What were the major developments in 2013 for global HRO? And in what ways are these changes going to reflect in 2014? In this position paper, Michael Custers, VP of Marketing, highlights the most important trends for HR outsourcing in 2014. Topics such as the move towards cloud and SaaS HR technologies, big data, Talent Management as a Service, automation, globalization and standardization will gain importance in the years to come. VISIT HR BLOG -> cake.hr/blog

1. NGA Human Resources interviewed Michael Custers, VP Marketing, to have his thoughts on the past and future evolution of (global) HR outsourcing:
What were the major developments in 2013 for global HRO?
At NGA we have witnessed 4 major trends for global HR outsourcing in 2013.
First and foremost, cloud has become the platform of choice for HRO. At this point, this is still happening under a variety of names and labels, such as cloudsourcing, platform-based HRO, or BPaaS (Business Process as a Service) but we expect the industry to converge around one or two key terms in 2014. In the past year, we have seen cloud HR platforms such as Workday and SuccessFactors EmployeeCentral be adopted as underpinnings for core HR and payroll BPO offerings. We expect to see this trend continue and HRO providers will continue to 'wrap' BPO services around these SaaS offerings, varying between 'thin' and 'thick' layers of business support and analyst services. These 'BPO service wrappers' will be further refined over 2014 and can range from user adoption and compliance helpdesk, over 'test and release' services, all the way to driving process execution in talent management, providing analytical insight across functions and deep HR process expertise.
Secondly, we have seen HR outsourcing providers get really smart with process automation, driving efficiency and compliance based on software 'robots', powering HR service centers and HR solution landscapes. Smart automation tools built on top of cloud-based HR platforms have helped drive down manual back-office labor significantly. In the front office we have seen HR Call Centers evolve to full-blown multi- channel HR Service Centers, offering a wide range of global (HR) business services delivered through a variety of channels, between chat, email, social and collaborative platforms and - only when necessary - still over the phone.
Thirdly and specifically on the global playing field, we have seen payroll BPO and RPO stand up as the main drivers (some would say survivors) of HR outsourcing. Benefits outsourcing remains largely focused on select markets, such as the US, whereas growth in learning BPO is mainly driven by regulatory requirements in specific vertical industries, leaving RPO and payroll BPO as the dominant and growing forms of HR outsourcing.
Lastly, we expect to see HR outsourcing to fit into a wider Global Business
The Evolution of HR Outsourcing: Trends for 2014
Just as any other business department, HR is in constant evolution. Both internal and external changes have a major impact on the role HR has to play within the company. HR is clearly shifting from an operational department to a more strategic and pro-active business partner, while actions and results must be measured and costs controlled. To improve HR efficiency agility while minimizing administrative burdens and costs, HR departments increasingly rely on HR outsourcing.

