Global HR Transformation 2009

Conducted by HROA in association with ADP

TABLE OF CONTENTS

Introduction ......................................................................................................... 4
About the survey ................................................................................................ 5
Executive summary ............................................................................................. 6
Research findings................................................................................................. 8
HR transformation status ........................................................................... 8
HR transformation outcomes ................................................................... 16
Outsourcing and shared services ............................................................. 20
HR management practices ......................................................................... 30
About the survey participants .......................................................................... 32
About the sponsors ............................................................................................ 34

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INTRODUCTION

Back to basics…once again!

Are we really able to change before we have to? This
question is probably on many people’s minds as we
confront more and more transformations and crises
that have major impacts on the way we do business
and, most important, on our everyday lives.
There are always signs before any modification in the
environment, but very few can or have the will to
interpret them. Think of the fall of the Berlin wall in
1989, the Asian financial crisis in 1997 or, more
recently, the U.S. credit crisis that plunged the world’s
economies into hard times.
I’m sure you know many other examples as well. We
have to prepare ourselves to go through more and
more unforeseen transformations. Good or bad, the
world and the way we are managing our economies
are changing, and we’d better be prepared to face
these changes.
So, what lesson to take away from all this turmoil? To
remain humble and work hard together to find
solutions that will enable us to avoid the mistakes of
the past and head in a better direction. This is one of
the reasons why we have been supporting the Global
HR Transformation Report for so many years.
Of course, much remains to be resolved and reading
this report surely helps the reader to understand
trends in the HR market and dive deep in
organisations around the globe. Not only does it offer
a snapshot of HR organisations at one point in time,
but it also integrates comparisons and analysis with
past data, which gives a broader perspective to the
whole project. This dual vision has contributed greatly
to its success over the years.
Finally, The Global HR Transformation Report is also a
wake-up call to all the stakeholders in the HR industry,
be they final users, providers, market analysts, or
advisors. The message is clear: the best way to deal
with uncertainty is to work on setting up standards
that will define what our industry should be in the near
future. This is an imperative to progress and put
together solutions that will better enable HR Managers
to face changes and challenges in their companies’
markets.
New challenges lie ahead. It is up to us to leverage this
report to find innovative ways to meet them.
I wish you a rewarding read,

Like any transformation, improving your HR

Hans Jansen
Department’s performance is not something you can
Vice President, Multinational Sales
improvise, especially in troubled times. As you will
ADP Employer Services International
read, the percentage of companies that declare they
are in a transformation stage may be declining slightly
compared with prior years, but their level of maturity
has clearly risen. Internal reengineering of processes is
now a significant part of the transformation strategy,
and companies progressively anticipate better the time
required for change and what outcomes to expect
from their transformation.

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ABOUT THE SURVEY

This year’s survey – our sixth annual edition – examines trends in human resources (HR) transformation
practices (which we define as any concerted effort to change and improve HR operations, whether through
outsourcing, shared services, internal reengineering, or a combination of these strategies) in organisations around
the globe. The 2009 report provides insights into market trends and changes, particularly in light of the recent
global economic situation, and offers perspective on future plans.

In addition to discussing transformation status and strategy, our report addresses:

• Reasons organisations transform, and the barriers that limit their transformation
• Transformation timing, cost and satisfaction
• Impact of recent global economic changes on transformation plans
• Engagement of external resources and experience
• Current and future transformation scope
• HR outsourcing and shared services strategy, budget and provider selection

The survey received responses from 188 executives around the globe in varying stages of HR transformation. For
a full breakdown of respondent demographics, please visit the “About the Survey Participants” section of the
report.

