Analytics and automation are now ranking as the top two priorities of enterprise human resource functions, according to a survey by Everest Group. Through a survey of senior executives in HR operations the Group found the top five key objectives cited are “move toward cloud,” centralisation of HR processes, and cost reduction.
“Cumulatively, these priorities reflect that access to digital solutions is a paramount concern for buyers of MPHRO solutions,” said Priyanka Mitra, practice director at Everest Group. “These digitally focused priorities also align with a clear shift we’re seeing in enterprise HR operating models as organisations seek innovative and flexible solutions to tackle tough HR challenges such as reducing operating costs, finding talent, and improving employee experience.”
Asked to classify their HR operating models, the executives surveyed by Everest Group described a continuum of capabilities that is clearly moving toward cloud-based and next-generation models. Twenty to 30 per cent described their operations as fragmented (State 1); 15-25 per cent described their operations as centralised (State 2); 45-55 per cent chose the cloud-based model as the most descriptive of their operations (State 3); and nearly 10 percent claimed to have achieved a next-generation operating model (State 4).
“Enterprises are looking for opportunities to undergo end-to-end transformation of their HR processes, and they are demanding that their service providers evolve from administrators to strategic partners that can help orchestrate a next-generation approach,” said Mitra. “Providers are responding by making heavy investments in technology, particularly analytics and automation. In addition, providers are also expanding their capabilities by widening their geographic reach and by adding high-end, value-added services such as talent management and advisory services.”
Everest Group reports that the MPHRO market registered a healthy growth rate of approximately five per cent between 2017 and 2019 and is expected to remain steady at 5-8 per cent for the next two years, crossing the $5 billion mark by 2021. However, looking ahead to 2021, Everest Group cautions that a potential recessionary wave may lead enterprises to delay decisions to outsource additional HR functions.
These findings and more are explored in Everest Group’s recently published report, “Multi-Process Human Resources Outsourcing (MPHRO) Annual Report 2020 – Preparing for a Digitally Enabled Decade.”