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Outsourcing rings changes for HR

HR outsourcing is changing as businesses are shifting from looking merely for transactional processes such as payroll to added-value multiple HR services that support the strategic transformation of their businesses. ICT business, KPN, takes HR outsourcing to a new level to deliver significant business benefits. Laurence Collins, HRO Proposition and Solutions Director at Logica UK, summarises.

The tough economic conditions have meant organisations need to both reduce their overheads and improve the return on investment from their people practices. Consequently, transforming the underlying capability of HR is becoming a priority for businesses who want to have more flexibility, stronger analytical insight, greater employee engagement and be better equipped to make the most of strategic opportunities. Organisations such as KPN are leading the way in ensuring they have an HR service that will meet employees and business needs. KPN provides fixed and mobile telephony, internet, TV and data traffic/management, and the management of ICT services to more than 38 million customers across the Netherlands, Germany and Belgium.

Post 2001, the company had taken tough restructuring measures such as a simpler portfolio, reduced workforce and tighter cost control strategy to recover their top position in the Dutch telecommunications industry. The organisation previously had 13 sites nationwide. Every site represented a district. Although each district used the same payroll system – SalReg, KPN’s proprietary system – the administration methods differed at every site. They decided to centralise disparate administrative processes for the payroll system and set up a HR Shared Service Centre.

This move meant they had automated administrative HR processes (self-service tools for employees and managers), drastically reduced staff count and lower accommodation costs. In 2006, KPN began to look at the tangible benefits that outsourcing might bring to the organisation to help maintain continuity and quality of service. Every minute that employees spent on tedious tasks was a cost that could be saved. They decided to outsource as many non-core HR processes as possible. KPN handed over technical management of their HR and payroll systems to Logica. The selection process was extensive, with dozens of conditions that had to be answered by the prospective service provider.

KPN also quickly realised that by outsourcing the whole package of HR processes, they could achieve a lot more. It provided KPN with more flexible manpower to dedicate to personnel administration. At a time when departmental budgets across the business were under scrutiny, it also enabled KPN to exercise greater control over their HR ICT costs and provided them with a greatly reduced and more flexible HR budget. There were further cost reductions through being able to make shorter and faster processes controllable from the revised budget. KPN’s shared services centre was already a well-run outfit. Logica proposed a joint approach in a multi-client environment. Logica took over the HR call centre and supporting information systems and now provide personnel and payroll administration for approximately 13,000 employees.

This means that every facet of human resource management, personnel and payroll administration is taken care of. From advice and implementation to pay slip generation and assistance from expert HR advisers, payroll administrators and HR service centre employees. Increasingly, we are seeing companies across Europe looking to harness their HR function as a strategic asset. In many cases the very ethos of the business itself is controlled through HR, ensuring that talent is retained and employees remain engaged. Flexibility is key to enabling this and allowing the organisation to respond quickly and effectively to the change. More importantly a large and inflexible HR function can be operating inefficiently, which in turn will impact negatively on the operating cost base. At a time when budgets across the business are being squeezed, KPN was looking for a streamlined HR function that does not expose them to spiralling costs and unrealistic commitments.

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