2. Services ecosystem, especially in view of the two trends described above. This trend to Global Business Services builds on demand for further standardization of services, globalization and continued cost efficiencies. We have seen buyers mature very quickly in their thinking about organizing, sourcing and delivering business services, and smartly combining in-house business services with select outsourced services. As a result, we have seen HRO become part of services ecosystems in co-existence with shared services.
How and in what ways are these changes going to reflect in 2014?
We expect all 4 trends of 2013 to further mature in 2014, with strong adoption of cloud technology and a strong shift of core HR technologies. We also expect SaaS to drive wider adoption of HR outsourcing as organizations get more comfortable with how to deal with data privacy and security, and consider HRO a perfect way to hand off increasingly complex compliance regulations. In that regard, we consider SaaS an accelerator and a transformative force rather than a threat to HRO.
In 2014, we expect big data to start making an impact on HRO. We've seen a lot of buzz and talk about big data in 2013, but few mature offerings or implementations have seen the light of day. For big data in HR, 2013 has been relatively quiet driven by the realization that getting 'small data' right is a first and necessary requirement to get 'big data' going. The focus on core HR will help lay the foundation for a solid big data strategy in HR in global organizations.
What will be the top 5 trends for HRO in 2014?
As SaaS adoption matures and further spreads, we expect the 'as a Service' paradigm to widen. As such, we expect Talent Management as a Service to become a model which helps answer the effectiveness question of many talent management processes, by driving process excellence, execution discipline and technology adoption. TMaaS can help remove the execution problems around for instance performance management, by simplifying processes, bringing talent business analysts who drive the execution of a performance cycle, and provide insight into the results of talent assessment.
With the continued adoption of SaaS platforms we also expect to see 'Integration as a Service' on the rise. To date there isn't a single stack of cloud technology which covers all HR processes, so organizations will have to integrate different systems. More systems and more data means more and more complex interfaces. SaaS technology providers have standardized many integration gateways in the form of APIs and Certified Packaged Integrations. We expect service providers to build offerings to help enable secure and solid application integration.
Automation is expected to be a continued trend, with software removing the need for manual work. This trend will also impact the offshoring and nearshoring trend, as automation will make HR service delivery less dependent on the location of where work is performed.
Finally, we believe the trends for globalization and standardization will continue, with a requirement for truly global HR services, rather than local or regional solutions. SaaS is an important accelerator for both as it allows for a rapid and uniform roll-out of HR systems and processes around the globe.
How are the demand supply dynamics going to impact the segment? How are changing expectations on the buyer side going to affect the industry?
Buyers will continue to look for cost efficiencies through BPO. In addition, we expect ever-increasing regulation and compliance requirements to be a key driving for payroll BPO as organizations struggle to keep up with a changing regulatory framework.
How are HRO service providers like NGA gearing up for the change?
The entry barriers to HR outsourcing are relatively high at this point. If you don't have access to a global service delivery network, with strong nearshore and offshore capabilities, it will be very difficult to enter the market. In addition, HRO providers need to get their arms around a very different way of implementing and configuring systems, between the old OnPremise 'implementation' world and the new cloud-based 'configuration' game. At NGA, we have been implementing multi- tenant cloud-based systems for the last 5 years which helps us tremendously in adopting new, efficient methodologies such as interrogatory configuration for cloud-based systems.
Across verticals, where do you see a significant hike in demand coming from? What reasons? (indicating approx. investments)
In line with previous years, we continue to see both the financial and pharmaceutical industries as strong drivers of HRO. Both industries are very global in nature, facing a strong regulatory framework and compliance rules, and mature enough to adopt standards-based HR processes.
What geographies and what sourcing models (offshore, onshore etc) will play the most crucial role in global HRO going ahead?
Given the importance of language and culture in HR, sourcing remains a tale of many cities. At NGA, we combine centers of scope, which are typically onshore or nearshore, with a focus on specialization and subject matter
expertise, and centers of scale, which focus on volume and standardization.

3. NGA Human Resources is a global leader in helping organizations transform their business-critical HR operations to deliver more effective and efficient people-critical services.
We help our clients become better employers through smarter, more streamlined business processes - to save money, manage employee life cycles and support globally connected, agile organizations. This is how NGA makes HR work.
What sets us apart is The NGA Advantage. It’s a combination of deep HR expertise and insight, advanced technology platforms and applications and a global portfolio of flexible service delivery options.
www.ngahr.com
In addition we also have a limited number of 'premium' centers in onshore locations to provide a 'white glove' service to customers who require this. The capacity of making these various types of delivery locations work in concert is both an art and a science. Currently we have important nearshore centers in Buenos Aires, Argentina, Granada, Spain, and Katowice, Poland. Our main offshore centers are in Hyderabad and Kochi in India and Manila on the Philippines.
Which HRO segment/part will come out to be most prominent in the year 2014?
As highlighted earlier, we believe global Payroll BPO will be the strongest performer in HRO. This will be driven by a number of factors. As more organizations make a change in their core HR systems, they want to get payroll 'out of the way' and payroll BPO is a good way to do so. Cloud will continue its march towards mass adoption and the familiarity with SaaS as a form of application outsourcing will allow many organizations to also outsource process work. Compliance and complexity of payroll will further drive demand for global payroll outsourcing.
Michael Custers
VP Marketing at NGA Human Resources
Michael Custers currently serves as VP Marketing at NGA Human Resources, a global leader in HR and payroll services, and a KKR venture since 2008. In this role he oversees worldwide marketing activities, including analyst & public relations, product marketing, event & lead management, and branding. Mr. Custers joined NGA in 2006 as Director of Investor Relations and Communications and subsequently served as Vice President of Global Alliances and Strategic Marketing for 5 years.
Prior to joining NGA, Mr. Custers was Director of Marketing at Certipost, a joint venture of Belgacom and The Belgian Post, where he supported the introduction of the electronic identity card in Belgium.
Mr. Custers started his career with Aditel, an internet startup. Mr. Custers holds a Bachelor degree in Journalism, a Master’s degree in Business Management and postgraduate degrees in B2B Marketing and Audiovisual Communications. He chairs the North American chapter of the HR Outsourcing Association.
Mr. Custers is a Belgian national and resides in Atlanta, GA.