the outliers of hr...

The Outliers of HR (Out)sourcing

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White Paper | The Outliers of HR (Out)sourcing

Contents Are you an HR outlier?

A few ideas from NGA Human

Resources customers

Why companies look at hybrid HR

A final note on HR sourcing

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5

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About the Author

Anita is VP Northern Europe and leads NGA Human

Resources' activities in this region. In addition to full P/L

responsibility, she is responsible for leading the region on

a profitable growth strategy, overseeing all of NGA Human

Resources’ client relationships, business development, sales

and operations.

Anita has extensive experience working for global

organizations and has acquired a great amount of international

experience while working with multinational teams in a variety

of roles, ranging from expert consultant to program director.

Prior to her current role at NGA Human Resources, Anita was

Managing Director for the Netherlands, leading one of NGA

Human Resources' largest business operations. She joined

NGA Human Resources in 2001 and has a proven track record

in delivering value to customers by leading HR Transformation,

Consulting and Outsourcing engagements. Anita played a

key role in founding the HR Business Consulting team at

NGA Human Resources. From 2008 to 2011, she worked

as Director HR Outsourcing, where she transformed the

operations and was responsible for the CIAN acquisition.

As guest speaker, Anita regularly delivers keynotes on the

subject of HR Transformation and Outsourcing at industry

conferences. She is also the author of several white papers

and articles.

Anita holds a master of arts degree from the Free University of

Amsterdam and has followed several postgraduate courses in

business administration and executive management, among others,

at the Eberhard Karls University of Tübingen, Open University of

Maastricht and Vlerick Management School.

Copyright 2015 NGA Human Resources

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Are you an HR Outlier?

Our global economic climate remains volatile, as the world has not yet found a

way out of the recession: Companies report mixed results; governments feel the

consequences of previous stimulus plans; and consumers are not spending for

fear of worse times to come.

For all of us in HR, it’s no longer a choice between cost efficiencies, talent

conservation and regulatory compliance – they are all equally important. The

question is, how we can expertly manage our day-to-day challenges without

losing sight of long-term strategies? This requires a well-balanced approach in

making the right choices that allow the company to contain cost, while still being

able to focus on securing and engaging the right talent for the future.

Cost containment is back

It’s obvious that cost containment is back on the agenda and that HR

departments must demonstrate renewed interest in outsourcing as a viable

option to improve efficiencies. Very often they view outsourcing as the best

approach to lower and control costs. But as attractive as it may sound from a

cost perspective, outsourcing is not always the most viable option: The sheer

size of this undertaking—creating a business case, moving staff, implementing

new technologies that support new processes—and the organizational change

involved all prohibit a quick decision.

The traditional view on outsourcing is that it is an “either-or” decision, where you

either outsource your entire HR department or keep everything in-house. Today’s

reality is different: Outsourcing does not have to all or nothing.

When we look at HR service delivery, we distinguish between four options:

Pro

ce

ss

Outsourced

BPAAS

Shared

Services

Business

Process

Outsourcing

Software

as a Service

Discrete

Provisioning

Outsourced

Insourced

Technology

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In the last 24 months, there has been a stronger emphasis on technology as

the solution for all HR delivery challenges. The “cloud” is presented as the

ultimate solution, and Software-as-a-Service (SaaS), the only answer. To be

a modern employer, you have to communicate through social media, your

systems must be in the cloud, and your HR department outsourced, preferably

to an offshore location.

But many of us can not start from scratch, “rip and replace” our systems, leave

our legacy behind and switch to a completely new, outsourced HR delivery

model in the cloud (BPAAS). We want to use an HR solution that we have

invested in for years and that contains historical information, data models and

processes that we cannot do without. We don’t have the funds to spend on new

technologies that change our HR service delivery, simply to make us

future-proof. We need a solid business case to make the case for change.

So what to do if your company is not ready for BPAAS? Or never will be?

Does that mean that the benefits are out of reach?

Fortunately not.

Why not consider your HR service delivery landscape as a box of Lego bricks

that you can assemble and reassemble based on your business strategy? Why

not become an HR outlier and create a hybrid solution that fits your company?

Why would you want to be an HR outlier?

Let me zoom into the concept of an ‘outlier’ first. An outlier is something so unlike the

rest of a sample, it is thought to be unrepresentative. It is a value far from most others

in a set of data. An outlier is statistically impossible and therefore, usually neglected.

