Stuart Gentle Publisher at Onrec

A third of companies plan to increase HR spend in the next year to combat the effects of recession

Survey shows strong investment in HR technology with growing interest in Software-as-a-Service

A third (31%) of companies plan to increase their spending on HR Technology in the coming year in an attempt to continue growth and improve efficiency in the face of a challenging economic environment. According to annual research released by global professional services company, Towers Watson, over half (53%) of the 628 global organisations involved in the research are planning to match last year’s investment levels while only 16% expect to reduce HR Technology spending.

“In many ways this year’s findings are surprising,” said Mike DiClaudio, head of Towers Watson’s EMEA HR Service Delivery practice. “Despite the obvious pressure on budgets over the past few years, many companies have decided that investment cannot be postponed any longer as HR departments face pressure to adapt and update the way services are delivered.”

The 15th annual survey on HR service delivery trends and practices also found that, in addition to investment, more organisations were looking to change the structure of their HR functions within the next few years in order to deliver HR services effectively. According to the survey, close to half (44%) of the organisations surveyed indicated they will change their HR structure in the coming year, a sharp increase from the 26% of respondents who were planning this last year.

“Companies are increasingly gearing up for large scale investment in HR change with the number of organisations planning a major restructure increasing by 75% compared to last year,” said DiClaudio. “These are major change projects that take a lot of planning and investment and are not taken on lightly. After the last few years of uncertainty and cost savings, many organisations are realising that their HR structure need to be refreshed in order to effectively service organisations that have themselves changed significantly over the past few years.

Among those organisations planning to increase their investment in HR technology this year, the top three areas of investment included rolling-out additional functionality from existing vendors, upgrading HRMS systems and expanding current self-service functions. The main reasons cited for these changes were to create greater efficiency with the department, encourage collaboration of processes and investment, improve quality and lower costs.

The survey showed that among companies making changes to their HR function, the largest proportion (39%) will move or revert to a shared services environment, while others plan to increase the number of shared-services used (31%) and outsource additional HR functions (26%).  For European organisations, there was a particular emphasis on increasing capacity in talent and performance management software, training programmes and compensation systems.

“We were interested to see a significant shift in technology investment towards Software-as-a-Service (SaaS) which is cited by over a third of organisations planning technology investment this year. This has increased from one in ten as recently as two years ago. Market consolidation and big advancements in reliability, data security and usability have made SaaS systems an appealing option for many companies.”

Other key findings from the survey include:

  • Six out of ten organisations (60%) offer an HR portal to HR and employees.  Another 20% are in the process of developing an HR portal.
  • Three-quarters of single country organisations believe in having one central HR function for the entire organisation, whereas this models only suits a third (32%) of global organisations, which prefer HR functions that are covered by function and geography with corporate oversight.