A major frustration between business units and their enterprise IT organizations is the issue of employee churn. The same issue affects relationships between enterprise IT and third-party service providers. Let’s look at how a company’s talent model affects whether the results of the IT work are consistent with the needs and desires of the business.
When you think of payroll, the last thing that probably comes to mind is “flexibility.” For longer than anyone reading this blog can remember, payday has come on the same day(s) of the month for most employees. This puts a significant portion of the global workforce in a bind; they live paycheck to paycheck, and find it difficult to make ends meet, pay down debt, and save money.
However, in today’s world of increasingly instant gratification, those days could be ending.
Enter “On-demand Payroll,” an emerging area within payroll that gives employees the freedom to decide how and when they want to get paid, and provides them some level of safety should an unexpected expense pop up that wasn’t on their radar.
Benefits for Workers
Increase in flexibility: One of the key benefits is that it enables employees to choose their pay schedules and stay on top of their finances or react to sudden expenses.
“Payrolling” the gig-economy: With the world moving towards the gig-economy, an on-demand payroll system has the potential to overcome the limitations of the current payroll process for contingent workers and freelancers.
Financial wellness: This will help workers better plan and budget their expenses, preventing them from running into cash flow problems. Additionally, it will help them stay away from predatory lenders and payday loan products that can lead to added fees and greater financial burdens.
Expedited payroll for unexpected situations: In cases of missed payroll deadlines or an employee’s unexpected departure, an on-demand payroll framework can eliminate any delay and proceed with the payment instantly.
All this results in better employee engagement and satisfaction, leading to an overall increase in the employee experience.
Employers will also benefit. Given the strong link between financial stress and employee health, on-demand payroll will result in reduced absenteeism and increased employee productivity and retention.
On-demand Payroll Solution Ecosystem
Payroll service providers and FinTech companies are developing capabilities to support enterprises’ desire to move to on-demand payroll. For example, there’s been a rise in financial wellness platforms that help employees budget, plan, and track their expenditures and savings. And digital wallets and pay cards can serve as alternatives to banks by acting as vehicles for direct deposit and allowing payments for purchases, and can facilitate faster payroll payouts.
Two Most Common On-demand Payroll Scenarios
Earned wage payments –The employee uses the on-demand payroll platform to request payment for hours/shifts worked, choosing to receive the payment in a wallet, on a pay card, or into a selected bank account. The deduction is calculated into the employee’s regular cycle payroll payment, whether it was for the full or partial amount. For this to work effectively and seamlessly, the enterprise needs to have an integrated system that can access all the relevant information needed for payroll processing, such as work hours data, tax related information, and employee data.
Advance payments – The employee asks for a salary advance (the maximum amount may be limited by company policies.) Although this scenario does not require a sophisticated and integrated system, enterprises must carefully track these transactions to make sure they’re properly accounted for, and to avoid running into cash flow issues.
Questions to Consider
Just like all other innovative approaches, on-demand payroll also comes with its fair share of challenges. So, here are several questions you should ponder before making the move.
Will there be an impact on my enterprise’s cash flows?
While employers may embrace a heightened role in their employees’ financial wellness, changes in pay schedules can mean disruption to cash flow management and forecasting, as well as added administrative burdens.
Will this impact tax calculations and payments to the government?
Due to the personalized nature of payments, employees may be withdrawing cash during non-standard financial cycles. Enterprises need to take into consideration whether it will impact the various mandatory reporting mechanisms, government payments, and filings.
What commercial model should be employed when a platform is used?
The most appropriate commercial model will be jointly determined by the on-demand payroll platform provider and the enterprise. Points to factor into the decision include whether or not the employees will be charged for using the platform, and whether a bank must be involved in advance salary requests.
How will the system be implemented?
Enterprises will need to integrate the various components required for a seamless transition to the new system, including time and attendance, the payroll platform, etc. They must pay particular attention to how the relevant data will be accessed, processed, and reported.
On-demand payroll forms a crucial part of the broader concept of “Employee Experience Suites.” Our upcoming three-part research series will cover these, practical ways to improve the employee experience, and some of the startup trailblazers disrupting this area.
