A focus on new hyprid delivery.

by Lowell Williams

The book of Ecclesiastes gives us the well-known phrase, There is nothing new under the sun. But in considering the most efficient balance of costs and services for employees residing in Western Europe, we are beginning to see the emergence of something very newa hybrid service model for HR service delivery that includes employee-facing service centers in Central or Eastern Europe that are backed up with a production service center located in South Africa, India, or elsewhere.

This hybrid model bears closer examination by all HR professionals. Of note is that the hybrid model appeals to both outsourcing service providers and to operators of internally owned shared services centers. If a company wants to own and operate its own service center, there is no reason why it cannot improve the efficiency, cost, and service levels by using the hybrid model. In like manner, an outsourcing provider can achieve cost optimization through the hybrid model as well.

The hybrid model works well because it addresses some of the reasons impeding the complete shift of HR services to India or elsewhere, such as deficiencies attributable to language, culture, and working knowledge of the client and its culture. Previous columns have focused on some of the problems inherent in language proficiency, but cultural and work literacy are different than language. A person may speak relatively fluent French but still not understand when a French employee is explaining a social security problem, because the service center employee may never have worked in France and thus lacks cultural literacy. Other primary reasons for the perception of poor service in relocated call and service centers are that the service center workers do not understand the companys internal culture, language, abbreviations, shorthand, and management techniques.

For these reasons, companies seeking to lower their HR services costs are shifting service and call-center work to Central or Eastern Europe. There, they are able to find a number of expatriates or third-country nationals to sprinkle throughout their service teams, and thus solve most of the problems concerning cultural literacy. But many companies are concerned about how long the wage advantage in Eastern Europe will last. There is already evidence that some Eastern European locations are overextended in terms of office space and available resources. Prague is a city often mentioned in this context, and comparisons to Dublin ten years ago are not infrequent. Although there is still a wage advantage of as high as 65 percent in favor of Poland over the Netherlands, the golden question is how long that will last.

One means of achieving the lowest operating cost and sustained cost advantage is to form a hybrid service solution. By limiting the size and character of the European-based employee-facing service center while simultaneously using an Indian or other low-cost production service center, an astute employer can maximize efficiencies and technology. By staffing a call center and small center of expertisebased in Europewith a minimal number of French, Dutch, German, and other nationals who have worked in those countries, complex issues such as works councils or other labor law issues can be readily managed, thus conquering the challenges of cultural and work literacy. Since every service center has a large amount of employee data management, mass updates, HRIT developments and debugging, and other labor-intensive projects activities that dont require country-specific knowledgethis type of back office work can be done by lower-cost service centers in South Africa, India, China, or elsewhere. Technology allows work in these service areas to be done efficiently in a secure environment and then routed back to the service center in Europe. South African services are in a time zone very compatible for Europe and have excellent technology infrastructure, workforce resources, and English and Dutch fluency. China and India are both very competitive on back office services and, of course, are becoming more proficient in call center services as well.

One additional feature of the hybrid structure that may be very important to multinationals is that the low-cost service center can be a production center for numerous front office service centers around the world. Thus, an Indian center with the right software and technological infrastructure could conceivably support HR service centers in Europe, North America, Latin America, and the Middle East-Africa region. This is truly a scalable model if correctly developed. It may well be that the best answer for quality of service in Western Europe is a limited service center in Europe backed by a production and data service center outside Europe. This hybrid solution may be the key to sustained cost-effective services at excellent employee service levels for companies that feel their work culture has extremely high service standards.