However, they find it much harder when these trained human resources, which are considered to be the companies’ assets, leave their positions to join another company. In this case, the outsourcing company faces the vulnerability of failing to give deliverables as per the agreed SLA. The less presence of HRO companies, the harder it is for these companies to acquire skilled personnel. This raises the question of whether these companies receive an adequate supply of talent required to match their growing demands. The answer is no in most cases.
To conclude: the overall answer to our main question on whether QoS in HRO companies is on a decline becomes a resounding YES, considering the above points of study. The higher attrition rates and inadequate supply of human talent mix is pulling the QoS index down for many of these companies.
Is there a solution where these companies can actually overcome this issue? Yes. There is a solution. Let’s stop here and wait for readers’ comments and discussion before we go into the solutions and suggestions to improve the QoS.