Is your enterprise planning to reimagine the payroll process? Have you successfully implemented on-demand payroll? We’d love to hear from you about your experiences, questions, and concerns. Please connect with us directly at:
India continues to offer an attractive service delivery location proposition for global companies, given its unique combination of a low-cost, scalable English-speaking talent pool, and the breadth and depth of available skills.
As the global digital services industry matures, and with increasing competition in the tier-1 cities, companies are looking to reduce the costs of talent and access additional untapped talent pools for digital services delivery.
Can tier-2/3 cities in India fit the bill? Let’s start by looking at the current state of digital services delivery in these cities.
Today, India is the largest destination for digital services delivery, with 75 percent of the market. Tier-2/3 cities in the country currently hold 14-16 percent of the market share, and we expect this proportion to grow by 15-20 percent in the next couple of years. Ahmedabad, Chandigarh, Coimbatore, Indore, Jaipur, Kochi, Lucknow, T-puram, and Vadodara are the top nine tier-2/3 locations, accounting for 55-60 percent of the digital services headcount in tier-2/3 cities.
Tier-2/3 cities are mostly leveraged to provide social & interactive (41-43 percent), cloud (21-23 percent), analytics (16-18 percent), and automation (10-12 percent) related services. When it comes to sophisticated digital technology services, such as cybersecurity, mobility, and Artificial Intelligence (AI), service providers still prefer tier-1 locations such as Bengaluru.
Now, let’s evaluate how tier-2/3 Indian cities’ value proposition stacks up against tier-1 cities.
What’s ahead for India’s Tier-2/3 Cities?
Here are some of the key findings from our recently published report, “Will Tier-2/3 Indian Cities Carve a Niche in the Digital Story?”
- Tier-2/3 cities will continue to be leveraged predominantly as spokes to major hubs in tier-1 cities for the next two to three years
- Because of a lack of skilled talent, delivery of advanced digital services such as machine learning, cyber security, and mobility from tier-2/3 cities will remain a distant dream for the next few years
- An increasing number of enterprises will set up global in-house centers (GICs) or shared services centers for delivery of digital operations, due to increasing confidence and improvements in infrastructure quality
- Reskilling/upskilling for digital capabilities will be paramount for companies operating in these cities
- A few large service providers will invest in training talent, and benefit from early mover advantage by becoming distinguished employers in a less competitive market
To learn more – including the metrics around availability of talent, market maturity, cost of operations, business and operating risk environment, and implications for market participants including buyers, service providers, investment promotion councils, and industry bodies – please read our recently published report, “Will Tier-2/3 Indian Cities Carve a Niche in the Digital Story?.” We developed the report based on deep-dive discussions with leading shared services centers, service providers, recruitment agencies, and other market participants.
HR has certainly come a long way in being perceived as a strategic function with significant impact on business outcome. Yet, despite workforce and technology investments, multiple challenges – including the growing talent deficit, problems with skilling and retaining niche talent, and the increasing flexibility and better experience demands of Millennials and Generation Z – are inhibiting HR departments from attaining their full strategic potential on behalf of the enterprises they serve.
The solution is moving to a next-generation HR model with digital transformation at the core.
The inefficiencies of the traditional model – siloed HR systems, a large number of touchpoints, and a disjointed employee experience – are clearly exposed by the challenges cited above. The next-generation HR model addresses these issues with a cloud-based platform at the center, augmented by technologies such as advanced analytics and automation. This results in an intuitive and integrated model that has the ability to provide an enhanced employee experience.
To successfully adopt the next-generation HR model, enterprises should take a structured approach that considers several important factors.
Employee Experience Should be the Focal Point
While the importance of operational cost reduction and process standardization can’t be disparaged, enterprises should prioritize the employee experience when they plan for a digital HR transformation. Be it HR service delivery or technology modernization, the end goal should be to provide an integrated, intuitive, and seamless employee experience to better attract, engage, and retain talent.
In our recently published report, “The Key Ingredients for a Digital-First HR Transformation,” we identified two critical components of the best employee experience:
Empowerment: HR should offer employees integrated, accessible, and disintermediated workflows and systems that empower them to serve themselves. Methods include employee self-service tools, omnichannel experiences, chatbots, and analytical tools, all of which enable employees to have more control over the decisions they make.