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EXECUTIVE SUMMARY
HR transformation continues to be a significant
phenomenon, although down from last year
Whilst 81 percent of respondents say they are/have/
plan to transform HR, 2009 was the first time in four
years that we saw a decline in respondents saying they
are transforming HR. This year, only in the mid-market
companies did we see an increase in the number that
expect to transform HR.
Cost was a main factor for those organisations
not planning to transform HR, a significant
difference from last year
For those respondents with no plans to transform HR,
satisfaction with the current organisation and/or
solution remains the top reason not to make a change.
However, cost, which no one cited last year, is the
number two reason this year, with 40 percent of those
who are not transforming HR citing it as a main
reason. Additionally, we saw a near doubling in the
percentage of respondents who say HR simply isn’t
enough of a priority to merit a transformation effort.
HR transformation response to the recent
economic downturn is mixed
There is no real commonality of response as to how
the recent global economic downturn has impacted
HR transformation efforts; the highest percentage
indicate there has been no impact, but nearly as many
say they have accelerated their efforts. Generally it's
larger organisations that are accelerating their efforts
in response to the downturn.
Organisations most often employ a hybrid
approach to HR transformation, although that
strategy saw a decline in 2009
A hybrid approach of internal reengineering, shared
services and outsourcing remains the most common
HR transformation strategy, although both it and a
predominant shared services strategy declined, whilst
internal reengineering increased.
Global HR Transformation 2009
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Although it remains the least likely strategy,
outsourcing has experienced a near double increase
between 2008 and 2009, from 7 to 12 percent, and is a
more common strategy amongst mid-sized than in
larger or smaller organisations.
Cost reduction/management leads the reasons
why organisations transform
The top reasons companies transform have remained
virtually unchanged over the past several years,
although they regularly change order. Cost topped the
2009 list, up from number three in 2008. Other top
reasons freeing internal HR staff to focus on strategic
issues, and to add or improve service for line
managers and employees.
Hurdles to HR transformation remain
unchanged over six years of research
In the six years we’ve been conducting this research,
the main hurdles to HR transformation have remained
unchanged. Skills of existing HR staff has been at the
top of the list from the start; internal bureaucracy, lack
of adequate technology, and underestimation of
resources required have rounded out the top four.
This year, however, did see a reversal of a trend that
we’ve noted in the past couple of years; it appears for
the first time this year that hurdles may be declining.
HR transformation most often takes three
years and generates cost saving in the 25
percent range
HR transformation most often takes three years –
slightly longer than anticipated. At the same time,
transformation generally generates savings in the 25
percent range, which is only slightly less than
anticipated.
HR transformation efforts have the greatest impact on
organisational management issues – rather than
service, technology, or staff/manager job performance
improvement; they have less positive impact s in two
areas that organisations say are key reasons to
transform: reducing/managing cost and freeing internal
HR staff to focus on strategic issues.
HROA © 2009
EXECUTIVE SUMMARY
HR outsourcing saw an overall decline this year,
but an increase in pockets of respondents
Outsourcing of HR processes saw a slight overall
decline between 2008 and 2009, but results show
significant variations among specific groups. For
example, the smallest saw a decline in HR outsourcing
activity, whilst larger ones experienced a slight
increase.
Although American organisations are still more likely
than others to outsource, they indicated a significant
decline in outsourcing activity in 2009, whilst Asia
Pacific organisations indicated a significant increase.
HR outsourcing, as always, is focused on
transactional processes
The 2009 data continue a trend we’ve found since we
started this research: transactional HR processes –
payroll, benefits administration, HRIS – are most likely
to outsourced, whilst strategic processes –
performance appraisal, employee communications,
career & succession planning – are least likely.
Top provider selection criteria remain
unchanged through industry change and growth
The top four provider selection criteria have remained
unchanged since 2006, although they have changed
order. In 2009, the top provider selection criterion
was functional coverage and expertise, followed by
proven ability to meet service levels, price, multi-
country capabilities, and specialisation in relevant
functions.
Many organisations are continuing to “go it
alone” when it comes to making outsourcing
decisions, although they are collecting more
information
An increasing number of respondents say they develop
and use their own process to identify and select their
provider(s).
The use of RFIs appears to be on the rise, whilst the
issuing of RFPs remains common.
Global HR Transformation 2009
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HR outsourcing annual budgets are most often
less than US$1M; many say they anticipate
increases, but that number has declined
Respondents most often budget less than US$1M
annually for HR outsourcing. The highest percentage
of respondents say they anticipate increasing their HR
outsourcing budget; however, that percentage has
dropped from 55 percent in 2008. At the same time,
many fewer say they plan to decrease their HR
outsourcing budget.
Shared services continues to be comparatively
uncommon
Shared services continues to be uncommon, although
not in quite the decline we saw in 2008. Whilst we
noted a decline in shared services in 2008 – and
posited whether it was a trend in the making – it
appears to have been an anomaly. This year we see a
mix of growth and decline across HR processes
managed through shared services.
Like outsourcing, transactional services are more likely
to be managed through shared services than are
strategic processes.
Use of shared services varies by size and
location
Across most processes, the largest organisations are
less likely to be managing individual HR processes
through shared services, but the most likely to be
managing the entire HR function through shared
services.
HR is a local business
HR processes are most often managed locally, versus
regionally or globally, a finding that cuts across size and
geography.
Most organisations maintain a common HRIS
The vast majority of organisations have common HRIS,
generally managed at the domestic level.
HROA © 2009
RESEARCH FINDINGS

HR TRANSFORMATION STATUS
WHO is transforming HR

headlines

Whilst HR transformation continues to be a significant phenomenon – 81 percent of respondents say they

are/have/plan to transform HR – 2009 was the first time in four years that we had a decline in respondents
saying they are transforming HR.

The sole group that saw an increase in HR transformation in 2009 was organisations between US$1B and
US$10B.

Across all regions respondents indicated a decrease in likelihood to transform HR; EMEA experienced the
greatest decline, with 17 percent saying they have no plans to transform, versus 7 percent in 2008.

