As all students of dialect are aware, interpreting another’s language requires a combination of skill, experience and immersion.  Literal translation may be eminently possible, but deriving intent involves a more detailed analysis of origin, region and culture.  Without such comprehension, mistakes will be made, time will be wasted and inappropriate conclusions will be drawn.  HR outsourcing (HRO) has faced and continues to face these same dilemmas, and clarity must be attained before interpretation is simply left to the intermediaries.

Origins and Evolution

Industry anthropologists do not dig very deeply for the lost ruins of HRO.  Many may discover the transactions consummated by Exult (now Hewitt) in the early 2000s as their only point of reference.  Others claim that such outsourcing has been around for decades, perhaps even centuries, citing the dependency that organizations have always had on external sources in support of the needs of their workers.

Despite its questionable origination, this market continues to evolve at an increasing pace.  Today we find over ten thousand service providers claiming to offer HRO, each with their own value proposition, return on investment and competitive differentiation.  It comes as no surprise that you, the human resources buyer, are faced with unprecedented market confusion precipitated and perpetuated by the lack of a common taxonomy. 

The Quest for Clarity

In April of 2008, attendees from around the globe arrived in New York City for the annual HRO World event.  A seemingly enlightened migration of consultants, advisory firms, analysts, industry press, service providers, association leaders, clients and pundits assembled for this sixth instantiation.  One might expect to see and hear all that is relevant to global HR outsourcing, perhaps uncovering the source of this semantic confusion.  In walking the show floor and visiting with vendors, specimens may be gathered with the hope of a great linguistic discovery.  

In examining the collective, one finds universities, commuter services, pet sitters, applicant trackers, pollsters, employee verification services, health clinics and retailers all speaking of their service to HRO.  Clients stand next to their outsourced providers and explain their often unique and unreplicable path to success.  Advisory firms count the number of transactions this past year, each with their own definitions and criteria for inclusion. And what of the HR executives?  Who represents their needs and answers this quest for clarity?  Who, pray tell, is to blame for such continued confusion? 

Divergent Interests

HRO World is not to blame.  Vilification does not belong to one firm, one person, one assembly or one industry body.  Beginning in 2000, the fervor of growth and determination to secure market share necessitated that each participant attempt to define the language of the HRO industry from their own perspective.  This included:

• HR Service Providers: They began to modify pre-existing price lists to support this new holistic version of end-to-end outsourcing.  Experience was strong in some areas, and weaker in others, resulting in depth but not breadth.
• Advisory Firms: A new category of consultant was born, and these firms had the unenviable challenge of ensuring that RFIs and RFPs were responded to in a common format.  With comparative analysis driving awards, service providers tried to influence any language gaps to their advantage.
• Legal Firms: Dealing with hundreds of pages of text, the lawyers attempted to translate intent into legally binding language that will last through significant changes in context and content over a multi-year period.
• HR Departments: Across a wide continuum of standardization, HR buyers did not have a common set of internal metrics and measurement by which to compare the outsourced solution.  What language did exist was country or region specific, causing strife in areas of global deployment.        

This frenzy erupted a mere eight years ago.  Some might argue that this represents ample time for resolution, and were we not addressing such a varied set of global interests, I would tend to agree.  However, with billions of euros, pounds and dollars poured into the HRO market, many have been either unwilling or unable to pause long enough to ensure that sustainability supersedes short-term interests.

On Monday we will explore the convergence of outcomes and possible solutions to this dilemma.  Let’s keep the conversation going.

This entry was posted on Friday, July 11th, 2008 at 8:42 am and is filed under Human Capital/Human Resources. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.