Engagement: Millennials and subsequent generations exhibit different behavioral patterns, are digital natives, and expect seamless employee experiences. Enterprises should adopt solutions that enable HR to engage and retain this ever-evolving talent. Solutions that are integrated, user-friendly, and provide consistent experiences across sub-processes / third-party portals with optimized response times and accuracy should be the key focus areas.
Ensure Orchestration of Digital Technologies to Maximize Impact
Rather than implementing a handful of technologies haphazardly, enterprises must take an orchestrated approach to digital HR transformation that enables the technologies to feed off each other, find synergies, and maximize the impact.
The findings in our recently published report made it clear that while each individual technology lever (see chart below) is powerful, enterprises can realize the maximum transformative impact when all the levers are applied in cohesion.
Why is this? Although the impact of technologies such as Robotics Process Automation (RPA) and BPaaS are focused on enhancing the efficiency of various processes, predictive and prescriptive analytics are capable of deriving net new insights.
On the other hand, cognitive/AI technologies such as Natural Language Processing (NLP) and Machine Learning (ML) can be bundled with other digital levers to significantly improve the stakeholders’ experience, in addition to increasing efficiency and providing net new gains.
Engage Service Providers for Help
To help support buyers’ growing demands and needs, service providers are increasingly offering HR and technology consulting services. Capabilities they offer include:
- How to understand and plan for the impact of digital adoption on the enterprise’s workforce
- How to adopt and derive value out of digital investments (i.e., third-party cloud solutions such as Workday, SuccessFactors, and ServiceNow, automation, and analytics solutions)
- How to optimize HR processes
With technology changing so rapidly, organizations need to make sure that they fully embrace digital transformation, and buckle up to face and be ready for the changes. Many organizations are already working in this direction.
To learn more about this topic, our recent report titled “The Key Ingredients for a Digital-First HR Transformation” identifies and deep dives into five key levers (automation, analytics, cloud, advisory, and employee experience) that will help enterprises successfully transform their HR function.
Is your enterprise planning to undergo a digital HR transformation? Have you completed it? We’d love to hear from you about your experiences, questions, and concerns. Please write to us at: [email protected] or [email protected]
Is upskilling and reskilling little more than a thinly disguised attempt by HR departments to rebrand Learning and Development (L&D)? The answer, as one practitioner pointed out at a conference in Poland, is “no.”
I recently presented to the Association of Business Services Leaders (ABSL) Chapter in Krakow, Poland about the talent acquisition challenges that digitization poses to Shared Services Centers (SSCs.) The argument runs roughly like this:
- Robotic Process Automation (RPA) is replacing human agents in transactional roles, freeing up capacity in the workforce. This can mean lay-offs at worst, or unqualified internal candidates reapplying for roles at best
- There is greater demand for people with new skills both technological (design thinking, robotics, autonomics, analytics) and soft (pattern-recognition, complex problem solving, leadership, intuition) than can be met by simply recruiting externally
- As automation takes care of transactional processes, organizations can enhance the value of their brands and the service they provide by having more people in roles which emphasize first contact resolution, emotional intelligence, listening, etc.
- This new value chain focuses on outcomes: people are measured against quality of outcome rather than throughput (for instance, a shift from average handling time to CSat), which in turn requires new management thinking around staff incentives, culture, and business model.
The data in the presentation was based on the Everest Group survey of 81 SSC leaders in Poland, the Philippines, and India, published earlier this year (see “Building a Workforce of the Future – Upskilling/Reskilling in Global In-house Centers.”)
So obvious was the message that emerged from the survey that one or two skeptics in the audience questioned why retraining that part of the workforce most affected by the trend of automation was even worthy of discussion. Is it not just good L&D practice? And surely survey respondents would not admit to anything other than good practice when asked the question?
Not quite true: there were survey respondents, albeit no more than 10 percent of them, who said that they were not planning to undertake upskilling and reskilling as a means of addressing talent shortages. A small majority, 58 percent, said upskilling/reskilling was the highest priority in addressing this same problem, while 10 percent, possibly the same nagging 10 percent, said it was a low priority.
The discussion continued after the presentation. Without experience as a practitioner, I wrestled with an explanation as to why this 10 percent stubbornly refused to fit the theory. Thankfully, the HR head of a Krakow-based SSC rode to my rescue and gave the answer.
