{"id":4523,"date":"2007-06-02T10:39:00","date_gmt":"2007-06-02T10:39:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/the-hr-outsourcing-industry-crystallizes-around-jj\/"},"modified":"2007-06-02T10:39:00","modified_gmt":"2007-06-02T10:39:00","slug":"the-hr-outsourcing-industry-crystallizes-around-jj","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/the-hr-outsourcing-industry-crystallizes-around-jj\/","title":{"rendered":"The HR Outsourcing Industry Crystallizes around J&#038;J"},"content":{"rendered":"<ul>\n<li>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\"><span><a onclick=\"window.open(this.href, '_blank', 'width=800,height=167,scrollbars=no,resizable=no,toolbar=no,directories=no,location=no,menubar=no,status=no,left=0,top=0'); return false\" href=\"http:\/\/fersht.typepad.com\/.shared\/image.html?\/photos\/uncategorized\/2007\/06\/02\/jj_2.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"float: left; margin: 0px 5px 5px 0px;\" title=\"Jj_2\" src=\"http:\/\/www.horsesforsources.com\/images\/jj_2.jpg\" border=\"0\" alt=\"Jj_2\" width=\"100\" height=\"20\" \/><\/a> <\/span><\/div>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\"><span><strong><span style=\"color: #000000;\">Y<\/span><\/strong><\/span><span><strong><span style=\"color: #000000;\">ou can\u2019t understate the importance of the 10-year $1bn Johnson &amp; Johnson HR Outsourcing contract to the long-term sustainability of the HRO industry.<\/span><\/strong><span style=\"mso-spacerun: yes;\"><span style=\"color: #000000;\"> <\/span><\/span>When discussions began within J&amp;J back in the summer of 2005, the key question bouncing around J&amp;J\u2019s leadership was \u201ccan we <em>really<\/em> do this?\u201d.<span style=\"mso-spacerun: yes;\"> <\/span>For a company that has grown largely through acquisition, J&amp;J today boasts a couple of hundred businesses operating under the flagship brand.<span style=\"mso-spacerun: yes;\"> <\/span>You can only begin to imagine the challenge of standardizing this global business on a common HR platform, across multiple countries, supported by centralized HR organizations.<span style=\"mso-spacerun: yes;\"> <\/span>I recall times it looked doubtful the deal would happen with all the negative publicity surrounding HRO, the contractual issues of some of the earlier engagements, and the financial difficulties experienced by some of the ambitious providers who bit off slightly more than they could initially chew.<span style=\"mso-spacerun: yes;\"> <\/span>It became abundantly clear over the last 6 months that J&amp;J would prove to be the bellweather of the HRO industry \u2013 its very survival hinging on whether this would actually happen.<\/span><\/div>\n<\/li>\n<\/ul>\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\">\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\">\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\">\n<ul>\n<li>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\"><span>What is transpiring in today&#8217;s industry, is that outsourcing (BPO and ITO) is providing the lever for companies to go through major change (hey \u2013 I managed to avoid saying \u201ctransformation\u201d).<span style=\"mso-spacerun: yes;\"> <\/span>And what\u2019s more, HR outsourcing drives business change with the investment footed by labor arbitrage, process automation and self-service technology (contrary to the mega ERP implementations of the \u201890s where the cost was borne by the shareholders).<span style=\"mso-spacerun: yes;\"> <\/span>For many global organizations, they simply cannot drive the scale of change necessary through organic process re-engineering \u2013 it\u2019s often far too expensive, far too slow, and often far too political.<span style=\"mso-spacerun: yes;\"> <\/span>Many companies do not have the required management experience to do it either.<span style=\"mso-spacerun: yes;\"> <\/span>Going through outsourcing drives shock into system, forces change quickly and usually reduces administrative costs.<span style=\"mso-spacerun: yes;\"> <\/span>Yes, a handful of companies decided it was not for them, for various reasons, but the vast majority would never go back.<span style=\"mso-spacerun: yes;\"> <\/span>They want to work with what they have achieved and make it better, through better governance and constant innovation.<span style=\"mso-spacerun: yes;\"> <\/span><\/span><\/div>\n<\/li>\n<\/ul>\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\"><span><strong><span style=\"color: #000000;\">So what\u2019s next for the HRO industry? \u2013 here are my snapshot predictions:<\/span><\/strong><\/span><\/p>\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\">\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\">\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\">\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\">\n<ul style=\"margin-top: 0in;\" type=\"disc\">\n<li class=\"MsoNormal\" style=\"margin: 0in 0in 0pt; tab-stops: list .5in; mso-list: l0 level1 lfo1;\"><span>Global deals will continue to slow as the major providers reach capacity and absorb what they have already taken on<\/span><\/li>\n<li class=\"MsoNormal\" style=\"margin: 0in 0in 0pt; tab-stops: list .5in; mso-list: l0 level1 lfo1;\"><span>The upper middle-market will open up aggressively as firms with 5,000 \u2013 10,000 employees pursue broader outsourcing strategies across SG&amp;A and IT functions.<span style=\"mso-spacerun: yes;\"> <\/span>Interest in outsourcing is at an all-time high and companies are vigorously exploring sourcing models that work for them \u2013 i.e. captives \/ hybrid models \/ full scope outsourcing<\/span><\/li>\n<li class=\"MsoNormal\" style=\"margin: 0in 0in 0pt; tab-stops: list .5in; mso-list: l0 level1 lfo1;\"><span>The \u201cTransform first, then outsource\u201d myth is beginning to fade (but slowly).<span style=\"mso-spacerun: yes;\"> <\/span>The common plea of \u201cwe can\u2019t do this right now until we get our act together internally first\u201d isn\u2019t washing as well as it used to, with more and more companies fixing their internal process and technology requirements <em>while<\/em> going through outsourcing transition.<span style=\"mso-spacerun: yes;\"> <\/span>J&amp;J is a perfect example of that, and a bellweather for many more organizations to follow who desperately need to change.<\/span><\/li>\n<li class=\"MsoNormal\" style=\"margin: 0in 0in 0pt; tab-stops: list .5in; mso-list: l0 level1 lfo1;\"><span>HRO will become more accepted as a standard outsourcing practice, like ITO, F&amp;A and Call Center.\u00a0 My post on the Human Capitalist blog in December 2006 lays out the issues the HRO industry has had to contend with, unlike other outsourcing towers:\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\">\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\">\n<p><a onclick=\"window.open(this.href, '_blank', 'width=800,height=167,scrollbars=no,resizable=no,toolbar=no,directories=no,location=no,menubar=no,status=no,left=0,top=0'); return false\" href=\"http:\/\/fersht.typepad.com\/.shared\/image.html?\/photos\/uncategorized\/2007\/06\/02\/jj.jpg\"><\/a><a href=\"http:\/\/humancapitalist.com\/?p=261\">Holding HR Accountable<\/a><a href=\"http:\/\/humancapitalist.com\/?p=261\"><\/a><\/p>\n<p><\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>You can\u2019t understate the importance of the 10-year $1bn Johnson &amp; Johnson HR Outsourcing contract to the long-term sustainability of&#8230;<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[79,80],"tags":[],"ppma_author":[19],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ 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