Everest, HRO, Benchmarks
HRO Benchmarks: Scope, Quality, and Pricing
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The Human Resource Outsourcing (HRO) industry is at a critical point in its short history. Buyers are increasingly looking at HRO as an opportunity to streamline processes, reduce direct and indirect costs, get access to the latest technology and tools, consistently achieve better quality, and align HR with the overall business in the fastest time possible. At the same time, suppliers are seeking the most optimal way to provide improved services to their clients at a cost that still allows for a profit. Reshaping the business model in a way that benefits both buyers and suppliers is critical to the survival of the industry.
Many HRO suppliers started off with a “lift-and-shift” model, wherein they took over a buyer’s existing people, process, and technology and used the acquired infrastructure as a platform to build out their HRO capabilities. In the initial deals, the model worked well for suppliers, with buyers getting the cost savings they anticipated. However, as suppliers moved beyond the first few clients, the importance of scale and standardization became apparent to realize leverage across clients. Suppliers struggled to create some level of solution and platform standardization across buyer organizations that tended to be resistant to any standards but their own.
Everest Research Institute in late 2006 conducted a detailed survey of key large existing buyer organizations in order to better understand the scope and metrics in the HRO market today. The study focused on the definitions and measures for the overall deal and within specific HRO process areas that facilitate optimal realization of the desired outcomes of outsourcing the HR function.
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HRO Benchmarks: Scope, Quality, and Pricing.
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