This is the group, she said, which understands that reskilling and upskilling is indeed good L&D practice but remains wedded to external hiring of permanent and temporary staff. It is the group that fails to see that existing employees must be recognized as the key pool to meet scarce talent requirements in SSCs.
Her explanation, thankfully, echoed our contention that successful application of reskilling/upskilling to talent acquisition needs:
- Senior leadership backing to ensure adequate resource and profile within the organization
- Implementation of a skill-specific talent acquisition strategy to identify both critical areas of shortage and those most suitable for reskilling/upskilling
- Quick roll-out of pilots in critical areas of shortage to build confidence and to learn
- Breaking down of functional barriers and giving employees wider exposure to functional roles
- A combination of effective duration and appropriate method (job rotation, on-the-job training, mentoring, peer-to-peer learning, and specialist external providers)
- Clear communication of career paths, internal opportunity, incentive, and compensation
- Patience and persistence!
She explained further. In her experience, the real difference between reskilling/upskilling as good L&D practice and reskilling/upskilling as a talent acquisition solution is simple. The talent acquisition solution approach is not considered aspirational, “something that HR does,” or nice to have. Rather, it is a strategic imperative.
How nice to have somebody who really knows what they are talking about answer a difficult question on my behalf!
The US Labor Department’s recently announced new regulations for H-1B and L1 work visas focus on the Trump Administration’s ongoing effort to tighten regulations and increase administrative hurdles. Viewed individually no new regulation is a show-stopper; but it’s clear that, collectively, they will have a more material effect. Here’s my take on the significant issues for service providers and their customers.
The jury trial in a lawsuit against TCS, filed by US workers alleging discrimination against US-born workers, opened this week. The suit claims TCS shows a preference for hiring Indian workers through H-1B visas when hiring locally in the US, even when trained US citizens were available. I believe this lawsuit is hugely important for the entire service provider industry, not just TCS, but not because of a possible settlement or the amount of damages. In fact, I believe whether TCS wins or loses the lawsuit is almost irrelevant. There’s a bigger implication: the services firms are in a no-win situation that they must now address. Let’s look at why this case is so significant.
Today’s US Workplace Environment
First, let me point out that TCS is not the only service provider firm to be sued for discrimination. In US companies, diversity is not only desired, but it is increasingly unacceptable to have a non-diverse workplace. Therefore, it’s perfectly understandable that the service provider firms, which have historically organizations which heavily utilize Indian talent, are easy targets for lawsuits claiming discrimination.
Litigants may not need to show specific examples of discrimination – only the results from a pattern of hiring or promotion. It really doesn’t even matter whether the lack of diversity was intentional or not. It’s just a fact of today’s US workplace that non-diverse hiring practices (for employees, middle managers and leadership) are now problematic. And the scrutiny that the service provider firms face is growing because of the difficult political environment.
It is quite understandable how services firms came to be in this position, and that they got into this situation honestly. They are great firms that were built with integrity with large work forces in India. As they grew, it was natural for the service firms to use H-1B and L1 visas to bring their own employees to the United States for the following reasons:
- They trust these employees
- The employees do high-quality work
- The employees have a strong cultural affinity and are thus comfortable in an Indian environment transported to the US operations
- They have the connections back into the talent factories in India and elsewhere
- It costs less than having to hire in the US.
The natural advantages combined with the economic advantages of importing Indian labor and hiring H-1B workers, resulted in a demographic dominated by Indian labor – but not necessarily a result of discrimination. However, this is a difficult argument to make when the statistics clearly show a skewed labor force.
Clearly, the service firms are at risk and, in all likelihood, will need to address these issues. The demands both ethnic and gender diversity in workplaces. Given the US political environment that now exists, the third-party service industry will likely face increasing demands to change the status quo.
They face a difficult set of choices, since they don’t want to discriminate against their current work force, yet they may need to take significant action to address the appearance of favoritism as well as change parts of their corporate culture, employment policies and benefits structure to bring them more in line with US expectations. If the service firms don’t address these issues, they run an increasing risk that a growing number of companies won’t do business with them.