40 percent of respondents who have no plans to transform HR cite cost as a main reason – significant
because no respondents cited it in 2008.

findings

A considerable percentage – 81percent – of
respondents have transformed, are in the midst of
transforming, or have completed HR transformation.
Whilst still significant, that number has dropped for
the first time in four years, down from a high of 90
percent in 2008.
organisations As we’ve found in the past,
transforming HR
companies of less than
US$1B are considerably less
81% likely to be transforming HR
than are larger organisations,
and this year that finding was even more notable with
a full quarter of the smallest companies saying they
have no plans to transform HR. (Although it must be
noted that three-quarters planning to transform HR is
still a sizeable number.)
Companies between US$1B and US$10B are the only
group whose HR transformation participation is
growing, with 95 percent saying they’re transforming
HR versus 91 percent in 2008.
Companies based in the Asia Pacific region are less
likely to be transforming HR than those in EMEA or
the Americas, a finding that has been steady across all
years of our research. At the same time, EMEA
experienced the greatest decline in HR transformation,
with 17 percent saying they do not intend to
transform versus 7 percent in 2008.
Although we have both more Asia Pacific respondents
and more smaller companies in our 2009 respondent
pool than in the past, we find this trend still holds, as
both the smallest and largest organisations are a bit
less likely to be transforming, and all geographies
report less likelihood to transform HR.
For those respondents with no plans to transform HR,
satisfaction with the current organisation and/or
solution remains the top reason not to make a change,
a reason cited by over half of respondents this year.
However, significantly, cost, which not one single
respondent cited last year, is the number two reason
this year, with 40 percent of those who are not
transforming HR citing it as a main reason.
Another significant change is a near doubling in the
percentage of respondents who say HR simply isn’t
enough of a priority to merit a transformation effort –
up to 29 percent this year versus 15 percent in 2008.

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RESEARCH FINDINGS

Figure 1:
where organisations are in their transformation process, by region

Figure 2:
while still prevalent, HR transformation has declined across most groups

less than US$1B – more than

year all
US$1B US$10B US$10B
2008
% transforming HR
90% 81% 91% 95%
2009
% transforming HR
81% 74% 95% 93%

respondents with no plans to respondents with no plans to transform

transform who say cost was a who say HR’s low priority was a major
major factor in that decision factor in that decision

2008
0% 2008
15%
2009
40% 2009
29%

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RESEARCH FINDINGS

HR TRANSFORMATION STATUS
WHERE organisations are in HR transformation

headlines

Respondents have experience in HR transformation; over 70 percent have been transforming HR for more
than a year.

findings

The highest percentage of respondents (34 percent) Respondents from EMEA have a bit organisations with
have been transforming HR for one to two years, and more experience than their counter- more than 1 year
70 percent have been transforming HR for a year or parts in HR transformation; 80 percent of experience
transforming HR
more. Not surprisingly, generally the larger the of them report launching their HR
company, the longer they have been transforming HR. transformation programs more than a
year ago.
71%
IMPACT of the economic downturn on HR transformation

headlines

There is no real commonality of response as to how the recent global economic downturn has impacted
HR transformation efforts; the highest percentage indicate there has been no impact, but nearly as many say
they have accelerated their efforts.

findings

There is a mix of response concerning the impact of
the recent economic downturn on HR transformation
efforts. The highest percentage (42 percent) say there
has been no impact to their efforts; another 38
percent say they’ve accelerated their efforts as a result
of the downturn, and the remaining 20 percent say
they have decelerated their HR transformation efforts.
Company size has some bearing on this issue. Nearly
half (48 percent) of organisations under US$1B say the
economic downturn has not impacted their HR
transformation efforts. Only 22 percent say the
situation has caused them to accelerate their efforts;
about a third (30 percent) say they’ve actually
decelerated their efforts as a result of the downturn.
On the other hand, over half of all respondents in
organisations of US$1B and larger say the economic
downturn has caused them to accelerate their efforts.
Next most common is no impact, followed by a
limited number who say they have decelerated their
HR transformation efforts.
Asia Pacific organisations’ response varies from their
counterparts’; they are considerably more likely than
others to say that the economic downturn has caused
them to accelerate their HR transformation efforts (58
percent).

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RESEARCH FINDINGS

Figure 3: Figure 4:
organisations are experienced in HR transformation impact of the economic downturn on HR
transformation plans

Figure 5:
impact of the
economic downturn
on HR transformation
plans, by size

Figure 6:
impact of the
economic downturn
on HR transformation
plans, by region

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RESEARCH FINDINGS

HR TRANSFORMATION STATUS
HOW organisations are transforming HR
headlines

A hybrid approach of internal reengineering, shared services and outsourcing remains the most common HR
transformation strategy, although both it and a predominant shared services strategy declined, whilst
internal reengineering increased.

Whilst still the least likely strategy, outsourcing has experienced a near double increase between 2008 and
2009, from 7 percent to 12 percent.