Many of the companies NGA Human Resources works with are outliers: Instead

of adhering to a standard ‘middle of the road’ model, they smartly combine

sourcing options that precisely fit their unique business needs. They don’t fit into

any standard model but define their own solution instead. In doing so, they create

a hybrid HR Service Model that connects insourcing, outsourcing, offshoring and

onshoring using different providers that include on-premise and cloud solutions.

At NGA Human Resources, our experience has taught us that outsourcing is

never a one-size-fits-all solution and that every customer has unique needs.

The HR Service Wrapper, our proven process approach, in combination with our

state-of-the-art technology, allows us to create hybrid HR Service Models that

include managed services that best fit the unique needs of our customers.

Thanks to our methodology, we know how to create a hybrid solution that allows

our customers to build onto their current investments, while providing them with

the benefits of NGA Human Resources’ economies of scale and incorporating

cloud offerings where they make sense.

NGA Human Resources examines your current situation from various angles to

create the optimal situation between people, process, service management and

technology on one hand, and between in-house or outsourced at the other end

of the spectrum. And if that means you become an HR outlier, all the better: It

ensures that the final solution is exactly right for you—not for your competitor.

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A Few Ideas from NGA Human Resources Customers

There are many reasons why companies choose not to create an in-house service center or to fully outsource HR, but rather to design a hybrid service delivery model. In this chapter we show you examples of the choices our customers made and the reasons behind their decisions.

Financial services

Following a major restructuring and divestiture, a financial services customer

needed to find a solution for its HR department, especially the technology pillar.

Most of the IT staff remained behind, and the new IT department lacked the

necessary skills to reliably run the HRIS and payroll solutions. In addition, the

company did not want to create a new payroll department and was looking to

outsource this as a managed service. The solution called for a quick approach

with minimal business disruption, since most efforts where focused on the

divestiture, and funds and time were limited.

NGA Human Resources proposed hosting their current, customer-specific HRIS,

as the general feeling was that this was a reliable, well-established system.

NGA Human Resources also took over all application maintenance services

and provided the company with an online solution to manage its new HR shared

service center. All services are governed by the NGA Human Resources Service

Level Agreement, and an annual ISAE3402 report is provided to ensure

regulatory compliance.

People

• HR staff employed by customer

• HR/IT staff employed by NGA Human Resources onshore & offshore

Technology

• Customer-specific HRIS

• euHReka self-service by NGA Human Resources

• Hosted by NGA Human Resources

• System administration by NGA Human Resources

Service Management

• NGA Human Resources Service Center Management Tools

• NGA Human Resources SLA

• NGA Human Resources ISAE3402

Process

• Customer-specific HR process model

• Managed Payroll outsourcing by NGA Human Resources

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Utilities

Due to regulatory changes, a utilities company was forced to break up into

three separate entities, forcing its HR service center to split into three separate

departments. The company’s HRIS had to be separated, as well. Due to the

complexity of the split and associated time constraints, there was no time to

switch to a new technology backbone, and the company wanted to avoid an

increase in people costs.

NGA Human Resources proposed taking over the HR Service Center staff and

providing services to all three entities under separate contracts, while using the

same processes and technologies run by staff working in the NGA Human

Resources service center in onshore and near-shore locations. In addition, NGA

Human Resources introduced Service Center Management tools to help govern

HR delivery services, as well as provide monthly SLA reports and an annual

ISAE 3402 report. For the time being, the HRIS is run by the customer’s IT center

of excellence, with NGA Human Resources providing change support and expert

help when necessary.

Facility Services

This customer initially approached NGA Human Resources to request a system

migration to an ERP backbone. After examining the customer situation, NGA

Human Resources determined that, while the current system could benefit from

some IT improvements, the company as a whole would gain the most by adopting

standard HR processes and ensuring that the HR staff made no exceptions.

People

• HR staff employed by NGA Human Resources onshore & nearshore

• HR/IT staff employed by customer

Technology

• Customer-specific HRIS

• Hosted by customer

• System administration by customer using NGA Human Resources support

Service Management




Process • NGA Human Resources process

model

• HR outsourcing (Workforce Admin and Payroll) by NGA Human Resources

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NGA Human Resources proposed taking over HR staff from all business

ocations to create an HR Shared Service Center at a central location, serving the

company as a whole. In addition, NGA Human Resources streamlined all existing

processes and created a digital point of entry for all paper documents. Staff that

did not want to move to the SSC was replaced by staff in NGA Human

Resources’ nearshore location. NGA Human Resources oversees all service

delivery using powerful Service Center Management tools and delivers SLAs and

the annual ISAE3402 report. The company still uses the same third-party HRIS,

thereby avoiding a costly and unnecessary IT migration.