But it will be difficult and expensive to address the issues. It likely will cause rising costs in the US. The cost to remedy the demographic makeup of the work force is quite high and likely will adversely affect competitiveness and margins. Addressing the issues is also likely to create additional morale and legal issues. They can’t fire people to bring about a more diverse workplace. They must take the interests of existing employees in mind while they move to diversity. Moreover, addressing these changes will take time.
And then there’s the reputation factor. At this time of great sensitivity to discrimination and jobs moving offshore, service provider firms face the prospect of increasing pressure to address these issues. But while doing so, they are still open to lawsuits, and these lawsuits would be expensive to litigate or settle. They can afford the litigation and possible judgments and settlements, however high the costs are. But they can’t afford damage to their reputations, brand and public image.
There is little doubt that 2018 has been an interesting year. And it makes one wonder what’s ahead.
As we all know, the fate of most businesses is now based upon the global economy. In the U.S., the economy has been on fire with great GDP growth, record stock markets (until the recent dip!), and unemployment rates that are at generational lows. But President Trump’s “America First” policies have introduced a layer of uncertainty to the business world. And the rest of the world certainly has experienced a mixed bag of economic results.
So, what’s next? While it is easy to worry about rising interest rates, tariffs, increasing global/regional geopolitical tensions, and maybe even global warming – none of these issues are directly within your business’ leadership team’s control.
Yet, there is one common issue (at least in the U.S./European markets) that is becoming even more persistent, and that is the talent shortage across many different segments of the economy. Our hypothesis is that organizations are going to need to double down on their automation efforts to get more productivity out of their existing workforce.
Do you agree with our automation prediction? Or are there other challenges more pressing for your organization? We want to hear what you think are truly the most important topics impacting your organization and its plans for 2019.
- Your top growth challenges
- Changes in global services buying centers and service delivery activities
- Your digital priorities
- Your talent challenges and priorities
As thank you for your participation, we’ll share a summary of the results; you’ll gain a comprehensive understanding of the areas where your peers are focusing their attention. Are they the same as yours? Completely different? A mix? Will 2019 be a repeat of 2018 Crazytown? Take the survey and see. (Although no promises on getting the right answer to that last one.)
A chatbot programmed to be a seven-year-old boy has become the first artificial Intelligence (AI) bot to be granted official residence in Tokyo, Japan. A NZ-based entrepreneur developed the “world’s first AI politician,” who is expected to run as a candidate in 2020. The CEO of Deutsche Bank estimates robots could replace half the bank’s 97,000 employees. U.S. Defense Secretary Jim Mattis implored President Trump to create a national strategy for AI. The University of Central Florida’s Center for Research in Computer Vision developed an AI-based system to detect often-missed cancer tumors.
The above references highlight a mere fraction of the recent cognitive and AI-based developments. With every passing day, next-generation technologies are integrating seamlessly into our everyday lives. Enterprises, service providers, and technology enthusiasts across industries and business domains are closely looking at these revolutionary and rapidly evolving technologies, which currently seem to have only the sky as the limit to the number of use cases they can generate and empower. Indeed, countries the world over are welcoming this change, with the UAE recently becoming the first to appoint a minister for AI.
All Business Processes are Beholding this Change, and Talent Acquisition is no Exception
Why do businesses need to embrace this change? The answer is simple: technology is no longer a means for savings money – factors such as enhancing the stakeholder experience and mining hidden insights are becoming even more crucial for companies to sustain their operations and stay relevant in the ever-changing economic environment.
The entire global services industry is undergoing a tremendous transition from labor arbitrage to a digital-first model. In the HR space, talent acquisition (TA), including both permanent and contingent workforce acquisition, is continuously developing as a space ripe for ever-evolving innovation. Startups, HR tech incubators, and investors continue working towards eliminating recruitment pain points and creating a seamless hiring experience for both candidates and recruiters alike.
Where is the Journey towards Digitalization of TA Heading?
A host of technology offerings – from basic automation tools to gamification solutions to higher-end point solutions and cognitive and AI systems – are emerging in the TA space. And per our recent research to understand where service providers and enterprises are in their journey toward unveiling the full potential of these technologies, the emerging landscape looks promising to kick-start a digital revolution that can transform TA in ways never imagined before.
The following exhibit highlights four key new-age technologies that are finding significant traction in the TA space. The proper conjunction of all these technologies, just like the various organs of a human body, will give rise to effective and more efficient TA systems.
