The rise of cloud technologies and Software as a Service (SaaS) creates an opportunity for HR outsourcing businesses to deliver HR as a Service (HRaaS) to small and medium sized organisations (SMO).

The nature of small and medium sized organisations (SMO’s) is changing.
The use of freelancers, the growth of zero-hours contracts, and the creation of strategic networks where SMO’s tap into the expertise of other SMO’s as a way of creating a specific competitive advantage are all indicative of how SMO’s are increasingly needing to ‘do more for less’ and are looking to cut costs and drive efficiencies wherever they can.
SMO’s now have access to cutting edge hosted HR services (such as the PBS Cloud Service offered by my own company) at their disposal, which they can access through a web browser and a secure internet link.

As well as reducing the IT burden, they can use this Software as a Service (SaaS) to lower the cost of providing their HR administrative functions.

As I’ve written in previous posts, good outsourced HR providers can help SMO’s deliver their business strategy, and give them an infrastructure to enable them to undertake their HR administration efficiently and cost effectively.  Outsourced HR Business Partners offer their clients cloud and network based economies of scale. These economies of scale include HR shared services and access to knowledge networks.

For the ‘buyers’ of outsourced HR for SMO’s there is an opportunity to tap into professional HR services, reduce the cost of HR administration and take advantage of innovations such as cloud based HR SaaS.

In my view “the cloud” is a game changer. It has created a vehicle for outsourced HR providers to offer cost effective HR business partnering to small and medium sized organisations.   The cloud, along with the creation of flexible networks, is creating HR outsourcing business that allows clients to tap into real HR expertise, to manage transactional HR and monitor and control workforce performance in an extremely cost effective way.

These current changes are being driven by technology.  In recent years SaaS has grown substantially amongst small and medium sized organisations.  Products such as Office 365, Quickbooks Online, Citrix Share File, and Join.Me are being adopted by many small and medium sized organisations.  As a result of this, the way a business configures its processes is increasingly being designed around the SaaS it has chosen to employ.

One of the benefits of a SaaS solution is it creates standardised ways of working.  This prevents, at source, the creation of time consuming, non-value adding ‘fudges’ and workarounds that help generate mini industries around administrative tasks.  By moving to the SaaS solutions and following its rules and methods the organisation eliminate at a stroke the plethora of spreadsheets and other “Heath Robinson” administrative systems that so often descend in to time consuming chaos.

To give specific HR examples: holidays being monitored on spreadsheets; sickness absences being recorded in Outlook diaries or Google calendars; employee checks and due dates being managed via tasks in Outlook or Google. This is replaced by a simple integrated system operated from the desk top.  As a result, there is a definitive data source, the data is integrated, there is standardised method for collecting the information, and the business has the ability to cross reference and analyse all the data in the system.

The creation of HR systems which impose standardised administration may not be popular initially, but the use of cloud based HR systems require significantly less time and resource to deliver operational and transactional HR services and high quality employee information.

I am proposing a new offer “HR as a Service” (HRaaS). Cloud technology creates an opportunity for cost effective HR outsourcing.  The cloud based technology allows the simplification of HR administration, whist the networks of expertise and cloud based knowledge management systems combine to allow HR outsourcing businesses to offer standardised yet highly configurable HR support to small and medium sized organisations.

As a result of standardisation due to HRaaS, less HR administration is needed, allowing Managers to put more focus and resource into long term business planning. This will allow managers to spend more time considering how to attract, retain and motivate the people necessary to give the business a competitive advantage, and less on workforce monitoring and routine administration.

With HRaaS the focus of HR outsourcing will include the use of the HR Business Partners supporting the client in solving its business problems, as well as the elimination of employment law risk and the reduction of administrative costs.

This article has been posted by Sean McCann, the Managing Director of People Based Solutions an HR consultancy specialising in delivering outsourced HR solutions to small and medium sized businesses. If you would like to know more about how we can help you manage you transactional, operational and strategic HR systems, policies and procedures contact us at:

People Based HR