Outsourcing as a predominant strategy is more common amongst respondents in the US$1B to US$10B
range than in larger or smaller organisations.

findings
The predominant strategy for transforming HR
remains a hybrid approach of internal reengineering,
shared services and outsourcing; however, the use of
that strategy saw a decline between 2008 and 2009
bringing it much closer to reengineering, the strategy
that saw the greatest increase. Shared services as the
main strategy saw the greatest decline, down to 20
percent from 30 percent citing it at a main strategy.
Outsourcing experienced a near double increase –
from 7 percent to 12 percent – although it remains
the least common predominant strategy.
Perhaps not surprisingly, the smallest organisations are
most likely to be transforming HR through reengineer-
ing and least likely to be using on outsourcing strategy.
Respondents in the US$1B to US$10B range are most
likely to be using a hybrid approach, but they are also
more likely to be focusing on outsourcing as their
predominant strategy than are either their smaller or
larger counterparts. Shared services is more common
amongst the largest respondents.
Strategies vary significantly by region. American
respondents are most often reengineering HR,
followed by employing a hybrid approach. They are
least likely to be making use of shared services.
European organisations, on the other hand, are most
commonly employing a shared services strategy,
followed by reengineering and hybrid approaches.
Finally, Asia Pacific companies are equally employing
hybrid and reengineering approaches. No one is
predominantly employing outsourcing.

WHY organisations transform

headlines

Cost reduction/management leads the reasons why organisations transform, up from number three in 2008.

Reasons companies transform has remained virtually unchanged over the past several years.

findings
The main reasons organisations transform HR have
remained fairly constant over the past several years,
although “to reduce or better manage” costs has
retaken the number one spot having dropped to
number three last year. (2008 may have been an
anomaly; cost savings was the top reason to transform
in 2007.) Other top reasons remain freeing internal
HR staff to focus on strategic issues, and to add or
improve service for line managers and employees.
Whilst there are slight variations based on size or
geography, none of them stands out as particularly
significant.

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RESEARCH FINDINGS

Figure 7:
how organisations transform HR

Figure 8:
changes in the shared
Year hybrid reengineering outsourcing
predominant HR services
transformation
2008
strategy year over % predominantly using
44% 19% 30% 7%
year
2009
% predominantly using
35% 33% 20% 12%

Figure 9:
why organisations transform HR

To access external sources of talent, expertise or technology

To facilitate reporting

To benefit from a new technology to empower line managers

To concentrate resources on core business

To align the organisation on common objectives

To respond to organisational changes

To add and/or improve service for line managers and employees

To free internal HR staff to focus on strategic issues

To reduce cost or better manage the cost of internal processes

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RESEARCH FINDINGS
HR TRANSFORMATION STATUS
WHERE HR is centralised
headlines

Centralisation is split relatively evenly amongst the domestic, regional and global levels, although where HR
is centralised depends upon company location and size.
findings
Where respondents centralise HR is a nearly equal
split amongst domestic, regional and global, with a very
slight edge for domestic.
Size does appear to have some impact where an
organisation centralises HR, at least to some extent.
The smallest companies are most likely to centralise at
the domestic level, companies of US$1B to US$10B
HURDLES to HR transformation
headlines

Over the six years of research on this topic, skills of existing HR staff has remained the top hurdle to HR
transformation.

In 2009, almost all hurdles declined, reversing a trend of the last couple of years.
findings
Over the six years we’ve been conducting this
research, the main hurdles to HR transformation have
remained unchanged. Skills of existing HR staff has
remained at the top of the list from the start; internal
bureaucracy, lack of adequate technology, and
underestimation of resources required have rounded
out the top four.
This year, however, did see a reversal of a trend that
we’ve noted in the past couple of years; it appears for
the first time this year that hurdles may be declining.
Last year we noted that 7 of the 10 identified hurdles
received higher responses between 2006 and 2008.
This year, all but one (opposition from worker’s
Global HR Transformation 2009
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are most likely to centralise at the global level, and the
largest companies are most like to centralise at the
regional level.
The Asia Pacific region presents the only notable
geographic difference in centralisation of HR. Asia
Pacific respondents are equally likely to centralise HR
domestically or globally – 43 percent for each – but
unlikely to centralise regionally.
councils – and that had only a very slight increase)
experienced a decrease. That is, fewer respondents
noted almost every hurdle this year versus what they
noted in prior years. This change is driven in part by
respondent demographics. This year we had more
Asia Pacific respondents, and those respondents
selected hurdles in much lower numbers than in 2008.
Regardless of how long an organisation has been
involved in HR transformation, all say skills of existing
HR staff is the top hurdle. Those companies that are
earlier in their transformation next most often note
internal bureaucracy, whilst those with more
experience next most often cite an underestimation of
resources needed.
HROA © 2009
RESEARCH FINDINGS

Figure 10: Figure 11:

HR centralisation HR centralisation, by region

Figure 12:
HR centralisation, by size

domestic level
regional level
global level

Figure 13:
hurdles to HR transformation

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RESEARCH FINDINGS

HR TRANSFORMATION OUTCOMES
TIME and SAVINGS

headlines

HR transformation most often takes three years – slightly longer than anticipated.