What's your outlier model?

The examples above have given you a taste of what you can do to make your

HR department ready for the future. These companies are HR outliers in their

own way: They had very specific reasons for their choices and the final sourcing

model. In doing so and by using the standard building blocks, they designed a

unique HR service delivery model that fits their needs and is future-proof due to

the use of modern technology.

People

• HR staff employed by NGA Human Resources onshore & nearshore

• IT staff employed by 3rd

party vendor

Technology

• 3rd party HRIS

• Hosted by 3rd

party

• System administration by 3rd

party with NGA Human Resources support

Service Management




Process

• NGA Human Resources process model

• HR outsourcing (Workforce Admin, Time and Payroll) by NGA Human Resources

People

• HR employees

• HR/IT employees

• Onshore, nearshore, offshore

Technology

• HR system

• HR self service

• Hosting

• System administration

Service Management

• Service Center Management Tools

• SLA

• ISAE3402

Process

• HR process model

• HR process outsourcing (single – full)

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The illustration below allows you to create your own hybrid model. The remaining

question is this: What is your perfect fit in insource vs. outsource, onshore vs.

offshore, on-premise vs. cloud, and fully or partially managed? Are you ready to

become an HR outlier?

Why Companies Look at Hybrid HR

There are many reasons why companies look at hybrid HR models. Here is an

overview of the most important ones:

Cost

efficiencies

Achieving economies of scale by sharing people and

technology innovations across companies

Switching from capital expenses to operating expenses

Access to near-shore and offshore resources

Knowledge

access

Baby boomers who are leaving the workplace must be

replaced.

HR has difficulties attracting people due to the perceived

lack of career opportunities.

Creation of a flexible HR resource pool to assign as

needed to replace tenured talent

Regulatory

Compliance

The legislative environment is rapidly becoming more

complex, and hard-to-find expertise is required to ensure

your HR environment remains compliant in all areas of

the world.

Need to deliver an unqualified ISAE3402 report annually

The list above is not exhaustive, and objectives, as well as underlying reasons,

vary between companies. But most companies looking at restructuring their HR

Services Delivery have a few things in common:

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They know they need a change in direction.

They have to submit a viable business case.

They’re in a time crunch.

Upfront costs must be minimized.

Cost of delivery should be lower and preferably operational not capital.

Past investments must be leveraged.

What works well should not be replaced.

Onboarding to the new model needs to be accomplished with the least

possible disruption.

There must be opportunity to move to BPAAS in the long term.

Hybrid sourcing models

A hybrid sourcing model allows you to gain the benefits of outsourcing, including

flexibility, leverage, service levels, speed to market, tools, and subject matter

expertise without requiring large upfront investments in time and money. Prior

investments can be leveraged in the final solution. And because the investment

is smaller, the return on investment is achieved more quickly and with less risk.

Here are some ideas on hybrid models that provide an optimal solution based

on your business requirements. By reading through them, you can decide which

components may contribute to designing your optimal solution.

Customer Employees NGA Human Resources

Customer specific Service Delivery NGA Human Resources

Standard

Onshore Geography Near & Offshore

Discrete Process Full HR BPO

Customer Location NGA Human Resources

ERP HR System euHReka

3rd

party/In-house HR System hosting Hosted & Cloud

Customer HR System admin NGA Human Resources

Ticketing system HR SSC Tools euHReka SCM

Activity-based Cost Per employee

OPEX Investment CAPEX

People: To deliver HR services, you need both HR and IT staff. If you outsource

HR processes, then the HR staff usually follows. Consequently, if you outsource

your HR technology, then your IT staff follows. There is one important guideline:

Those responsible for the results must also be directly responsible for the

associated staff that delivers those results—no exceptions.

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NGA Human Resources uses a “hub-and-spoke” model. The generic HR and IT

services are delivered from the hub center, and country-specific services from

the spoke center. This ensures that service delivery is as effective and efficient

as possible. Legislation changes are addressed regularly, and unique, local

knowledge is consistently interpreted and executed in the right way through

a local HR specialist in the “spoke.

