2023 Survey on

Industry Trends in
HR Technology
and Service Delivery

April 2023
2023 Survey on Industry Trends in HR Technology and Service Delivery

Organizations are facing wide- Longer-term goals are focused than anticipated. But the ongoing keep up with the pace of change
ranging challenges to their on broader HR transformation, shift to HR SaaS remains strong, in HR technology. Too often,
business and people, including: including new operating models, and companies are achieving a organizations are failing to invest
new capabilities and skillsets and healthy return on investment with in new technology/enhancements
• An uncertain economic
a move to more agile HR delivery. their HR tech transformations. or optimize their HR technology
environment
model. To achieve better business
To better understand the current HR While cost savings are being achieved
• Rapid changes in business needs value, organizations will need to
technology market, ISG surveyed with HR technology, more than half
become more adept at aligning their
• A tight labor market enterprise leaders about their HR of the organizations we surveyed are
technology strategy to their business
and skill shortages technology landscape, priorities struggling to achieve clear business
strategy, budgeting for ongoing
and future plans. We sought value from their HR technology.
• Rising disengagement improvements and continually
organizations of varying sizes - from Organizations seek better business
evaluate new technology. Only then
• Hybrid/remote work 5,000 employees to more than outcomes, such as reduced time
will we see consistent results.
environments 50,000 employees - across a wide to hire, improved HR efficiency and
range of industries. Because we improved retention. To achieve Organizations are evaluating not
One thing is clear: organizations need have data from similar surveys every these outcomes, organizations just their HR technology model, but
to invest in HR technology to address two years for the past ten years, the are recognizing that they need to their HR service delivery model. HR
these pain points and drive results. findings tell us a great deal about redesign their business processes shared services and outsourcing
how enterprise HR is changing. and their end-to-end delivery of HR are proving to be solid strategies
Since the pandemic, HR organizations
services in conjunction with their to achieve HR delivery goals. Most
have adjusted their short-term goals Today’s enterprise landscape
HR technology deployments. organizations intend to increase their
to optimize work-from-home models, contains varying levels of HR
use of a centralized model (either
drive employee self-service, deploy technology maturity, with some For organizations that have already
shared services or outsourcing), and
user-friendly tools and improve organizations moving to HR software completed their journey to HR
most are seeing improvements in
communication from leadership. as a service (SaaS) more slowly SaaS, many are struggling to
quality as well as reduced costs.

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2023 Survey on Industry Trends in HR Technology and Service Delivery

HR Technology: Key Trends and Analysis Future (2025) Primary HR Technology Model
This year’s study shows a clear for this group. Internally developed
Licensed
bifurcation in the market between systems were also reported at
software
organizations that have invested in a higher rate than expected. hosted
Licensed
new HCM technology and continue 15%
Figure 1 depicts the aggregate software
to move their model forward and
response from survey participants on-premises
those that have slowed plans for
when we asked them to 23%
HR technology transformation.
The data show over a third of select one profile that best
organizations still remain on on- describes their expected HR
premises solutions, with this same technology model in 2025.
percentage of companies primarily
The findings indicate that, while
using SaaS or hybrid models.
this bifurcation in the market
SaaS cloud-
We expected to see a larger will continue in the near term,
Internally based
percentage of organizations move the number of on-premises and 32%
hosted solutions in the market developed
away from on-premises solutions, system
but the impacts from the pandemic, is expected to decline by about
14%
business priorities, workforce a third in the next two years. The
challenges and a desire to extend number of organizations expecting
the investment of current solutions to be on a subscription-based SaaS Hybrid
have slowed the journey to SaaS or hybrid solution in 2025 sits at 16%
almost half of those surveyed.
Source: ISG | Figure 1

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2023 Survey on Industry Trends in HR Technology and Service Delivery