HR transformation generally generates savings in the 25 percent range, which is only slightly less than
anticipated.

findings

As we’ve found in the past, HR transformation takes Similar to time to transform

slightly longer than anticipated to achieve – but only results, organisations often miss
slightly longer. Across all respondents, those their cost savings results, but
responsible for transforming HR expect to take in the generally by a slim margin. On
average number of
range of just under two years, but actually take three. average, expected savings are in years to transform
Half of all respondents met their transformation timing the 24 percent range, and actual
expectations, but nearly half (45 percent) took longer
than anticipated; the remaining 5 percent are beating
are just under that. However,
across all respondents, whilst over
3
their expectations. half (57 percent) say they met
expectations, nearly a quarter (24
The most common reasons respondents cite for taking
percent) fell below expectations,
longer than anticipated to achieve HR transformation
and the remaining 19 percent met
include:
expectations.
• Resistance to change and lack up support
internally Among those who exceeded
• The cost of transformation and funding expectations, 80 percent set goals average cost
constraints at 25 percent or less; among those savings
• Lack of upper management support and decision-

•
making
The impact of the economic downturn
whose results fell below
expectations, 45 percent 25%
• Execution problems established goals of 26 percent or
more.

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RESEARCH FINDINGS

Figure 14:
actual versus expected time to transform

Figure 15: Figure 16:

accuracy in estimating time to transform accuracy in estimating cost savings

Figure 17:
actual versus expected cost savings

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RESEARCH FINDINGS

HR TRANSFORMATION OUTCOMES
OUTCOMES versus expectations

headlines

HR transformation efforts have the greatest impact on organisational management issues – rather than
service, technology, or staff/manager job performance improvement.

HR transformation efforts most often fail to meet expectations in two areas that organisations say are key
reasons to transform: reducing/managing cost and freeing internal HR staff to focus on strategic issues.

findings

Respondents report the best results from their HR At the same time, HR transformation performs worst
transformation efforts in organisational management in a couple of the areas earlier identified as main
areas: improving response to organisational change, reasons to transform, namely reducing/managing costs
aligning the organisation around common objectives, and freeing internal HR staff to focus on strategic
and concentrating resources on core business issues. issues. In those areas, 34 percent and 41 percent,
In each of those areas respectively, say performance has fallen below
best results in HR transformation:
three-quarters or more expectations.
of respondents say
organisational performance has met or
exceeded their
Organisations also note that HR transformation often
fails to meet expectations in benefiting from or

management expectations.
accessing technology, talent and expertise.

worst results in HR transformation:

freeing HR staff
to focus on
strategic issues

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RESEARCH FINDINGS

Figure 18:
transformation efforts versus initial expectations

To access external sources of talent, expertise or

technology

To facilitate reporting

To benefit from a new technology to empower

line managers

To concentrate resources on core business

To align the organisation on common objectives

To respond to organisational changes

To add and/or improve service for line managers

and employees

To free internal HR staff to focus on strategic issues

To reduce cost or better manage the cost of

internal processes

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RESEARCH FINDINGS

OUTSOURCING AND SHARED SERVICES

OUTSOURCING practices

headlines

Outsourcing of HR processes saw a slight overall decline between 2008 and 2009, but results show
significant variations when viewing response broken down by both respondent size and geographic region.

♦ Smaller organisations saw a decline in HR outsourcing activity, whilst larger ones experienced a
slight increase.

♦ Whilst still most likely to outsource, American respondents indicated a significant decline in
outsourcing activity, whilst Asia Pacific organisations indicated a significant increase.

The trend to focus HR outsourcing on transactional versus strategic processes continues unabated.

findings

Just under 60 percent of all respondents currently
outsource or plan to outsource HR processes, down
slightly from 65 percent in our 2008 research. The
smallest organisations, those under US$1B, are least
likely to be outsourcing HR processes – just under half
say they currently do or plan to. Respondents from
the Americas (64 percent) are more likely than their
counterparts in EMEA and Asia Pacific (56 percent for
each) to outsource HR processes.
Whilst we saw an overall decline between 2008 and
2009 in organisations that say they are outsourcing,
breakdowns by size and geography reveal a more
dynamic situation. For example, the overall decline is
actually driven by smaller organisation; not only are
they the least likely to outsource HR processes,
organisations under US$1B also are the only ones to
indicate a decline in outsourcing activity. In fact, that
decline is fairly dramatic, from 64 percent in 2008
indicating they were or planned to outsource to 49
percent in 2009. Respondents larger than US$1B
indicated an increase in the same response from 70
percent to 75 percent.

A geographic breakdown of response provides an

equally contrasting result. Whilst respondents from
the Americas continue to be more likely to outsource
than their counterparts in other regions, the
percentage of American respondents who say they are
outsourcing or plan to outsource HR processes
declined by nearly 20 points between 2008 and 2009,
from 83 percent to 64 percent. At the same time, Asia
Pacific respondents outsourcing of HR processes
increased by an even greater amount, rising from 33
percent in 2008 to 56 percent in 2009. EMEA
respondents noted a slight decline from 60 percent to
56 percent.