Process (or scope): If you want to retain certain HR activities in-house, a

process hybrid provides an effective solution. Your in-house HR staff performs

the activities that can’t (or will not) be migrated to the vendor, who takes care of

the remaining support services. For example, although NGA Human Resources

handles executive services for many customers, some of them prefer not to

outsource this and have in-house staff in charge of delivering executive services.

Process hybrids also pertain to the way processes are executed. A company

can either choose to adopt the NGA Human Resources standard or request that

some processes are executed in a company-specific way. In addition, companies

can choose to switch to a partially or fully managed service, with different service

delivery setups per country.

Technology: Clearly aligned to the overall HR strategy, the technology is the

base of process delivery and ties the service together. As long as an HRIS

can be accessed from anywhere in the world, location is not an issue. Support

services can be delivered by either the customer’s in-house IT department or

by the outsourcing provider.

Most modern HRIS systems can support the services as defined by the NGA

Human Resources Service Wrapper, making it feasible to use a company-

specific system in an outsourcing scenario, thereby leveraging previous

investments. Companies can also choose to switch to NGA Human Resources’

euHReka as a worldwide HR foundation. A technology hybrid is a good choice

when the current system is well equipped to handle HR processes, and your

company would like to roll out new HR services to its employees using cloud

vendors.

Looking also at the current state of the market, many HRIS vendors have

recently acquired a cloud vendor for add-on services and are integrating these

solutions as “front-end” to their existing back-end services. If you use one of

these systems, it might be worthwhile to closely follow the integration and see

which value such a setup delivers, unless you have a pressing need for change.

Location: If you are looking at a location hybrid, it’s usually because some skills

are not available at your location or you want to benefit from wage arbitration.

An organization may choose to use near-shore and offshore resources for a

particular service, while for others, all staff is located close to or at the customer’

location.

The main reasons behind the choice of location are available language skills,

access to specialist (country-specific) knowledge and data-privacy legislation.

From an operational point of view, technology allows NGA Human Resources

to perform most services regardless of location, and NGA Human Resources

has service centers in all regions of the world.

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A Final Note on HR Sourcing

If your company can afford to spend the time and the money, there’s no question

about it: A BPAAS solution offers the largest savings and the best return on

investment, simply because of the seamless integration of people, process

and technology in combination with service management and economies of

scale. It’s like putting together four pieces of a puzzle so they fit exactly right.

However, if that’s not the case, hybrid models are a good alternative to leverage

the benefits inherent to outsourcing and offering organizations greater flexibility

and options when it comes to managing HR processes more efficiently. In

essence, it is a more flexible outsourcing service, designed for customers who

own and operate their own IT equipment, software or staff and where NGA

Human Resources can assist in improving the utilization and cost management

of their HR service delivery.

There are two keys to a successful hybrid model: finding the correct balance and

finding the right partner. Responsibilities must be clearly divided between the

organization and the service provider, and a strong governance model must be in

place to ensure adequate collaboration. NGA Human Resources has a long-term

vested interest in designing and operating hybrid service models, and we bring

the necessary expertise to managing these engagements. Streamlined and

efficient processes are also important, as provided by the NGA Human Resources

Service Wrapper and supported by great technology. NGA Human Resources

has a long- standing interest—and unique expertise—in designing and running

hybrid service delivery models.

Now is the right time to take a step back and assess what matters most: Are

your HR talents best devoted to managing day-to-day workforce administration?

Making sure your processes and systems are transparent and compliant? Or

would you be better off leaving that to experts who can achieve economies of

scale and provide you with an efficient and cost-effective solution? This way,

your HR professionals could spend their time where they are most valuable to

your company: identifying, acquiring, developing, engaging and retaining talent.

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NGA Human Resources is a global leader in helping organizations transform their business-critical HR

operations to deliver more effective and efficient people-critical services.

We help our clients become better employers through smarter, more streamlined business processes - to

save money, manage employee life cycles and support globally connected, agile organizations. This is how

NGA makes HR work.

What sets us apart is The NGA Advantage. It’s a combination of deep HR expertise and insight, advanced

technology platforms and applications and a global portfolio of flexible service delivery options.

www.ngahr.com

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