In the ever-evolving business landscape, organizations are on a constant quest for innovative strategies to boost efficiency, embrace digital disruption, and fuel growth. Amidst this complexity, HR leaders must drive talent outcomes, extending to Human + Machine collaboration. HR centralization emerges as their sustainable solution.
In the past, centralization and outsourcing focused on cost optimization and achieving transactional results, often lacking a strategic, holistic approach. This short-term focus limited the impact on shaping a broader organizational ecosystem and often fell short in cultivating a holistic and interconnected HR framework that aligns seamlessly with the overarching business objectives and fosters sustainable growth.
In the current landscape, a results-driven strategy takes center stage. This involves:
Strategic HR Alignment: Contemporary organizations seamlessly integrate HR with business goals. This synergy drives business success as HR activities actively contribute to objectives, enhancing workforce management.
Tech-Driven Diversity: Traditional uniformity in HR transforms to technological versatility. Diverse HR tech solutions cater to unique needs, boosting efficiency, engagement, and the employee experience.
Hybrid Operating Models: Combining internal and external resources optimizes HR processes, maintaining agility in response to dynamic business needs.
This contemporary paradigm underscores the significance of HR, aligning human capital strategies with overarching business goals for growth.
Shifting from standard methods to tech-driven flexibility marks a key change, enhancing HR’s contribution to sustainable success.
Centralizing HR operations offers numerous organizational benefits, empowering professionals for impactful strategic roles. This emphasizes value-added collaborations with the business beyond traditional policy implementation.
By pooling resources and standardizing practices, HR centralization fosters streamlined processes, enhances data-driven decision-making, transcends geographical boundaries, and cultivates a consistent organizational culture. Ultimately, this evolution positions HR as a catalyst for driving holistic, enterprise-wide success, as its practitioners become catalysts for meaningful outcomes across the organizational spectrum.
In the modern business landscape, centralization of HR operations has proven invaluable, offering specialized expertise, agility, and strategic growth. However, its true essence lies in nurturing employee experience, which is integral to maintaining brand value and attracting top talent.
By standardizing processes, harnessing technology, and embracing digitization, organizations ensure egalitarianism in employee services, reducing micro-cultures and aligning the entire organization with its purpose.
KPMG India’s HR Managed Services team draws a parallel between key employee journey “moments that matter” in the below illustration below and the potential for centralization of HR tasks up to 60% :
Centralization yields cost benefits, specialized talent access, and operational excellence for all significant ‘moments that matter’ in an employee’s journey.
Fortifying HR centralization demands strategy, upskilling, and standardization, so organizations can enhance their focus on core competencies. It is also an opportunity for a digital transformation, leveraging tools, and technology (AI, BOT, analytics) for streamlined recruitment, payroll, and employee management, optimizing efficiency and accuracy.
Many Indian clients, spanning sectors, and backgrounds such as large conglomerates and global captive centers, have already embraced or are contemplating HR centralization. This capacity can be developed in-house from the ground zero or through outsourcing of some or all of the HR operational activities, often via ‘Build-Operate-Transfer’ with select HR vendors.
To ascend to a strategic level, organizations need to have a fortified layer of failsafe processes and governance – an outcome that can only be achieved through standardized HR operations.
When implementing HR centralization, we suggest organizations anchor on the 4 E’s: Efficiency, Effectiveness, Experience, and Engagement; to foster collaboration, innovation, and continuous improvement.
- Efficiency: Streamlining processes, reducing redundancies, and optimizing resource allocation.
- Effectiveness: Achieving organizational goals through well-coordinated HR practices.
- Employee Experience: Creating a supportive and satisfying work environment.
- Engagement: fostering a sense of involvement and commitment among employees.
In addition, other crucial pillars for a successful HR managed services setup include:
Focus on Employee Experience: to be emphasized, just as you would prioritize customer experience.
Agile Scalability: Scale to meet organization needs, begin with selective HR outsourcing, and move to end-to-end centralization. Flexible HR services adapt to evolving demands.
Embracing tech-driven transformation: Adopt innovative HR tools, AI analytics, and cloud solutions to optimize processes, enhance data-based decisions, and offer seamless experiences. Beyond 3-B (Build-Borrow-Buy) talent model, embrace ‘BOT’ tech for task automation.
Compliance Assurance: Stay updated on regulations, adhere to laws, build trust with ethical HR practices
Continuous Innovation: Encourage your team to think outside the box and challenge conventional HR practices and meet organizations’ evolving demands effectively.
A forward-looking vision for HR centralization embraces cutting-edge technology, fostering a self-service revolution that empowers employees. Intuitive platforms ensure staff control, shifting to proactive outreach, personalized support, optimizing milestones, data-driven decisions, and harmonious organizational success. This vision heralds a future where HR is a seamless, employee-centric force, maximizing potential, and elevating organizational success.
Authored By
Arun Sharma, Associate Partner, HR and Talent Managed Services, KPMG in India
Kaushik Sarathy, Associate Partner, HR and Talent Managed Services, KPMG in India