We’ve been reflecting on the future of HR BPO, while reviewing the past and present of the HR outsourcing industry. Our conclusion was that in recent years we’ve witnessed the birth of the third generation of HR outsourcing – aka HRO 3.0. Over the course of more than a decade, the HR outsourcing industry has evolved to platform-based underpinnings, user-centric design for maximum transactional efficiency, high degrees of process standardization, and true global reach.
As HRO 3.0 matures, which is particularly relevant for multi-process HR outsourcing contracts, we are witnessing the arrival of a new deployment model enabled by the convergence of SaaS and BPO. This combined offering of Business Process Outsourcing and Software as a Service is something we are describing as Business Process as a Service (BPaaS) and we believe it has the potential to be just as significant a step-change to BPO as the emergence of Cloud was to the OnPremise software industry all those years ago.
The promise of BPaaS is straightforward: BPaaS makes BPO easier to consume, faster to deploy, and easier to adopt than ever before. It incorporates Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and SaaS as well as having all the existing benefits of outsourced HR processes, offered through BPO. For HR, we believe BPaaS will be most meaningful in processes such as payroll, workforce administration, and employee productivity.
BPaaS offers standardized yet highly configurable HR services, allowing organizations to standardize transactional HR processes globally; and as such shed off the burden of HR administration and focus on value creation through HR. HR transformation revisited, indeed, but this time with a solid technology and process underpinning. Recent market research has demonstrated that 60% of business leaders are evaluating BPaaS solutions, but adoption is lagging behind due to limited understanding of the business impact and knowledge gaps in how to deploy BPaaS-type solutions.
BPaaS brings the much acclaimed concept of ‘apps on taps’ to life, which has been largely absent in the enterprise space so far, by impregnating BPO with typical SaaS features such as configurability (little customization), multitenancy (single codebase), preconfiguration (with process standardization as a key requirement), scalability (consumption-based), and high degrees of automation and/or industrialization.
In addition to all these benefits, BPaaS solutions often also include CSB (Cloud Services Broker) solution. CSBs extend ‘the platform’ to an entire ecosystem of SaaS partners: open APIs allow BPaaS providers to redirect, aggregate and consolidate software services in order to enrich and scale their platform-based services.
As a result, organizations benefit from simplified and standard integration, richer platform functionality, transparent consumption of third party services, and an ever expanding ecosystem of HR service providers.