Executive Summary

Today, the business environment is more dynamic than ever. In this often volatile environment, human capital is arguably the most sustainable source of competitive differentiation and value creation. Clearly, the role of HR organization is more central than ever in terms of helping business tap this human capital potential and align it with business strategy. However, to don this role, HR organization will need to utilize tools and resources that enable it to get real insights into its human capital behavior, opportunities, and challenges. It calls for a decision making approach based on facts and numbers rather than intuition and guess work. Within this context, the application of analytics in the HR realm is becoming increasingly important.

Analytics is the discipline of gaining meaningful insights through interpretation of data that helps in better decision making. It is achieved through utilization of the right kind of competency (both statistical as well as functional) on appropriate and unified data (internal organizational and/or external business environmental) levering the right tools and technologies. Our research shows that there are four levels of analytics that differ from each other in terms of their ability to create business impact and the associated sophistication of underlying solution – reporting, descriptive, predictive, and prescriptive analytics. The scope and approach to HR analytics should be determined based on contextual factors such as objective, internal readiness, investment appetite, and target timeframe to achieve the objective.

Notwithstanding the traditional challenges to realize the HR analytics value, outsourcing is fast emerging as a viable option to overcome those. However, it calls for a careful and pragmatic approach to various key components of outsourcing.

This report examines the role of analytics in HR and identifies the ways to capture its value within an outsourcing construct. It addresses the following key questions:

• What is the need for analytics in HR?
• What are the building blocks of analytics and how do they need to interplay to achieve desired level of outcome?
• How should organizations approach HR analytics from a scope and sourcing perspective?
• What are the key challenges in HR analytics adoption and why outsourcing / third-party services are emerging as a viable option to address those?
• How can organizations capture the required value through outsourcing / third-party analytics arrangement?