Article: The conversation has changed from process to outcomes: Deepak Dhawan

#HRIndustry

The conversation has changed from process to outcomes: Deepak Dhawan

People are more interested in the business implication of the intervention and not just the process
 

There is a huge pressure on companies to enhance efficiency and this opens more scope in HR outsourcing

 

The industry is evolving as the client's map moves from processes to outcome

 

The conversation has changed from process to outcomes - Deepak Dhawan, CEO & Founder, Talentonic

How will you define the HR Industry?

I look at the industry in the traditional way in 4 quadrants:

Training & Development – This is a 2.3 trillion Industry globally, data for India is not available but the numbers in India are very large as it includes all training from the bottom of the pyramid, to technical, functional, behavioral training and even leadership training. This industry is also growing very rapidly as the service industry and the new economy as these are knowledge hungry industries. This is a segment with huge width and depth. There is a volume market and a margin multiplier. Training services on a per day basis for training 2000 employees in a year with standard content to highly customized Leadership development services with specialized content and case studies and program management services substituting "stand up and conduct training" services. Technology has and will make a huge dent in this area. "Mass customization" will emerge, enabled by technology, to span the mental chasm between volume and customization. I see firms emerging which will provide 'training consulting" services for talent management requirements combining assessment, content and program management.

Recruitment & Staffing – this is a 300 billion industry globally, it includes from your executive search, to selection, placement, temping etc. Some players are pushers and that is a problem. Many clients today have moved beyond and require a different type of services that integrate not only recruitment but also assessment for example. This industry already has a fair amount of width and depth. At the high end, the retained firms are almost already selling themselves as consulting services. A healthy and welcome trend is that as the market for talent becomes global, many of the firms are acquiring a domain focus. Who should I go with if I need a CFO in US is not necessarily the same firm who I will go with for hiring a CEO for the Power Industry or a senior management team for Telecom. In this segment there is both an opportunity and a challenge. The opportunity is RPO. This will expand in a big way as Companies look at outsourcing a part of the recruitment action as different from sourcing. For companies this should be an opportunity to reduce cost and “time to hire”. For HR services companies this is a massive opportunity. The issue still to be resolved is whether the same companies doing sourcing will be trusted in India for RPO service. The challenge is really in the mid management segment. There are resume pushers who will get marginalized and I do expect this Industry to adopt new norms of productivity and cost which will push this middle sector on a path of improvement. The staffing part of the business has its own low cost business model. Volumes, cost control and consolidation will continue to be the discernible trends.

HR Technology – this is around 60 billion industry globally, it includes all technology from end to end, to niche to workforce analytics tools. This industry is moving quite rapidly at two levels: on the one hand, as a result of supporting integrated solutions and on the other hand Indian buyer is today more open to investing in technology. All these are pushed by the requirement of improving HR productivity. Today many organizations still spend time and resources in processes like performance reviews and salary revisions, when there are solutions today that can streamline this process and make it more effective and efficient.
The bulk of this industry is HR Outsourcing but this is one sector which will probably see the highest growth in India. There is a huge pressure operating within companies. Pressure to re-focus their HR teams on the more strategic stuff. Heavy lifting will have to come down. Information management in HR going across multiple data bases and not restricted to functional silos. There is a lot more which can be outsourced...and there is a lot more where efficiency and effectiveness of HR services can be improved across the board. I see the rise of true HR product companies where we are not just automating but having the domain capability to re engineer the process and then putting technology behind it. As flexibility is demanded......scale is required and the Head HR truly occupies a seat around the table there will be a lot more innovation around this. This will happen in recruitment, in compensation and in talent management.

HR Consulting – this is around 25 billion industry globally, in includes your consulting around the complete human capital supply chain. It is tough to describe this sector. In dollar terms, a huge part of this sector is compensation and benefits management. Strategic HR is small. Integrated talent solutions are limited and developing. Traditionally most Indian Companies do not feel that they need strategic HR inputs. They got it figured out themselves. However, changes are happening at the client end. M&A, globalization, changes in business model, unprecedented growth rate. So don't engage me at the process level. Engage me at the level of outcomes and provide me business solutions. In consulting I see engagements becoming longer and more business focused. It is more likely that the consulting platform will become the point of convergence. Should be interesting to see developments here.

From the customer perspective the client’s map has moved from processes to outcome. As an HR Head or a CEO I am not interested on which process, technology or system you will use but the outcome that the intervention will have in my business. So the conversation has changed tremendously from process to outcomes This trend is creating a convergence among the four quadrants. You will see consulting companies like McKinsey actually getting into the leadership area. Not as a “stand up and train” offering but more on creating the strategy, the process, the program, running it for a year and then leave it behind for another training company to continue. Executive search firm also getting into assessment and leadership development. As the client pushes for solutions and outcomes, some new folks are coming to the party.

The industry of buying products and services will continue but only at the lower level of the pyramid low value and high volume type of services. This will continue to be product or service specific and pricing will be one of the parameters of decision making. What we will see increasing is the growth of integrated solutions to organizations, that are technology driven and that go beyond the HR process to bring value as business outcome.

For example, I feel that some of the mergers of acquisitions in the service provider space do not add any value to the customer if they only add capacity then it does not bring new capabilities as offerings. The way forward in choosing your preferred partners will be those that are able to answer the following questions: 1) do you understand my business? 2) Can you provide me with an integrated solution that will work and create business outcome? And 3) can you integrate this solution in terms of process and delivery?

HR Service providers going forward will be broad based at the back end in terms of offerings but more focused at the front end in terms of capabilities to be able to bring all the pieces together. This is driven not only by the fact that HR cost is increasing but also that the efficiency and effectiveness of HR is being monitored more closely on how they bring value to the business and how they engage and motivate the employees.
 

Topics: HRIndustry, C-Suite, Outsourcing

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