How is the Cloud Replacing Shared Services in HR?

how is cloud replacing shared services in HR?

Cloud computing has secured a safe spot when it comes to offering integrated service solutions. From SaaS to BPaaS, the cloud frenzy has been influencing the way businesses function and consume services. Though shared services have already been delivering comprehensive solutions for payroll and talent management, cloud-based HR services are posing to be a tough competition to beat and is surpassing all standards and competencies offered by traditional on-premises shared services.

The scope of business operations have constantly been transforming and with new technology trends taking over the market, the functioning and management of each individual process in HR (payroll, talent management and recruitment) have been impacted. This intensified the need to streamline HR practices to perform consistently and collectively, directing primary focus towards improving business results. Such a though boosted the demand for shared services in different HR operations, where centralized user systems reduce the amount of redundant data and repetition of efforts.

In HR and payroll processing, a lot of administrative work including the maintenance of employee personal data, salary and compensations, tracking time and absence etc., have been functioning through centralized user systems that make shared data easily accessible o managers and HR leaders. Over the past decade, managers have been brainstorming for creating opportunities to shift such back-end and transactional work into automated systems so that they can work directly towards contributing to core business activities.

The intention to simplify and transform HR undertakings into automated processes led managers to leverage the capabilities of the technology genius – cloud computing. Organizations are favoring cloud-based HR platforms over conventional shared services due to the hype cloud computing has been creating over the past years and the flexibility of services it offers.

Vendors providing shared services are trying to firmly grab hold of their market position by improvising their service offerings, but cloud-based HR models are beating all odds to stay ahead of the competition.

How has the cloud impacted the industry standard for shared services and how is the market seen to be in the future for shared services? Let’s look a bit into it.

Comparing Cloud services and shared services

A shared service system is a discrete business unit of an organization that connects individual processes to leverage resources and reduce costs involving the customer and IT support. It delivers a variety of services to different business operations to persuade efficient practices.

On-premise shared service systems have been in use for quite some time. But on the contrary, cloud-based sharing platforms started flourishing just a decade ago, in spite of which, it has become the most preferred solution in contemporary times. This prominence for could-based services can be credited to the many benefits it is packed with when compared to traditional shared servicing.

One of the many advantages of cloud-based shared services lies in the significant cost reductions it provides. It can be bought as and when a particular requirement arises and can be sourced based on monthly or yearly subscription charges. It is very flexible and does not require extra effort in maintenance or IT support (through manual effort is needed to maintain files outside the internal database). The service model can be scaled based on requirement and business needs. Investments in server rooms, cooling stations and infrastructural setup can be avoided completely. A variety of services is made easily available at the fingertips. These services can be implemented effortlessly and with high-security governance.

Owing to the mobile nature of work that exists nowadays, companies tend to prefer flexibility while dealing with remote workforce and would need the capability to share files and data records when on the go. This requirement of employers developed to be the fundamental reason behind switching over to cloud-based sharing services, but as the wonders of cloud computing started to unravel, organizations began considering the possibility to transition into cloud-based systems more rigorously.

The future for shared services

In the years to come, a majority of the shared services will evolve into cloud-based shared services. This in the long term can be channelized to generate more business opportunities by actively taking part in the technology transformation that is striking at an unprecedented rate. Cloud-based shared services can greatly influence process automation in HR, which in turn can aid in securing HR’s identity as a core business operation and strategize the capabilities of HR to directly increase business performance.

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Author: Aarathi B

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