For organizations investing in an

Top Three Most Important Outcomes from Adopting HR SaaS Technology Solutions
HCM transformation, driving factors
include the need for talent, a more
globally harmonized and agile model, Improve ability to attract, develop and retain talent 36%
better integration, reduced costs Enable a globally harmonized HR operating model 31%
and improvements in employee
Improve integration with key business applications 30%
experience and engagement. Figure 2
depicts the most important outcomes Enable agility for HR 25%
organizations have gained or expect
Gain access to ongoing innovation and leading HCM practices 23%
to gain in adopting SaaS.
Enable agility for the business 23%
Improving the ability to attract,
develop and retain staff jumped to Reduce HR administration cost 23%
the top outcome this year. While Increase employee engagement 23%
the talent market may ease during
2023, difficulties finding the right
Improve the employee user experience 22%
talent and skillsets are expected Reduce dependency on IT 19%
to continue. Innovative talent and
Reduce technology cost of ownership 16%
recruitment solutions have been
critical to the way organizations Speed to implement and achieve value 16%
are supporting their talent needs Improved data quality and insights 9%
and securing the right talent for
business-critical roles and skillsets. Facilitate a corporate culture of diversity, inclusion and equity 3%
Support hybrid work models 1%
Source: ISG | Figure 2

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2023 Survey on Industry Trends in HR Technology and Service Delivery

“In today’s
Enabling a globally harmonized integrations can be seen through
HR operating model ranked as the investments by leading providers to
second most important outcome in aid with extensibility, such as UKG’s
this year’s study. HR organizations release of its FleX platform and
know a harmonized model is
foundational to delivering timely,
high-quality service, enabling a
Paylocity’s acquisition of Cloudsnap.

In today’s environment, HR’s success

depends on its ability to support the
environment, HR’s
success depends
positive employee experience
rapid pace of change. Given how
and simplifying their technology
quickly the business environment
model. Organizations are adopting
is changing, if organizations cannot
an increasing number of modules/

on its ability to
move quickly, they will not survive.
products from their HCM vendors
Therefore, increasing agility for
to further harmonize their models.
HR is a top concern for survey
Improving integration with key respondents; an agile operating model
business applications ranked higher
in this year’s study compared to the
prior study, coming in as the third
and configurable technology help
support that strategy. New product
capabilities, such as workforce
support the rapid
pace of change.”
most important outcome. A more planning functionality, demonstrates
connected model plays an important how technology providers are
role in providing a seamless employee supporting change and agility needs.
experience, enabling improved
productivity and making employees’
work easier. The increasing focus on

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2023 Survey on Industry Trends in HR Technology and Service Delivery

Evaluating New How Important Are the Following Criteria?

HR Technology
Over the last few years, as Data Security 1% 19% 35% 44%
organizations have evaluated
Ease of Use 2% 12% 50% 36%
new technology, they have
consistently prioritized certain Analytics and AI 1% 22% 44% 32%
capabilities and features. Figure Integrated Ecosystem 19% 50% 30%
3 shows the criteria that drive HR Chat, Voice and Self-service 3% 25% 44% 29%
technology selection decisions.
Depth of Functionality 1% 25% 46% 28%
With the increasing number of Ease of Maintenance 1% 28% 44% 27%
cybersecurity attacks on large Mobile Access 2% 24% 48% 26%
corporations and the associated
Automation 3% 22% 50% 26%
media and public attention, it’s no
surprise that data security once Global Design 2% 27% 46% 25%
again tops the list of criteria for Configurability 1% 27% 47% 25%
selecting a new HR platform. Modern Look / Feel (UI) 1% 30% 45% 24%

Ease of use ranks as the second

Ability to Extend to Other ERP Modules 1% 23% 52% 24%
highest priority in selecting HR Cost of Ownership 3% 24% 52% 21%
technology. Creating an environment
Not Important Nice to Have Must Have/ Expected Top Priority
that makes everyday activity
easier is a priority, and software Source: ISG | Figure 3

