Beyond Cost Reduction: Getting Real Business Value from HR BPO

Accenture outlines the role that this new approach can play in helping to enable high performance.

This article was originally published in IAOP Outsourcing Insights, December 2008.

In today’s economic turmoil, it is no surprise that many companies are taking advantage of outsourcing’s proven ability to reduce costs and improve service. However, particularly when it comes to the outsourcing of HR functions, companies need to take a strategic, long-term view—while the workforce is their single biggest cost, it is also their most important source of value.

As Accenture High Performance Business research shows, the health of the HR function is critical to a company’s ability to achieve high performance. Companies and their HR departments must take special care that short-term actions do not create long-term harm.

In addition, companies that survive the current crisis most easily will be those that are able to do more with what they have, that are agile and can adapt to changing circumstances in the context of overall business strategy. HR business process outsourcing (BPO) is emerging as a strategy that can play a critical role in this environment by helping companies both reduce costs and enable improved workforce performance.

A strategic approach to HR outsourcing goes beyond cost reduction to create a strategic, integrated approach that drives business results. Properly designed and delivered, such an outsourcing arrangement based on the management of the entire talent life cycle helps to support the achievement of high performance by:

• Aligning value through competency frameworks.
  
  
• Aligning candidates with business needs through assessment and screen services.
  
  
• Maximizing the business impact of learning and development.

While it is possible for a company to perform these processes on its own, working with a trusted outsourcing company will introduce economies of scale while introducing rigor and discipline.

HR outsourcing buyers in mature engagements already are beginning to make use of these capabilities, and leading HR outsourcing providers like Accenture are gaining experience rapidly. Logical starting points for first-time buyers would be recruitment and learning services.

Because talent management services are so dependent on access to reliable data and the ability of the outsourcing provider to integrate services, Accenture recommends a single, long-term outsourcing service provider rather than multiple ones.

Skilled and motivated employees provide a competitive edge that is long lasting and difficult to replicate—and thus helps deliver high performance. This strength is never more important (or at risk) than in tough times. Having evolved beyond cost reduction, HR BPO represents an important way to help organizations improve workforce productivity and deliver meaningful business results in a challenging economic environment.