Multi-Process Human Resources Outsourcing Providers: Highlights From the New Digital World Class Matrix™

In this episode of the Business Excelleration^® Podcast, Andy Warzecha, Greg Morgan and John Sheridan discuss The Hackett Group’s Digital World Class Matrix^™ for multi-process human resources outsourcing (MPHRO) providers. They unpack key insights from the study, highlighting how MPHRO providers harness generative artificial intelligence (Gen AI) to streamline operations and amplify client value. From automating routine tasks to delivering strategic insights, they explore the evolving role of MPHRO providers in transforming HR functions.

Welcome to The Hackett Group’s “Business Excelleration^® Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Andy Warzecha, principal and the North American Advisory practice leader at The Hackett Group. Andy is joined by Greg Morgan, director of HR Transformation at The Hackett Group, and John Sheridan, associate principal at The Hackett Group. In today’s episode, they discuss the new multi-process human resources outsourcing (MPHRO) Digital World Class Matrix™ Study.

To begin, Andy first states that this research study was conducted after the work done around finance accounting. There was a lot of interest in the HR space. John explains that this study is different due to The Hackett Group publishing a wide range of business process areas and Digital World Class Matrix™ studies. Other businesses conduct studies, but Hackett’s approach is unique from the scope, capability and maturity but also in how the experience of individual clients compares to the their standard. They speak to clients directly using these services and solutions, and talk about expectations met and values delivered. They also bring relevant leadership, valuable insight, and leverage Hackett’s deep benchmarked and value expected by customers. For this study, they used 12 suppliers that are HR outsourcing providers and filled out a request for information to get their data. They had strategy sessions with them and used their own resource that was publicly available. They talked to their clients, and after these surveys and interviews with the clients, they went back and looked at each client against each other. They placed them on the grid and decided which ones are Digital World Class^® and in other categories based on scoring and interview results.

Next, Greg and John discuss the major takeaways from this study. Most solutions are driven by cost reduction, business enablement, employee experience and an adoption of innovation. The increase in the use of artificial intelligence (AI) for HR tasks would help service providers bring offerings to clients, showing different levels of maturity across the supplier community. They build out solution road maps and bring it to market. The investment in solution providers is going up dramatically with the ability of service providers in how to handle change. They found that most organizations aren’t using the full potential of the service providers, which shows a much lower scale and scope. Most want a global presence with local support and a high-growth segment with potential to expand existing relationships. This reflects maturity and capability of service providers but not taking full advantage of what’s available shows immaturity. Solution providers are differentiating themselves in the market through the size of their operations and how many clients they have. The ones that do it the best have the tools, technology and a large-scale client base with using more of their services.

In addition, they talk about the broader issues in AI in relations to HR. AI is a huge interest area and has the capability to be a game-changer. Employees have the ability to access AI to generate responses, which improves the quality and speed of responses for HR. AI is very dependent on data, and most organizations are protective of their data, especially HR. AI can provide access they might need, especially to really provide a personalized service to the individual employee. Vendors have built AI into products already, and the data is the road map for what they are heading toward. As vendors deliver the technology, everyone gets the same technology and you won’t experience transformation unless that technology has those breakthrough capabilities. They are embracing both the direct vendors and those from an outside perspective. Anyone can view these results and the study by going to The Hackett Group’s website and downloading the abridged version.

In closing, listeners should first outsource routine tasks so HR professionals can use their energy elsewhere. This will help service providers bring in those skills, leverage data and analytics, and create streamlined processes. Next, listeners should accelerate the adoption of best practices, and then they also need to focus on driving enhanced employee experience by employing digital tools. Finally, they say don’t use HR outsourcing as a tactic but as part of a broader program.

Time stamps:

0:47 – Welcome to this episode hosted by Andy Warzecha.

1:43 – Why is this study different?

3:38 – What level of rigor is used for the study?

5:11 – Major takeaways from the study.

8:18 – How are the solution providers differentiating themselves in the market?

9:21 – Broader issues in AI.

10:36 – What are the vendors specifically doing?

13:11 – What actions should our listeners take?