HRO and the Talent Challenge

A changing landscape for HRO

In the years leading up to, and including, 2005 there was a bonanza of work available from companies seeking to shed selected HR functions in an effort to become leaner and more focused on core competencies. In the Asia-Pacific region (APAC), start-ups and established Multi National Companies (MNCs) alike scrambled to respond to this demand. In this heady environment, there was work enough to go round and employees were keen to be involved in the excitement of a growing industry. HRO providers were setting up shop in areas differentiated, by cost competitiveness and a plentiful supply of highly educated, multi-lingual employees. 

A few years ago, the primary mandate and challenge for HRO providers in APAC was to provide ways to ensure cost optimisation per HR transaction. Today, HRO providers have multiple challenges they must face to be successful. For example: CFOs, on both the provider and buyer side, are asking hard questions about whether the promised HRO financial gains are being achieved; across the industry, HR organisations are still spending 40% of their time on administration and; competition in APAC for the right resources to do HRO work is increasing. 

There have been many articles which look at the financial and strategic pressures on HRO, but little has been written about the increasing competition to attract and retain HRO talent. This article looks briefly at this challenge for the HRO industry. The article begins by elucidating why HRO providers must have key talent, who are able to effectively staff customer-facing functions such as HR advisory centres. Secondly, the article looks at some of the contributing factors in APAC to increasing competition for HRO staff. The article finishes by looking at the Hewitt Associates 2007 Best Employers data to see what lessons HRO providers can draw from APAC hotel chains to try to attract and retain the right talent which will enable them to provide excellent service to their clients.

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