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RESEARCH FINDINGS

Figure 19:
HR outsourcing declining overall, but ...

year all

2008
% outsourcing HR 65%
processes

2009
% outsourcing HR 59%
processes

Figure 20:
increasing at larger organisations, declining at smaller

less than US$1B – more than

year
US$1B US$10B US$10B
2008
% outsourcing HR 64% 74% 65%
processes

2009
% outsourcing HR 49% 80% 67%
processes

Figure 21:
and varied by region

year americas asia pacific emea

2008
% outsourcing HR 83% 33% 60%
processes

2009
% outsourcing HR 64% 56% 56%
processes

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RESEARCH FINDINGS

OUTSOURCING AND SHARED SERVICES

OUTSOURCING practices, continued

Findings, continued

The 2009 data continue a trend we’ve found since we
started this research: transactional HR processes –
payroll, benefits administration, HRIS – are most likely
to outsourced, whilst strategic processes – perform-
ance appraisal, employee communications, career &
succession planning – are least likely.
Variance among respondents based on organisational
size is limited – regardless of size, companies generally
follow the trend noted earlier. Notable variations
include:
• The largest respondents (greater than US$10B)
are less likely to outsource HRIS than are their
smaller counterparts and more likely to outsource
stock option administration.
• The smallest respondents are less likely to
outsource expatriate and relocation.
Variations based on geography:
• American respondents more often outsource
leave than do their counterparts elsewhere, whilst
EMEA respondents are comparatively unlikely to
outsource leave. Asia Pacific respondents fall
between the two.
• Asia Pacific organisations are less likely to
outsource HRIS than their counterparts in other
geographies, and more likely to outsource training
& development.
• American respondents indicate that it is less
common for them to outsource recruitment
those in other regions.

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RESEARCH FINDINGS

Figure 22:
HR outsourcing practices by process

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RESEARCH FINDINGS

OUTSOURCING AND SHARED SERVICES

SELECTING a provider

headlines

In 2009, the top provider selection criterion was functional coverage and expertise.

The top four selection criteria have remained unchanged since 2006, although they have changed order.

An increasing number of respondents say they develop and use their own process to identify and select
their provider(s).

Larger companies are more likely to engage a consultant/sourcing advisor, up to 65 percent in 2009 versus
50 percent in 2008.

The use of RFIs appears to be on the rise, whilst the issuing of RFPs remains common.

findings

internal and external resources RFIs and RFPs

An increasing number of respondents say they develop
and use their own process to identify and select their
provider(s), up to 87 percent from 70 percent in 2008.
As more organisations engage in outsourcing and
outsource fewer processes at one time, this number is
likely to rise. The smallest companies are somewhat
more likely to use their own processes than are their
larger counterparts; 92 percent of these smallest
organisations say they develop their own processes,
versus 82 percent of larger ones.
Asia Pacific respondents, likewise, more often develop
their own processes than do their counterparts in
other geographies.
Just over half (51 percent) of organisations say they
engage a consultant or sourcing advisor, virtually
unchanged from last year’s 49 percent. Larger
companies more often engage consultants; 67 percent
of organisations of more than US$1B in revenue say
they engage consultants/advisors versus 56 percent for
US$1B - US$10B organisations, and 38 percent of
those with less than US$1B. Fewer than a fifth of Asia
Pacific organisations engage consultants/advisors,
making them more than three times less likely to do
so than their counterparts in EMEA and the Americas.
It appears that organisations are increasingly issuing
requests for information (RFIs), up from about half in
2008 to 65 percent in 2009. The largest companies
outpace smaller organisations in their likelihood to
issue an RFI at nearly 80 percent versus closer to 60
percent for organisations of US$10B or less. Again
here, Asia Pacific organisations are considerably less
likely to issue RFIs than their counterparts in other
regions.
The issuing of requests for proposals (RFPs) is more
common than RFI requests (as it has been over the
past several years) at 76 percent overall, only slightly
increased from 2008’s 73 percent. As with RFIs, the
largest companies, at 84 percent, are more likely than
smaller organisations to issue an RFP. Asia Pacific
organisations are somewhat less likely than their peers
to issue an RFP, but at 67 percent, this number doesn’t
vary as much as it does for RFIs.
provider selection criteria
The top several provider selection criteria have
remained unchanged over the time we’ve been
conducting this research, although they have regularly
swapped places among the top three or four spots.
Functional coverage and expertise is the top criterion
in 2009, up from number three in 2008, and proven

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RESEARCH FINDINGS

ability to meet service levels is number two this year,
up from number three last year. Price holds the third
spot this year – 2008 appears to have been a bit of an
anomaly, when price jumped from the number three
spot up to number one for the first time – and multi-
country capabilities and specialisation in relevant
functions round out the top five.
All respondents, regardless of size, include the same
two criteria in the top two spots. Smaller and mid-
sized organisations generally rank the same criteria
among the top five as the overall rankings above. The
smallest companies (less than US$1B), not surprisingly,
rank multi-country capabilities lower than their larger
counterparts.
The largest organisations’ criteria vary a bit more.
Whilst the top two match the overall choices,
references and reputation rank much higher with this
group, in third place; flexible contract terms and
financial viability round out the top five for that group.
Again, all respondents regardless of location, rank the
top two criteria in the top two spots. Whilst EMEA
and the Americas companies generally don’t vary
significantly from the overall rankings, Asia Pacific rank
flexible contract terms number three, and multi-
country capabilities lower than their counterparts, at
number 12.