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2023 Survey on Industry Trends in HR Technology and Service Delivery

providers continue to invest heavily respondents prioritized strategic Have You Achieved Measurable Business Value
across the full employee lifecycle and operational priorities over pure by Adopting HR SaaS?
to achieve this objective. Alongside cost considerations. Organizations
ease of use is an integrated want to get to the right solution first.
ecosystem, which facilitates a more
seamless experience for employees,
consistency of data and a common
look and feel for end users.
Gaps in Business Value Yes
46%
Figure 4 depicts organizations’
The data show that 32 percent of
answers when asked if they
organizations are prioritizing AI
have achieved measurable
and analytics this year. This jump
business value in their adoption
reflects business’ desire to surface
of HR SaaS technology.
forward-looking insights and enable
agility. In response, leading HR This year’s results indicate only
technology providers, such as such No
46 percent of organizations have
as Oracle, SAP SuccessFactors 54%
achieved clear business value by
and Workday, are focused on adopting HR SaaS technology, a drop
embedding AI, machine learning of 18 percent from the prior study.
and analytics in the core platform. Source: ISG | Figure 4
One reason for this is that HR buyer
expectations have increased. Beyond to greater operational efficiencies,
Just 21 percent of respondents
improving the user experience, reduced cycle times and other
cited cost of ownership as a top
organizations are seeking improved measures of business value.
criterion, highlighting that most
functionality that translates directly

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2023 Survey on Industry Trends in HR Technology and Service Delivery

In over half of the cases, this drop

Why Did You Not Boost Measurable Business Value?
in achieved measurable success is
directly linked to the failure to change
HR business processes and/or change
the HR service delivery model when We don’t measure We didn’t materially
implementing new systems, as seen business value transform our business
in Figure 5. Increasingly, organizations 21% processes when
recognize the need to evolve their
implementing our
business model to take full advantage
HR SaaS platform
35%
of SaaS technology and functionality.
However, the time and support
needed to make this transformation
can be a barrier. When shortcuts are
taken, organizations experience the Inadequate Change
impact in terms of lower adoption. Management
9%

We didn’t materially
Our HR SaaS platform did adapt our HR service delivery
not meet our expectations model when implementing
for business value our HR SaaS platform
14% 21%

Source: ISG | Figure 5

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2023 Survey on Industry Trends in HR Technology and Service Delivery

Another dynamic contributing Over three-fourths, or 77 percent, of

What Savings Are You Able to Achieve by Leveraging SaaS?
to gaps in business value is the organizations were able to achieve
ongoing struggle for companies to more than 10 percent cost savings HR Admin and
keep up with the degree of change in IT/Technology Operations, Management 29%
in HR technology. Aligning to the Maintenance and Support. Almost Source: ISG | Figure 6
business strategy, assessing new half, or 45 percent, of respondents
19% 19%
technology capability and ensuring achieved more than 20 percent
an effective ongoing update IT savings. Just 7 percent of 13%
process with new software releases respondents spent more or were
7% 7%
(typically two to four times a year) unable to achieve IT cost savings.
4%
are critical components to achieving
consistent business outcomes.
No savings Less than 10% 10-20% 20-30% 30-40% 40-50% >50%

One area organizations are

consistently achieving results:
IT/Tech Operations,
cost savings. Figure 6 highlights 32%
Maintenance
that 87 percent of organizations and Support 26%
are achieving savings of 10 percent Source: ISG | Figure 7
or more on total HR administration
costs, and 20 percent of companies 15%
are achieving savings of 40 percent or 12%
more on total HR administration costs.
6%
5%
1% 2%

Spent more No savings Less than 10% 10-20% 20-30% 30-40% 40-50% >50%

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2023 Survey on Industry Trends in HR Technology and Service Delivery

Investing for the Future: Investing in the Experience Layer Highest Priority for HR IT Spend Over the Next Two Years
To get a sense of what the future looks the strategic and tactical data they HR Service Delivery Technology/Experience Suite
like, we asked survey respondents need to see trends and provide insight
34% 20% 25%
to rank the highest priority for HR IT to the business. Forward-looking
spend over the next two years. Figure information helps organizations lead Analytics and AI
8 shows how organizations ranked the market instead of react to the 20% 16% 10% Rank 1
the top three areas of investment. market; analytics and AI capabilities
will be important differentiators Talent Management Solutions Rank 2
HR delivery technology and the among HR technology providers. 13% 16% 15%
experience suite rank as the highest Rank 3
priority of investment for enterprises Talent Management is the third Employee Wellness Solutions
over the next two years. Organizations highest ranked priority for HRIT spend 12% 13% 12%
continue to focus on improving the over the next two years. Current
Customizing applications
employee experience, simplifying organization challenges and broader
the employee journey through self- macro workforce trends tell us that 8% 9% 10%
service capability and improving the talent will remain a critical area of
Robotic Process Automation
efficiency of the end-to-end HR model. investment for years to come.
7% 16% 12%
Analytics and AI are fast-growing
HCM (SaaS) solution
areas of investment in the market and
top enterprise priorities. HR needs 6% 9% 13%
to be more flexible and responsive. Payroll
Analytics and AI give organizations 2%
2% Source: ISG | Figure 8

