Simply Lowell (Part I)

Lowell WilliamsFor once I am stumped for a title.  The one man who had successfully escaped my previous attempts to feature him has finally been caught.  Either his career has nose-dived and he's now desperate for some publicity, or the "Horses" now gives that 15-minutes of fame people so badly crave.  I hope it's the latter -:)

Yes – we have the one-and-only Lowell Williams in a two-parter…

Lowell, quite simply, is the most respected practitioner in HR Outsourcing.  Not only has he spent many years as an actual HR leader, he also worked for the "original" HRO provider Exult, moved into the sourcing world with TPI, before joining Equaterra in 2004 to head their HRO advisory practice.  He has been responsible for many HRO engagements – and he has somehow survived to tell the tale.  He also became the HROA's "Person of the Year" in 2008… an honor only bestowed to the most lovable scoundrels in the outsourcing world.  So without further ado…

Phil Fersht (PF): Lowell, firstly, what are the main issues you’re hearing from your clients these days? What are the main contrasts between now and before the economic crash last year?

Lowell Williams (LW): We have survived the worst of the crisis, and clients are beginning to plan for the medium term. We are entering the still dangerous waters of post-crash recovery and stabilization, but most executives are no longer poised on the windowsill while updating their designation of beneficiary forms. As they approach having to slim down selling, general and overhead costs, company executives are again turning to shared services and outsourcing, but they are very anxious to have the most rapid payback and to minimize capital outlay. This has led to an explosion of interest in Software as a Service (SaaS) which is a phenomenon not unlike the new Obama national health plan. Everyone is talking about SaaS and software sellers and providers are announcing new alliances and products constantly, but we cannot say that there is a large volume of experience with SaaS out there. SaaS, outsourcing (especially to cost advantaged areas) and shared services are the dominant themes of the post-apocalyptic world.

PF: You’ve been such a consistent figure in the world of HRO over the years, since its early days.. Will we ever see a return to the glory days of end-to-end HRO deals, or is it all going single-process now? What related areas to HRO are we beginning to see developing (for example legal work / compliance)?

LW: If I were willing to sing a tune here, it wouldn’t be “Glory Days” but I wouldn’t turn to the first stanza of Joan Baez’ immortal ballad on aging either: “Today there’s no salvation; the band has packed up and gone . . ..” HRO deals involving 45,000 employees, transition of 15 countries and outsourcing of 15 processes all on a Big Bang cutover date are things of the past. There will continue to be large transactions, but the phasing of transitions and the clustering of related processes and geographies arelogical maturity indicators in this business showing that providers have learned to temper their own ambitions for revenue and to resist client demands to do illogical and highly risky things. One evident process cluster is Core Processes, such as payroll, employee data management, call center, and HRIT. A second cluster groups Human Capital Processes, i.e.,performance, learning, succession, employee development and deployment. The clustering of HR processes with limited geographical footprints for each transition wave is a healthy way forward, and many top tier providers have already converted to this model.

PF: Do you see the more HR work being conducted offshore in today’s climate?

LW: Yes, the inexorable trend is to do more process work offshore. In EQ we track offshore service work using the Advantaged Cost Ratio ™ Index. This index measures the total percentage of services from low cost service areas, such as the Philippines or India, to the total cost of services from all geographic service points for a given client. Outside of limited call services and highly technical areas of benefit and equal opportunity compliance in HR, there is no reason why low cost, stable shared service centers or outsourced service centers that are offshore should not be used. Offshoring is a dominant element of this business and it will continue. There is no economic or political reason to retard or halt the process of offshoring services. Offshoring does impose on clients an absolute need to audit performance and capacity, to ensure that data recovery and business continuity procedures are in place and tested out and to be aggressive in ensuring that systems are backed up and that service centers are located in stable areas with good infrastructure. We believe that some service center developments, including outsourcing centers, have been too opportunistic and have not reflected careful political risk assessment. Political risk and stability of workforce are more important than cost comparison, and those factors should take on an increasingly important role in the choice of service location over the next several years.

In Part II, we will discuss platform BPO, something about governance… and some of Lowell's predictions for the future in our strange little world…

Lowell Williams (pictured), is… simply Lowell.

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3 Comments

  1. Posted December 2, 2009 at 1:42 am | Permalink

    I really wonder about the future of HRO. Is it HRO or SaaS?

    Lowell’s cluster of HRIT sound like ITO, but for a specific category of customers. It is a great opportunity for a company like Oracle or smaller niche vendors who can provide SaaS and, to a lesser degree, call center services. A performance management/development niche/cluster also sounds like SaaS, with a little data entry/workflow service.

    Both are software plays, with some small services.

    However, it’s a great example of how a business process can be somewhat standardized across different companies. Like AP, payroll, and, possibly, indirect procurement outsourcing could be standardized. And its a great example of solutions that mix services and software, something that many other areas of BPO haven’t come to grips with. Makes FAO could look like this in the future, if customers could standardize as much as HR does?

    Looking forward to part 2.

  2. Posted December 2, 2009 at 9:06 pm | Permalink

    All:

    Folks in government need to understand that sharing services almost always increases costs . . . it is a paradox. The uninformed fall into this trap sharing front and back offices and IT believing that money is saved, it is not. Without an understanding of the nature of demand we lock in waste. The biggest lever for improvement is the design and management of work.

    Please read:
    http://blog.newsystemsthinking.com/blog/shared-services-strategy/0/0/dos-and-donts-of-a-shared-services-strategy

    Regards, Tripp Babbitt
    http://www.newsystemsthinking.com
    http://www.thesystemsthinkingreview.com (Government)

  3. Posted December 3, 2009 at 5:12 pm | Permalink

    Simply Lowell is simply marvelous, as always. One other point worth mentioning is that, with much better software and much more extensive self-service, the volume of unautomated work and call center requirements really does gone down dramatically, regardless of whether it’s done in-house or via BPO. Perhaps the future of HRO is great SaaS with a dab of offshored back office left-overs and call center support. For a song, “wouldn’t that be loverly, loverly, loverly, loverly…”

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