Business growth is much faster than people growth so organisations are becoming buyers of people services to bridge this gap
Speed of institutional building is crucial for first mover advantage - N.S. Rajan, Partner and Asia Pacific Head of Human Capital, E&Y
How will you define the Industry of HR?
There is no uniform definition per se, I will define the Industry of HR as any decision on buying products or services for any part of the human capital value chain. This is not restricted to HR as a function or HR Head as decision maker but is any decision in the supply chain of people within the organization. So the HR Industry are the services rendered across the value chain of human capital and some of those services are governed by HR and some are not.
How will you classify the different offering of this industry?
If you look at consulting alone, the largest piece is HR Strategy, advisory and talent management, then comes the retirements, health and welfare benefits and finally the transformation based consulting that also has an angle of people required. Besides consulting you have the spread of services for functional HR support (search, selection & placement, training companies etc) and the entire world of HR outsourcing. It is difficult to classify this space as each offering is different, the impact those have in the business is also very different and decision process & decision makers varies significantly from offering to offering.
How will you define the relationship between buyers and vendors in this industry?
Before we define the relationship, let me tell you that organizations today are struggling between how much they do in-house and how much they outsource and this shows the complexity of that they are facing as business growth is higher than capability growth and hence there is always a mismatch that needs to be compensated by buying people services.
In terms of the nature of the relationship between organizations and service providers, specifically for HR Consulting I feel there is a direct correlation between maturity of the organization and the buying pattern of services, firstly. Secondly, global organizations or MNC are much more appreciative of consulting services; Thirdly, sometimes the HR Heads as custodians of the HR domain struggle to find the balance of how much they should do in-house and how much they need support from external experts as engaging consultants will have an impact in terms of cost and the challenge will be to understand the business impact and return that the intervention will bring. Fourthly, business growth is going much faster than people growth so more and more organizations are becoming buyers of people services to bridge that gap and being able to maintain the momentum of growth. Organizations realize that the speed of institutional building is crucial for ensuring the first mover advantage and hence need to invest in people services to take this advantage. Finally, the need for benchmarking also drives engaging with consulting firms as organizations want to know what their peers are doing and also want to learn from practices and past experiences that consulting can bring to the table.