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2023 Survey on Industry Trends in HR Technology and Service Delivery

How Are HR Technologies Innovating to Support Staffing Challenges?

With a tight labor market and talent market. Some of the primary ways • Upskilling technology identifies Overall, these technologies
scarcity, talent acquisition teams technology is bringing value include: current skills gaps against enable talent acquisition teams
future needs and strategies
are reinventing talent strategies to to better respond to the hiring
• Candidate relationship management for upskilling or hiring.
attract new candidates. Organizations technologies help sourcing teams needs of the business and provide
need to improve sourcing, broaden establish relationships and build trust • Assessments filter applicant pools a positive experience for internal
talent pools, market themselves with candidate pools. They create a and enable recruiters to spend time and external candidates.
more robust database of current and with the most qualified candidates.
proactively and create connections
with candidates. Companies need past candidates for teams to target • Video interviewing technology
and ultimately reduce time to fill. provides 24/7 flexibility for candidates
to provide candidates access to
easily apply and communicate • AI and talent analytics and quicker response times.

through various channels and create provide insight to broaden the • Automation enables a more
a better candidate experience. candidate pool, match the best streamlined process for sourcing,
candidates, understand the matching, screening and
And hiring teams need to move
best sources of hire and identify interviewing – improving the
fast on hiring decisions. bottlenecks in the process. candidate process along the way.
There is significant investment • Talent marketplaces surface • Onboarding technology enables
in technology to address these opportunities not just for organizations to better connect with
dynamics, and organizations external candidates but new hires, guide them through the
investing in talent acquisition internal candidates, too. process and build early relationships.
technologies have leveraged
them to effectively react in this

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2023 Survey on Industry Trends in HR Technology and Service Delivery

Most organizations continue to Many organizations believe remote Looking Forward: What Is the Future of WFH?
require at least some commitment work is not providing the level of
to weekly onsite work. Nearly three- productivity seen from an onsite
quarters of organizations expect model. Many believe that team >80% onsite
5%
more than 60 percent of employees collaboration and communication
to work onsite. And nearly two-thirds – as well as learning – happen more 60-80% onsite; remainder WFH
of respondents do not support a effectively in person. Organizations 25%
work-from-anywhere approach. are seeking the right model. 40-60% onsite; remainder WFH
Creative approaches to WFH and
Is Your Organization Supporting 20-40% onsite; remainder WFH
hybrid models are emerging. For
Working from Anywhere?
example, one organization allows a new
<20% onsite; remainder WFH
hire to choose a “persona” that lines 40%
up with their workplace preference,
Yes such as: 1) working 100 percent of the
29%
time in an office, 2) working 2-3 days
in an office, or 3) working 100 percent
remotely. New hires who choose to
Evaluating No 23%
8% 63%
work remotely 100 percent of the time
may not have all the opportunities of
the company career path available to 7%
them, but employees are empowered
2023
to make the choice and understand
the impact of their decision.
Source: ISG | Figure 9 Source: ISG | Figure 10

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2023 Survey on Industry Trends in HR Technology and Service Delivery

