Pandemic increases use of cloud-based workforce solutions

ISG surveyed 260 companies worldwide for the study, with 46 percent saying they use software-as-a-service (SaaS) platforms or a hybrid solution for HR. That compares with just 20 percent in the survey two years ago. Looking ahead, 57 percent of the companies surveyed said they expect to be using a SaaS or hybrid solution on a subscription basis by 2023.

"In 2020, the Covid 19 pandemic changed the world of work in unimaginable ways. It has brought into focus the potential of SaaS technologies for HR to better engage employees, support the workforce outside the office, improve productivity, and enable a more agile HR model" says Stacey Cardigan, partner at ISG HR Technology and co-author of the study.

"Our study shows that interest in HR SaaS platforms is growing as more and more companies are finding that their cloud-based approach is delivering measurable value."According to the study, 64 percent of companies say their investments in HR SaaS platforms result in measurable value. That's up 23 percentage points from 2019, when ISG last conducted this study. Business value refers to a variety of metrics, including productivity, cost reductions and employee retention.

Achieve advantages

Looking at HR cost savings, 70 percent of respondents said they save 10 percent or more with SaaS solutions, while 37 percent of respondents put their cost reduction as high as 20 percent or more. "The pandemic is one of the most stressful events in recent history. HR is at the forefront of this" says Deb Card, partner at ISG HR Technology and co-author of the study.

"HR technologies provide significant support by enabling real-time, data-driven decision-making; fostering cohesion and collaboration among employees in a virtual work environment; monitoring performance, productivity and engagement; and enabling virtual employee search, onboarding and offboarding."

Many leading SaaS HR solutions also now feature Covid-specific functionality to comply with new HR-related laws, track Covid cases or manage return-to-work, Card said. The study also found a strong correlation between companies' ability to meet their business goals and align their operating model and processes with new HR platforms, he said.

Companies are currently split fairly evenly into two parts: on the one hand, users of internally provided services, and on the other, users of outsourcing models. However, compared to the 2019 and 2017 surveys, the study records a clear trend toward outsourcing. A total of eleven HR functions were analyzed. Among them, payroll and health and wellness benefits management saw the biggest shift toward outsourced or hybrid operating models.

Home office will stay

In the wake of the pandemic, nearly seven out of ten companies expect a significant proportion of their employees - more than 20 percent - to continue working from home in 2022 and beyond, according to the ISG study. In this regard, most companies indicated that this will apply to 20 to 40 percent of their employees. As a result, greater investment in HR technology, tools and policies that support a long-term strategy for working from home would be necessary, ISG said.

"In human resources management, the Covid 19 pandemic has further highlighted the importance of data and analytics for workforce planning, including real-time data on absenteeism, employee satisfaction, and the ability to plan and execute leaves or return to work" says Kelly Will, director at ISG HR Technology and co-author of the study. "Nearly 40 percent of companies say they have been very successful in building a data-driven culture in HR. Another quarter of respondents described themselves as fairly successful."

Will adds that progress in HR data analytics is encouraging. However, he says there are still many as-yet untapped opportunities to leverage enterprise-wide HR metrics: "Using data as the basis for improvement measures requires change management that builds up appropriate know-how and routines, embeds data analysis in daily work, and takes advantage of new analysis options."