Enterprises in the U.S. are reinventing their approach to human resources with the help of outsourcing providers that are making significant investments in new technologies, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
The 2024 ISG Provider Lens™ Transformational HR Outsourcing Services (HRO) report for the U.S. finds companies are reimagining multiprocess HRO in response to technological advances, client demands and the growing complexity of employing workers in the U.S., especially around health care and compliance. New tools, such as generative AI (GenAI), give enterprises more tools to bring about these changes.
“The HR environment is constantly changing, with rising costs and new employee expectations,” said Stacey Cadigan, partner, Human Capital Management, for ISG in the Americas. “Organizations that partner with providers can survive and thrive by adapting to these conditions with the help of technology-enabled solutions.”
Multiprocess HRO emerged two decades ago as providers consolidated transactional HR activities to increase efficiency and reduce labor costs, the report says. Their solutions have evolved since then, though not as fast as in some other types of outsourcing, because HR tasks are performed by employees throughout a company using a wide range of software platforms.
Now, the HR function is expanding beyond back-office support for transactions and compliance to a more strategic role in positioning enterprises for better business outcomes, ISG says. Companies are assigning HR staff to specialized cases and strategic roles more than to routine tasks. HRO providers make this change possible with solutions that are based less on savings from offshoring and more on automation that complements human expertise.
U.S. enterprises are adopting new HRO services based on next-generation technologies. These give HR and business leaders better information and offer employees personalized experiences regardless of device or location, the report says. Strengthened by these services, HR departments are improving overall business outcomes in addition to operational performance.
Enterprises and service providers are already using AI for many forms of HR automation, and GenAI is quickly gaining momentum, ISG says. AI-enabled services so far have been aimed primarily at areas with low variability and few process steps, such as helping to generate job descriptions and onboarding packages. Service providers have built GenAI into their services and are demonstrating ways it can reduce the cost and complexity of HR management, especially in recruiting, employee learning and contact centers.
“Service providers and clients together have already identified multiple use cases for GenAI,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “With technology advancing this quickly, it is time for companies to transform HR.”
The report also explores other HRO trends in the U.S., including the introduction of outcome pricing for services and the increasing importance of better health insurance carrier integration.
For more insights into the HRO challenges facing U.S. enterprises, including reducing turnover and keeping up with the latest technology, along with advice for addressing these issues, see the ISG Provider Lens™ Focal Points briefing here.
The 2024 ISG Provider Lens™ Transformational HR Outsourcing Services (HRO) report for the U.S. evaluates the capabilities of 22 providers across two quadrants: Multiprocess HR Outsourcing (MPHRO) Services and Health and Welfare (H&W) Benefits Administration Services.
The report names Alight as a Leader in both quadrants. It names Accenture, bswift, Businessolver, IBM, TCS, TELUS Health and WTW as Leaders in one quadrant each.
In addition, Aptia and Infosys are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.
Customized versions of the report are available Apita and Businessolver.
The 2024 ISG Provider Lens™ Transformational HR Outsourcing Services (HRO) report for the U.S. is available to subscribers or for one-time purchase on this webpage.
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