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Regional Report Same Old, Different New This growth can be chalked up to the promise of HRO. Many companies in the Nordic region have realised they can achieve the same, if not better, quality of services as they previously had with an entirely internal HR service focus. Numbers back up this migration. According to a May 2011 survey by NorthgateArinso and Marketvisio of large Nordic companies (more than 1,000 employees) in Finland, Sweden, Norway, and Denmark, 64 per cent in total had outsourced one or more HR processes. Denmark led the region with a startling 91 per cent of survey respondents indicating they already were outsourcing, followed by Sweden (65 per cent), Norway (62 per cent), and Finland (49 per cent). The survey further indicates that the outsourcing of administrative functions is most common. Although the study did not include respondents from Iceland, Thomas Skov, senior sales director of EMEA business process services in Oracle's Denmark office, says despite that country's small size, "Iceland companies have greater experience with HRO than other Nordic companies." Why are companies increasingly outsourcing in the region? The top response (58 per cent) by the survey participants was the need to reduce operating expenses, not surprising in the aftermath of the still simmering financial crisis. Close behind at 56 per cent was the desire to free up resources for other purposes, followed by wanting to benefit from resources that were currently not available (38 per cent). Do these per centages equate with HRO penetration in the rest of Europe and the United States? Karppinen says they lag—but only by a bit. "Due to the history, culture, and attitudes in the region, BPO [business process outsourcing] penetration is lower than in some parts of Europe and the U.S.," he elaborates. "Adoption also is influenced by the differences in the corporate and industry demographics in each country." The financial crisis also compelled many Nordic companies to seek needed cost savings, in addition to sharpen their focus on core competencies. These efforts help to explain the rather rapid increase in HRO in the region. "For a growing number of Nordic companies, combating the economic conditions by outsourcing peripheral activities like HR administration, payroll, and even recruitment and learning administration is an attractive, high-quality, and cost- effective option," says Marianne Langlois, global process executive in HRO provider NorthgateArinso's London office. Others outsourcing experts share this view. "HRO has become business as usual for companies to organise parts of their HR service delivery," says Matti Karppinen, manager of services development, in the Espoo, Finland-based office of HRO service provider Aditro. "The market is enjoying steady growth." With regard to the functions that are outsourced most by Nordic companies, the interviewees point to payroll as being the most popular by far, followed by HR administration, travel management, health and wellbeing benefits, and recruitment. "Our research indicates with regard to BPO payroll that it has reached a 50 per cent rate in Denmark, 30 per cent in Finland, 12 per cent in Norway and 10 per cent in Sweden, which is lagging," Karpinnen says. Langlois agrees. "Payroll administration is the most outsourced HR process in the Nordics," she says. So does Skov, who comments that payroll administration and recruitment account for the lion's share of engagements he's seen. Langlois and Karppinen also concur that many companies in the Nordics tend to begin their trek toward fuller HRO with payroll administration as the starting point. As Langlois put it, "Routine (HRO) tasks usually begin with payroll." She adds, "We also are seeing a rising interest in talent management, recruiting, learning, expat management and benefits outsourcing, as well. For recruiting and learning, project-based use of an external service provider is most popular." FALL 2012 | www.hroglobal.com [33]