Figure 23:
provider selection criteria ranking

CRITERION 2009 2008 2007 2006

Functional coverage and expertise 1 3 2 1

Proven ability to meet service levels 2 4 1 2

Price 3 1 3 4

Multi-country capabilities 4 2 4 3

Specialisation relevant functions 5 8 7 7

References/reputation 6 5 5 6

Guaranteed cost savings 7 7 6 5

Cultural match 8 12 8 9

Financial viability 9 6 9 12

Flexible contract terms 10 9 10 8

Existing relationship 11 10 14 13

Unique provider (consulting, implementation, processing) 12 14 13 10

One stop shop (functions other than HR) 14 13 11 14

Size and market position 13 11 12 11

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RESEARCH FINDINGS

OUTSOURCING AND SHARED SERVICES

BUDGETING for HR outsourcing

headlines

Respondents most often (38 percent) budget less than US$1M annually for HR outsourcing.

The highest percentage of respondents (42 percent) say they anticipate increasing their HR outsourcing
budget; however, that percentage has dropped from 55 percent in 2008. At the same time, many fewer say
they plan to decrease their HR outsourcing budget.

The largest organisations are more likely than their counterparts to be decreasing HRO budgets

Asia Pacific respondents are most likely to increase budgets, Americans to decrease, and EMEA respondents
to remain unchanged.

findings

Respondents most often (38 percent) budget less than
US$1M annually for HR outsourcing, followed by
US$1M – US$10M at 35 percent. Nearly 90 percent of
respondents budget US$20M or less on HR
outsourcing.
Compared with 2008, there is a higher percentage of
respondents budgeting less than US$1M; however,
nearly the same percentage is budgeting less than
US$10M in 2009 as in 2008.
As has been the true for the entire time we have
undertaken this research, in 2009 the highest
percentage of respondents (42 percent) say they are
likely to increase their HR outsourcing budgets over
the next several years; however, that percentage has
decreased by more than 10 points since last year. A
significantly smaller portion than in prior years say
they plan to decrease their HR outsourcing budgets
over the next several years. The percentage of those
who say their HR outsourcing budget will remain the
same – 41 percent – has grown the most, by more
than three times since last year.
As we noted last year, the numbers above indicate a
disconnect between what people say they expect to
do and what they actually do. Despite the fact that the
largest percentage of respondents say they anticipate
increasing their HR outsourcing budget, actual budgets
do not appear to have increased over time.
Only the largest respondents (those with more than
US$10M in revenues) vary from the general profile
above. About the same percentage of those largest
organisations expect to increase their HR outsourcing
budget. However, a smaller percentage than overall –
29 percent versus 41 percent – anticipate their
budgets staying the same, and a larger percentage – 24
percent versus 16 percent – intend to decrease their
budgets.
In terms of geographical perspective, Asia Pacific
organisations are more likely than their counterparts
to plan to increase their HR outsourcing budgets, and
none indicate that they expect to decrease those
budgets. American respondents are more likely than
their counterparts to expect to decrease their
budgets, whilst EMEA companies more often say they
plan no change than do their counterparts in other
regions.

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RESEARCH FINDINGS

Figure 24:
HR outsourcing annual budgets

Figure 25:
HR outsourcing annual budgets, 2008 and 2009

Figure 26:
Changes in annual HR outsourcing annual budgets

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RESEARCH FINDINGS

OUTSOURCING AND SHARED SERVICES

SHARED services

headlines

Shared services continues to comparatively uncommon.

Whilst we noted a decline in shared services in 2008 – and posited whether it was a trend in the making – it
appears to have been an anomaly. This year we see a mix of growth and decline across HR processes
managed through shared services.

findings

Shared services continues to be comparatively clear correlation between increase/decrease and type
uncommon; there are only two processes – HRIS (54 of process; in other words, transactional processes
percent) and payroll (52 percent) – which more than were as likely to increase as decrease.
half of respondents say they manage through shared
Across most processes, the largest organisations,
services. Like outsourcing, transactional services are
those with revenues of more than US$10B, are less
more likely to be managed through shared services
likely to be managing individual HR processes through
than are strategic processes. As a result, career &
shared services; however, they are the most likely
succession planning and assessment & performance
group to be managing the entire HR function through
appraisal, for example, are among the least likely to be
shared services. Mid-sized companies, US$1B –
managed through shared services.
US$10B, are generally more likely to manage HR
We noted last year that shared services had declined processes through shared services, particularly payroll
across the board, and we questioned whether this was and health & welfare benefits.
the beginning of a trend or simply and anomaly. Whilst
Across almost all processes, Asia Pacific respondents
it remains unclear whether shared services is truly on
are more likely to be managing processes through
the decline, it does not appear that shared services is
shared services than are their counterparts in other
on as significant a decline as the 2008 numbers seemed
geographies.
to indicate. Just about the same number of processes
showed increases as declines this year, and there is no

