HR Cost Savings in the Aftermath of COVID-19


In the aftermath of COVID-19, HR professionals have no shortage of challenges to address: from keeping employees safe and productive, to managing new policies and regulations, to addressing organizational cost pressures. Whether you find yourself struggling to achieve savings amid HR budgets cuts or want to better position your organization coming out of the crisis, the decisions you make now can have lasting consequences. Consider the following opportunities:

  1. Accelerate savings through early renewals. ISG market data shows that HR outsourcing (HRO) renewal fees have dropped an average of 10-20 percent. Coupled with a shift to software-as-a-service (SaaS) technology, HRO, payroll, benefits and recruitment process outsourcing deals can offer even more significant savings. ISG also finds that organizations achieve improved cost savings and better terms through early negotiations. Organizations that start renewal planning and analysis 18-24 months in advance get the best results due to greater leverage.


  2. Assess your current HR organization and costs. If it has been a while since you last assessed the effectiveness and efficiency of your HR organization or if you need to evaluate your model based on a revised organizational outlook, now may be a good time. An HR assessment can identify targeted areas for efficiencies, including opportunities to increase centralization of HR services, improve self-service, optimize processes and eliminate non-value-added activities. Simplifying HR delivery is an important component of achieving organizational goals.


  3. Consider current HR technology opportunities. If you are in the process of evaluating new HR technology, the current market may provide opportunities for cost savings. With slower sales cycles and delays in technology implementations, sales teams may be more willing to discount the software, delay payments or provide free months of licensing. Similarly, systems integrators (SIs) are finding creative ways to help customers with financing options or providing discounted services, such as complimentary virtual workshops or discounted post go-live support. Now may also be a time to take another look at add-on modules or consolidation opportunities that you didn’t prioritize when you first implemented your HCM technology. Leveraging add-on capability of your core HCM solution may tap into cost reduction opportunities or advanced capabilities you were not ready to take advantage of during the initial rollout.


  4. Evaluate HR automation. Solutions such as automated chat or other robotic process automation (RPA) may not be part of your HR delivery model today. Organizations with outdated systems and administrative inefficiencies are good candidates for cost savings, and even organizations that have implemented new SaaS technology find there are “orphan” processes or activities that have not been addressed in the solution. Automation can be one of the quickest ways to increase scale, reduce cost and improve employee experience.

As we look forward in the months ahead, HR will be tasked with smoothly onboarding employees back to work, ensuring workers stay healthy and engaged and increasing agility for the business. Decisions HR leaders make today can help organizations not only achieve near-term cost savings but better position HR for years to come.

ISG helps HR organizations navigate the current crisis and better position themselves for the future. Contact us to find out how we can help you.


About the author

Stacey Cadigan

Stacey Cadigan

Stacey Cadigan is an HR thought leader who is passionate about HR and talent management. With more than 20 years in HR, she has leveraged her deep experience and expertise to help clients achieve their strategic, operational, and financial objectives. Through her diverse experience in HR strategy, HRO operations, RPO, HR technology, and transitions, she has developed unique insight and the ability to ask the right questions in assisting organizations with finding solutions to effectively align their HR initiatives with their vision. Stacey was named “HR Thought Leader of the Year” in 2016 and “HRO Superstar” by HRO Today Services and Technology Association for 2016–2019.