Braving the annual industry HRO schmooze fest this year, I realized I was emulating Roger Federer’s extraordinary Wimbledon run by making it to my fifth-consecutive show. Only an elite few have made all six – at least I can’t claim that honor -:)
From the moment I stepped into Naomi Bloom’s Brazen Hussies event on Tuesday night and was ordered to eat a heavily-garlicked vol-au-vent with the instruction “we’ve all had one, and so should you”, I knew something interesting was in the air this year.
For starters, all the industry big-guns were there; the leading HRO providers with all had their head honchos; the sourcing advisors; both SAP’s and Oracle’s BPO teams espousing the virtues of outsourcing on their ERP platforms; every staffing, benefits, talent management, data-something-or-other firm you’d never heard of; and even a few mercenary analysts dotted around the place. We even had a new double-act to entertain us – the Elliot and Richard show, moderated by the vivacious and cabalistic Jay Whitehead. This was one networking event when you just had to be there.
So, in true HROWorld tradition, I slammed myself with 20 back-to-back meetings over the two days, supplemented with a constant supply of stale coffee and a constant stream of sales literature I will cherish for a long time (ahem).
My overall impression of the state of HRO is one of re-engineering to get this right. This was the resounding message I got from several discussions with the market-makers in this industry. OK, we’ve had a few non-starters recently, but let’s emphasize these were projects that were cancelled before any implementation work had taken place, and in several cases, the contract had just never quite made it to fruition. This doesn’t imply that HRO is failing; it implies that some businesses have made strategic decisions that now isn’t the right time to undergo open-heart HR surgery on themselves. And do you blame some of these firms, when the bottom has fallen out of their industry and they might just have some other urgent priorities to rectify?
I wrote a year ago that the industry crystallized around the Convergys/J&J deal, and I was right. What I liked about this show was the serious discussion on what works in HRO versus what doesn’t. There was a refreshing honesty from almost everyone regarding the steps suppliers and buyers need to take to make this work…and so much less hype. In fact we had so little hype, we could have used some. Most of the suppliers are seriously focusing on what they are good at, and crafting HRO solutions based on their core strengths. The need for standards and common service levels was discussed at length, with several ongoing initiatives in the industry currently focused on the joint-development of common HR standards and technologies that enable a more robust, repeatable HR delivery model.
There was universal recognition that HRO works when solutions are crafted from the bottom-up, with services added incrementally and HR leaders having more time to develop successful governance practices, as opposed to some of these massive end-to-end “big-bang” deployments, that have often resulted in a misalignment of expectations and delivery. This isn’t failure or disaster; it’s a 9 year-old industry testing the boundaries of what works – and what doesn’t. I’ve been at pains recently to point-out that 97% of HRO deals have succeeded – and by succeeded, I emphasize that they are plugging away to get this right.
Let’s be brutally honest here, this is business process outsourcing – and this is a tough complex business, where things can only go wrong. You really cannot judge the “success” of any major outsourcing engagement until it’s at least 3 years’ along and transition has been completed. The day of the billion-dollar mega-HRO deal may be over for now, but take some time to look at the plethora of these “bottom-up” engagements taking place, where companies like ADP and Ceridian are racking up their HRO clientele at double-digit growth rates; look at Hewitt’s re-focused strategy on centering its core benefits outsourcing business as the kernel of its HRO delivery model; and look at Accenture‘s and IBM’s continuing efforts to optimize their global HRO engagement models, with HR service-delivery centers employing thousands of service personnel across several global locations. The seeds of this industry have been sewn, and we’ve had our reality check. Now it’s time to move on and watch some great companies make this thing work.