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RESEARCH FINDINGS

Figure 27:
HR shared services by process, 2007, 2008 and 2009

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RESEARCH FINDINGS

HR MANAGEMENT PRACTICES
CENTRALISATION of HR process management

headlines

HR processes are most often managed locally, versus regionally or globally, a finding that cuts across size
and geography.

findings

Across all respondents, all HR processes are more
likely to be managed locally than either regionally or
globally. Global management of processes, though
significantly less common than local, is next most
common. Leave, pensions administration, health &
welfare management, and recruitment are most likely
to be managed at the local level, whilst HRIS,
expatriate & relocation administration, stock options
administration are most likely to be managed globally.
Across all companies, regardless of size, local
centralisation of HR is still most common. However,
not surprisingly, the largest companies are more likely
than others to centralise globally, whilst the smallest
centralise locally more often than do their larger
counterparts.
There is limited difference in management by
geography compared to the overall numbers.

COMMON hris

headlines

The vast majority of organisations have common HRIS, generally managed at the domestic level.

findings

80 percent of organisations have a common HR
information system (HRIS), whether it is centralised at
a domestic, regional or global level. Among those who
do have a common HRIS, most often respondents say
they manage it at the domestic level (38 percent),
followed by the global level. Only 11 percent say they
manage their HRIS at the regional level.
The largest organisations are considerably more likely
than their smaller counterparts to manage their HRIS
at a global level; however, almost a quarter say they do
not have a common HRIS. The smallest organisations
are more likely than others not to have a common
HRIS, but the highest percentage of the smallest
organisations (44 percent) manage their HRIS at a
domestic level. Mid-sized companies (US$1B –
US$10B) are the most likely to have a common HRIS,
at 95 percent; 41 percent say they manage that HRIS
at a domestic level.
EMEA respondents are less likely than their
counterparts to have a common HRIS – 29 percent
say they do not. That said, all respondents, regardless
of geographic location, follow the same pattern, most
commonly managing their HRIS at a domestic level,
followed by a global level.

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RESEARCH FINDINGS

Figure 28:
geographic management of HR processes

Figure 29:
HRIS and HRIS centralisation

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 ABOUT THE SURVEY PARTICIPANTS

Figure 30:
total survey respondents

188

Figure 31: Figure 32:

headquarters location breadth of operation

Figure 33: Figure 34:

revenue (US$) number of employees

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ABOUT THE SURVEY PARTICIPANTS

Figure 35:
industry
INDUSTRY % INDUSTRY, cont. %
Consulting / Business Services 15% Media 3%

Technology, IT, Electronics 15% Transportation 3%

Manufacturing 13% Education 3%

Finance, Insurance & Real Estate 11% Hotels, Restaurants, Catering 2%

Health Care / Pharmaceuticals 6% Oil & Gas 2%

Public Administration 6% Construction 2%

Other Services 5% Other 2%

Mining & Utilities 4% Consumer Goods 1%

Retail & Wholesale Trade 4% Food & Beverage 1%

Telecommunications 4%

Figure 36:
function

Figure 37:
title

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ABOUT THE SPONSORS

ADP

Who We Are
Automatic Data Processing, Inc. (Nasdaq: ADP), with
nearly $9 billion in revenue and over 585,000 clients, is
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What We Do
ADP Employer Services, part of ADP, Inc., serves
clients in more than 50 countries worldwide. As a
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More Information
Additional information on ADP at: www.adp.com

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ABOUT THE SPONSORS

HROA

Who We Are
The HROA is the definitive independent organization
for those who purchase, provide, or participate in HR
transformation, shared services, and outsourcing. Our
membership encompasses over 7,500 HR executives,
including the largest 50 buyers, the top 30 providers,
the leading sourcing advisors and attorneys, and HR
Transformation thought leaders.

What We Do
Events and Networking
The HROA produces a variety of strategic, highly
interactive conferences and webinars for executives,
managers and practitioners in the HR transformation,
shared services and process outsourcing communities.

Research & Standards

As the only independent organization representing all
participants in the industry, the HROA acts to
improve the practice of HR Transformation by
overseeing and accelerating the development and
adoption of effective industry standards and practices.
As part of this process, the HROA gathers broad-
based input from across the industry and works to
develop lasting industry consensus and to arrive at
conclusions that balance the various commercial
interests of all participants.

More Information
For additional information about the HROA or to join,
visit www.hroa.org or contact Adam Bleifeld at
info@hroa.org or at +1 202 905 0351.

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