Within TA systems, Analytics applications act like the left brain hemisphere, executing the more logical, analytical, and objective tasks that need to be accomplished. NLP applications act like the right brain hemisphere, executing the more intuitive, thoughtful, and subjective functions. RPA drives the implementation as the muscle, completing the loop to accomplish the objectives, and targets the left brain, the right brain, or both. ML acts as the layer that sits behind all these technologies, and enhances the output further by giving machines the ability to remember and learn from patterns or behavior of the engaging stakeholders, gradually eliminating manual intervention completely.
Here’s a simple example to demonstrate this process in TA: NLP applications learn about candidates – say from resumes, social media, etc. – to help analytics systems evaluate and predict best fit candidates from the information learned. RPA then reaches out to the shortlisted candidates. And all the while, ML technology carefully observes and documents everything to train the systems for better future use.
What’s on the Immediate and Near Horizon?
While some TA functions and tasks have already been automated, our research suggests that within the next five years, over 50 percent of them can be further digitalized leveraging next-generation technologies. The applications of these above technologies in TA are many-fold – AI-based sourcing and screening; psychometric, behavioral and gamified assessments; chatbot-driven candidate communication; and cultural fit, future performance, and attrition prediction – to name just a few.
The ultimate aim is to simultaneously engage and win quality hires, leave a lasting candidate experience, and remove all manual, non-core functions from recruiters’ and hiring managers’ plates.
The time is right for taking a holistic technology-driven revamp of TA functions to stay ahead of the curve in the quest for winning talent in a market that is agonizingly short of quality talent!
Historically, companies have leveraged the GIC model to deliver business process (operations) and IT services. However, as the model is maturing and incremental demand for these services is declining, enterprises are increasingly looking to their GICs to build more strategic Research & Development (R&D) and digital capabilities, drive innovation, and focus more on value-added services. In other words, they want their GICs to be “capability centers,” not just “delivery centers.”
There’s clear evidence that this is happening. In 2017, there was a significant increase in set-up of such capability centers focused on R&D and digital skills, especially in areas such as design, innovation, automation, Artificial Intelligence (AI), Machine Learning (ML), and cybersecurity. Indeed, our recently released GIC Annual Report 2018 shows that the share of centers supporting R&D/engineering services – including digital services – increased by almost 150 percent during 2017, as compared to 2016. And these centers accounted for more than 50 percent of total GICs setup in 2017.
These capabilities are expected to be the key differentiators and success drivers for global enterprises going forward. In 2017, ~46 percent of all new centers were focused on developing or expanding digital capabilities for the enterprise. There are multiple examples where offshore/nearshore GICs have been given a global mandate to lead organizational initiatives in new and emerging areas such as automation and blockchain.
So, how exactly are GICs becoming the global capability centers? What are the key enablers? Another of our recent research studies shows that GICs need to take a FORCEful approach:
- Foster innovation: GIC leadership needs to invest in developing a customer-centric culture, and test small-scale Proof-Of-Concepts (POCs) to demonstrate end-client value and build credibility
- Orchestrate transformation: GICs should leverage their well-established foundation by identifying their core strengths and upshifting the value they deliver through improved operational excellence with productivity enhancements, optimized pyramids, and better managed external spend. Simultaneous focus on leveraging these new capabilities to drive both growth and efficiencies will be critical to deliver true value to the enterprise
- Reskill and upskill workforce: GICs must radically change their reskilling/upskilling initiatives to ensure talent readiness for next-generation skills. They also need to adopt a bespoke approach for specific requirements, and undertake pilots in areas with the highest skills gaps to assess the effectiveness and relevance of the capability centers model
- Collaborate with ecosystem: GICs should proactively leverage the external ecosystem – specialist providers, startups, educational institutions, etc. – to develop holistic solutions, increase agility, and reduce go-to-market time
- Expand existing capabilities: GICs have a unique insider’s view that enables them to provide strategic insights to orchestrate enterprise-wide digital/technological transformation, facilitate integration between IT and operations, and break functional siloes to achieve truly breakthrough results
To learn more about the research behind our FORCEful approach, please click here. And if you’ve already established a capability center, or are in the process of doing so, write to us at [email protected] or [email protected]. We’d love to hear your thoughts and experiences!