If you got married and wanted to change the beneficiary on the company-provided life insurance, you had to take a trip down the hall to the human resources department to make the switch. If you were getting divorced in a community property state, your attorney needed to know how much your 401(K) plan was worth because your spouse is going to get half. And, while you’re down at the HR office, you might check and see how much your stock options are worth today.
Until the arrival of the World Wide Web, the people at the HR office were the omniscient ones and the only ones who could answer even the simplest questions about you. Today, with the help of Web-based programs, there’s very little you can’t find out yourself about your company benefits as long as your Internet connection is live.
Employees are considered consumers of the human resources department these days. Exult, an HR Business Process Outsourcer (BPO) in Irvine, California, has defined 38 different life events that could happen to an employee and intends to make information surrounding each available through its Web portal, entitled myHR. “We’re trying to use software to allow employees to perform HR transactions themselves,” says Mark Hodges, vice president of strategy and marketing for Exult.
Exult’s portal will allow employees of its client companies to check on their accounts at 2 in the morning as well as 2 in the afternoon. In addition to convenience, the ease of use allows employers to offer more services than they could if the employer had to pay staffers to administer them. For example, if an employee had a new baby, the Web site could provide discounts and links to diaper services.
Outsourcing The Transactions
Large companies are turning to Exult to automate their HR functions. Its clients retain the important tasks of corporate strategy and policy and outsource to Exult the transactions and administration.
Money pressures are forcing HR departments into the arms of BPO providers. HR departments rarely receive a hefty portion of the company’s capital budget at a time when they are faced with three significant capital investment demands. Hodges claims they have three major capital investments facing them. The first is investment in bricks and mortar to construct a shared services center to handle the processing demands. Next, they have to purchase first tier software like SAP or PeopleSoft, always an expensive proposition. Finally, they’ll have to find the money to build their own Web portals.
Many can’t come up with the cash given today’s spartan budgets. “Many departments are being asked to do more with less,” observes Hodges. HR departments are forced to reengineer their processes just to keep up.
BPO alleviates the need to spend money in all three areas and frees HR executives from attempting a reengineering while they have their hands full with their day jobs. Few companies have the depth of resources to reengineer 18 different HR areas simultaneously to best practices, Hodges notes.
The “Super Helpdesk”
Exult divides its clients’ work between its two client services centers – an existing center in Houston and a planned facility in Glasgow, Scotland. These centers will handle processes like payroll, benefits and call center functions. The company plans to be able to process both SAP, PeopleSoft and Oracle platforms.
Exult is also building a center that focuses on HR metrics, best practices and market trends. Its staff will act as advisers to Exult’s clients. It could be likened to a “super helpdesk.”
Exult typically inherits some software when it signs a contract with a new client. It forms alliances with other providers, like Authoria, an export database company, or Fidelity, which has an easy-to-use 401(k) software program. It uses Unisys for its IT infrastructure partner.† But when it couldn’t find an existing software solution it needed for myHR, its programmers began the development themselves.
When a client outsources with Exult, the supplier creates a section of its portal for it. The employees visit the site, which features their company’s logo, and can personalize it any way they want to.
In addition, clients typically experience cost reductions. Exult is currently collecting data, but it assumes the 15 percent savings IT outsourcing produces may apply here, too. The numbers might be higher for multinational companies with HR departments in every country. BPO standardizes the corporation’s processes so there’s only one way to do things.
The future should yield even greater benefits. For the first time, a corporation will be able to have access to data that didn’t exist before. A company contemplating purchasing another can go into its database to see if it already has the skills on staff to accomplish the merger, for example.
Hodges underscores the fact that myHR will never remove the need for humans and their sage advice. “We intend to liberate HR from much of the mundane, transactional details they are currently performing,” says Hodges.
General Atlantic Partners, a venture capital firm in Greenwich, Connecticut, formed Exult in November 1998 after hearing from many of its customers that they needed BPO help. The firm couldn’t find a BPO outsourcer to buy so it started it own with an investment of $50 million. The new management of Exult christened the company exult because it was a real word that combines excellence and results.
Lessons from the Outsourcing Primer:
- HR departments are expected to do more with less because of budget cuts. BPO outsourcing allows them to use the most up-to-date tools with less capital investment.
- BPO standardizes processes. This can produce significant cost savings for multinational corporations with HR departments in several countries.
- A Web-based HR department allows employees to do many transactions at their convenience – in essence employee self-service.
- A Web-based HR department allows a company to offer more services at little extra cost.