If you’re running a company today, you’re likely focused on hitting sales goals, growing in new markets, staying ahead of competitors, and keeping customers happy. Human resources (HR), despite its critical importance, doesn’t always get the strategic attention it deserves. Often viewed as a support or administrative function, HR sometimes takes a backseat to departments like finance that have an immediate and obvious impact on the bottom line. In many cases, little thought is given to the future of HR beyond which benefits package to select.
But that’s all changing thanks to innovations in human capital management (HCM) suites. In fact, many companies are opting to rely on business process outsourcing (BPO) experts and partner managed cloud solutions for integration, deployment, services, and support because they allow end customers to focus on their core competencies while supporting cost reductions and improved HR service levels.
BPO for HR Is on the Rise
Recent research from The Insight Partners shows that HR services are the largest BPO segment worldwide at $12.4 billion — more than a third of the global cloud BPO market (see Figure 1). The study projects that the HR segment will increase at a 22.4% compound annual growth rate (CAGR) and reach $37.6 billion by 2025, and will comprise nearly 40% of the total cloud BPO market (see Figure 2). The report cites talent management, payroll, recruitment processes, and employee benefits processing as the most frequently outsourced HR functions.
By working with dedicated HR and HCM service providers, companies can leverage external expertise and best practices to optimize efficiency, streamline operations, and ensure regulatory compliance.
The Power of Partners
Through BPO, providers act as general contractors by delivering services under one commercial agreement to their end customers. With partner managed cloud, they can deliver specific packaged and managed SAP solutions to end customers through hosted cloud services. All SAP cloud-based solutions — including SAP SuccessFactors, SAP Ariba, SAP Fieldglass, SAP Concur, and SAP C/4HANA — are available through partner managed cloud. Partner managed cloud also offers customers full implementation, migration, management, and support of cloud applications via the provider and their exclusive intellectual property (IP).
For companies that cannot or do not want to take on day-to-day HR tasks, BPO partners such as Zalaris, an Oslo-based SAP BPO partner specializing in payroll and HR solutions, can help close the gap. “Our focus is entirely centered on HR, which frees up the client’s internal resources to focus on change management and more strategic aspects of the function,” says Hans-Petter Mellerud, CEO and founder of Zalaris. “Customers can count on us to continuously address daily payroll and HR requirements — from tax, legal, and regulatory compliance matters to strengthening recruiting and performance management processes that better align employees to corporate business objectives.”
Conversely, Texas-based SAP consulting and services partner HR Focal Point specializes in “moving the needle” strategically rather than focusing on HR administrative tasks. “I think what we are doing resonates with customers in the small-to-midsize (SME) space who want the bells and whistles that SAP SuccessFactors provides without the added overhead required to support it,” says Tracy Simoneau, Director of Consulting Services at HR Focal Point. “They see a managed support or BPO solution as something that delivers efficiencies and a higher quality of service delivery compared to trying to take it on themselves.”
Whatever the degree of involvement or type of processes being outsourced, success stories abound with BPO and the cloud. According to research from Aberdeen Illuminators, 58% of “best-in-class” companies have reduced the cost of configuration changes by working with a dedicated solution partner in their IT service management strategy. Additionally, 24% have realized lower costs for IT service delivery by implementing outsourcing.
Best-in-class companies are also 2.2 times more likely to deliver services more rapidly by working with dedicated implementation partners, according to the research, and 13% more likely to have adopted private cloud technology in one form or another.
The Future of Cloud BPO
As new innovations continue to revolutionize standard business processes, HR too will undergo a transformation to become more strategic and garner the respect it deserves. Companies looking to outsource HR functions will have a vast array of options as more partners invest in BPO and partner managed cloud services. But this isn’t just about HR; comprehensive cloud solutions are built to help companies run faster, better, and simpler with optimized processes. BPO and partner managed cloud will continue to be instrumental in the overall cloud movement. To learn more, visit www.sap.com/partner/become.partner-managed-cloud.html.