Outsourcing HR services? Ask vendors about their robotic process automation capabilities

Posted by Dave Smith on July 13, 2017.

If your organization outsources some of its HR services—or is planning to—you’ll likely have a set of criteria for evaluating vendors. While there are many important factors to consider, a vendor’s current or planned use of robotic process automation (RPA) is a newer and increasingly important criterion that should not be overlooked. RPA’s ability to drive efficiencies, reduce costs, free resources, and support overall HR sustainability make it a key capability. You should expect your vendor to be using RPA and understand how you can benefit from it.

Understanding RPA
Having a clearer understanding of robotics can help you fit RPA into your overall outsourcing strategy. The “robot” in robotic process automation doesn’t refer to a machine, but rather to a type of easy-to-configure software, akin to a macro, that works across functions, applications, and platforms to process structured and unstructured data. RPA is used to perform repetitive or rules-based transactional tasks that would otherwise have to be performed by people. The demonstrated advantages can be seen in faster processing times, higher volumes, and reduced errors, which have the potential to drastically improve HR Shared Services (HRSS) cost, quality, and efficiency, while freeing people to take on higher-level, value-added activities.

As this graphic shows, RPA can be used in a variety of ways in an HR operational environment.

Potential RPA Applications in HR

Source: Deloitte Consulting LLP

Evaluating vendors
Vendors’ current and planned use of RPA is a factor in all phases of the outsourcing relationship, especially when selecting new administrative partners or when renewing service contracts.

  • Vendor selection. It’s been typical for organizations to focus on the here and now when evaluating vendors: These are our requirements today. How can you fulfill them? At what price? But with RPA, which is evolving every day, a focus on today and tomorrow is warranted. Fulfilling the “how” and “at what price” should change if the vendor has a good, thorough robotics roadmap to follow.For example, a vendor roadmap may show that 10 percent of its processes are currently driven by robotics, with plans to increase that to 50 percent over the next 5 years. Your organization should understand how that roadmap is expected to unfold, and what kind of costs savings and performance gains you can expect from that. If the vendor is able to realize efficiencies as the roadmap is implemented, both parties should benefit: the vendor should be able to retain some of those savings to increase its margins, and the organization should realize lower costs as well. These then become negotiation points during the next phase, contracting.
  • Contracting. Where robotics are concerned, contract considerations and service level agreements (SLAs) should not be static, as robotics will likely have increasing impact over the course of the contract. Look to the vendor’s roadmap and how it plans to introduce robotics into the service delivery model and evolve it over time. Given that automating tasks that were previously manual should result in a lower rate of error, ask how that evolution is expected to drive cost efficiencies and improve performance metrics. What guarantees will the vendor offer regarding service levels and deployment of the stated roadmap?
  • Implementation. Process standardization and data integrity are critical factors for RPA success; bots do exactly what they’re told with the data they have to work with. So if there are gaps—poor data or conditions the bot didn’t expect—the bot could return wrong answers or stop working. As you transfer services, you should be prepared to revisit process exceptions, data shortfalls, and other service exceptions that may complicate or preclude the effective use of RPA. You and your vendor should work together to confirm that your data is very clean and your processes sufficiently standardized for automation.
  • Vendor management. Active and ongoing vendor management is essential: Are contractual obligations related to RPA deployment being met? Is performance improving as the roadmap is implemented? Are cost savings being realized and applied?

HR sustainability as the ultimate RPA value-add
We think of sustainable HR in terms of 4C’s—HR should be able to:

  • Create capacity, freeing up time by eliminating mundane repetitive tasks and enabling HR professionals and customers alike to focus on more value-added activities.
  • Grow capability in its own people and in its customers via a rich, curated, just-in-time learning environment.
  • Empower community, tapping into a variety of internal and external networks as sources for information, learning, and collaboration.
  • Boost credibility within the organization by consistently meeting its customers’ needs.

RPA has the potential to deliver on two of these critical fronts. If you can leverage robotics to drive efficiencies and transfer rote, clerical work to machines, both your organization and the outsourcing provider create capacity to address bigger business and workforce issues, and are able to boost credibility with their customers through consistent, accurate performance.

RPA’s potential can be felt both in outsourced and retained in-house HR Services. Not all HR services are candidates for outsourcing. In developing a service delivery model that includes third-party support, you should also look for opportunities to leverage robotics to increase efficiency in retained services and processes. For example (one of many), RPA may be applied in an accounting/budget reconciliation context to facilitate performance management-related increases or bonuses as part of overall compensation administration.

A critical competency
While RPA is just one of a dozen or more criteria typically used to assess and select an outsourcing vendor, it’s an increasingly important one. RPA’s fast evolution and potential to drive enormous change in how HR services are delivered make it a must-have competency for many organizations. Consider vendors that actively use RPA and have a robust roadmap for increasing its use in the future.

Dave Smith is a principal with Deloitte Consulting LLP and a leader in the HR Operating Excellence practice. He helps clients develop operating models with bottom-line impact, in sync with the business at every turn.

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