More and more HR departments want to outsource operational processes and replace their on-prem system in their digital transformation. Outsourcing, therefore, plays a vital role in digitization and cloud strategies. Which aspects should HR managers consider when implementing such projects?
The digital change is changing personnel organization. Business models, processes, and technologies will have to adapt and the type of IT provision. Today’s companies are under enormous pressure to digitize. The existing system must be maintained with the current staff, and the necessary know-how for a digital transformation is to be built up. Given this challenging task, more and more HR managers are deciding to outsource central HR functions and related solutions to external service providers. The trend towards outsourcing human resources could mean an annual growth rate of almost 20 percent for service providers like Alight in the German market alone.
HR Outsourcing In Transition
HR outsourcing is more relevant today and is becoming a new mission. It is no longer just a tool to reduce costs but also a growth driver. Digitization and the move to the cloud have created new ways to generate business value. On the agenda are, for example, specific goals such as shorter recruiting times, halving the bounce rate in recruiting, or better employee loyalty in onboarding. With the help of external services, HR managers can better achieve this goal.
Bringing HR And IT Closer Together
With the shift to business value, the use of HR and payroll solutions has changed in recent years. When it comes to providing digital solutions, the responsibilities are increasingly being transferred to the specialist departments. They usually provide the impetus for implementation. The digital journey is currently beginning for many companies in several places at the same time. Acting without IT involvement is not recommended because the IT department can take over the critical part of the implementation to create a stable foundation for various projects and clarify questions about the integration of legacy systems for time management and payroll accounting into the cloud.
So what is the ideal starting point for such a personnel project? Ideally, HR and IT form a common target corridor and support each other in their decisions. Ultimately, this leads to solutions that deliver the required business value and have a positive impact on the entire company.
Avoid Resource Congestion
When developing a digitization and service strategy, the HR department must set realistic goals. In practice, however, the workload is often too high. Anyone who switches to a new core HR system quickly realizes that this affects many areas and processes such as payroll accounting, time management, or organizational management. As a logical consequence, many companies are choosing to drive the transformation forward everywhere at the same time. However, this often does not work because the same employees are responsible for carrying out specific tasks. These multiple locations of resources can lead to a blockade of the entire project. Those responsible then have to look for the conversation again and reset processes. That costs time and motivation.
Pursue Realistic Goals
Therefore, companies should initially concentrate on converting core systems and master data to avoid such a scenario. This is especially true if the scope of work increases rapidly with the coupling of communication channels and HR – for example, through messengers for discussions with the HR department, managing your data, or accessing information via the cloud regardless of location and time. This covers topics such as “Breaking down barriers to staff access” and “Simply designing staff support.” Applications and processes that employees know from their private lives are integrated into their professional environment. In this way, companies ensure the most excellent possible penetration and acceptance in the organization and can follow-up processes such as recruiting,
Standardized Cloud Technologies Grow With Market Developments
A completely new technological approach comes into play with the move to private and public clouds. In the past, when HR IT was introduced, a lot of money was usually spent to develop a company-specific target process model. It was then implemented in the local system and went online. Today it works the other way round: the organization of the project follows the technology. Large cloud providers have created the prerequisites for this through cross-sector industry standards. With their solutions, business processes with high personnel and functional requirements can be effectively implemented.
The use of standard technology also ensures that the HR department can react well to growing market dynamics. Because through continuous maintenance and further development, manufacturers can keep their solutions up-to-date, for example, legal or functional changes. These innovations are directly available to the user company through regular product launches.
Provider At Eye Level
In the digital world, HR departments and outsourcing providers are increasingly moving closer together. More and more classic service providers take over processes, or IT functions one-to-one and have made them available unchanged for many years. But the transformation path needs companions and designers. Today it’s about putting the idea of an agile organization into practice. That only works with continuous advice. The supplier’s cooperative behavior is close to the customer and flexible. The cloud providers act as partners in the digital transformation of business processes within the HR departments.
High Scalability Thanks To The Cloud And Outsourcing
The “breathing” service model assumes that the contract is designed from the outset so that it can also be adapted to a rapidly increasing or decreasing number of employees. In general, the model should be scalable both downwards and upwards. If, for example, the framework conditions of the personnel organization change – can the supplier take over? And if so, how quickly? When outsourcing, customers should clarify such questions right from the start.
For the outsourcing suppliers, this means a turning point in work control. To adapt to changing customer needs, innovative tools and processes are required. Issues such as automation or artificial intelligence (AI) are increasingly finding their way into delivery strategies. Outsourcing is no longer just focusing on people but is evolving into a business that combines people and technology. For example, the use of chatbots for first-level support reduces the workload of employees. Simple service inquiries, for instance, about vacation, lifetime working time accounts, or expense reports, can be answered without manual intervention. The digital application recognizes who is responding to which request and immediately provides the required information.
No More On-Premises Dinosaurs
Last but not least, the question arises as to what progress the migration of IT to the cloud and the integration of external services will bring. The main aim is to simplify the backend infrastructure by reducing the technical complexity. Longer-term topics are the optimization of operating costs and the simplification of business processes in the IT area.
Maintaining and updating conventional HR systems is becoming more and more difficult. It is only a matter of time before they disappear entirely from the market, making the switch to cloud services indispensable. Then, at the latest, it will be time for new delivery models and services. But why wait and not make the planned change now? Everything that existing internal applications have to do today can also be provided from the cloud. Companies can use it to make their HR processes leaner, more modern, and more economical. Continuing to feed the resource-poor on-premises dinosaurs in the data center is no longer appropriate.