Deploying New Technology: Experience in the

Chosen Technology and Industry Drives SI Selections
Most HCM technology Ten percent fewer organizations are critical steps in selecting a
implementations are managed by in this year’s study prioritized provider. With the level of current
a third-party systems integrator price. Price will always be an market activity and somewhat limited
(SI). Figure 11 outlines the top important factor in any decision resourcing, some providers are
factors in selecting an SI. to implement new technology, but struggling to staff projects – making
organizations are more focused on it even more important to lock in
In selecting an SI partner, the top elements of project success such key resources for implementation.
three priorities are: 1) a partners’ as experience, ability to manage
depth of experience with the given broad scope and the accelerators Top Three Factors in Selecting a Systems Integrator
technology being implemented, 2) SI’s bring to the implementation.
a well-defined methodology and 53% 52%

approach, and 3) success in the While the least important decision 45%
specific client industry. Success criterion for SI partners is the 39%

stories specific to the technology delivery team, it is an area of critical 31%

29% 28%
and industry with similar criteria can importance that we believe should 23%
be powerful for buyers embarking be higher on the buyer’s list of
on large-scale engagements. Depth top factors. Confirming specific
of industry expertise with industry resources and the team’s experience
accelerators is no longer optional. implementing in-scope modules for
Experience in Project Experience in Scope of SI tools and Price Overall SI Delivery
clients of similar size and complexity the chosen methodology the client services accelerators experience team
technology and approach industry (including
AMS)
Source: ISG | Figure 11

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2023 Survey on Industry Trends in HR Technology and Service Delivery

HR Tech Capability
As we have done in past surveys, we once again wanted to understand the maturity levels of HR tech environments in global
companies. And we wanted to know how organizational capability is impacted by the adoption of HR technology,
optimization of HR processes and the associated service delivery. ISG’s HR Tech Capability
Model tracks an organization’s HR capabilities across five areas: 1) HR technology Business Agility
strategy, 2) HR processes, 3) HR service delivery, 4) direct access
with employee self-service (ESS)/manager self-service Customer Experience
(MSS) and 5) reporting and analytics.
HR Delivery 4.0
Figure 12 depicts Operating Efficiency
Services
the ISG HR Tech ⬤ SSC/BPO provides significant
Capability Model. HR Delivery 3.0 analytical/value add services as well
as transactional.
Services ⬤ Strong focus on delivering quality HR
HR Delivery 2.0 ⬤ Mature SSC/BPO operations analytics to drive business decisions.
⬤ SSC/BPO moves beyond transactions ⬤ Processes are highly automated,
Services towards solution/value -add activities. harmonized and optimized.
⬤ Centralized SSC/BPO, ⬤ Increasingly focused on customer ⬤ Leverage of emerging technologies
transactional focused. experience/self service adoption. both improve customer experience
HR Delivery 1.0 and lower operating cost.
⬤ Moving towards globally applied ⬤ Core processes are automated and
Services standards and best practices. harmonized, but optimization ⬤ Leveraged CoEs provide deep expertise.
⬤ Decentralized HR delivery ⬤ Partial self-service available, but gaps in opportunities still exist. ⬤ Customer-centric process design –
⬤ Disparate, non-optimized processes user experience. ⬤ Moving towards HR analytics in addition “moments that matter” focus.
and policies. ⬤ Largely operational reporting to operational KPIs. ⬤ Metrics focus on business outcomes
⬤ Process design not customer-centric. (e.g., KPIs, metrics) with limited Technology as much as operational KPIs.
⬤ Limited or no metrics and KPIs. investment in analytics. ⬤ Global HCM SaaS solution Technology
Technology Technology ⬤ Emerging technologies increasingly ⬤ Full SaaS; advanced use of emerging
⬤ Limited/no SaaS or self-service. ⬤ Partial SaaS or hybrid models. applied (e.g., chatbots). technologies (AI, automation).
⬤ Limited/no strategy or central ownership ⬤ HR technology not well aligned to ⬤ HR Tech strategy increasingly aligned to ⬤ Fully integrated intelligence platform.
of HR technology; unable to adequately organizational objectives; challenges broader objectives. ⬤ HR Tech CoE viewed as strategic partner.
respond to business needs. responding to business needs in a timely
manner.
Source: ISG | Figure 12

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2023 Survey on Industry Trends in HR Technology and Service Delivery

HR Technology Strategy Capability

One predictor of success is the extent greater success in this area. How Successful Is Your Organization at . . .
to which organizations define an HR Maintaining a Three-year HR Tech Roadmap?
strategy to improve the employee A similar opportunity exists
experience and maintain an HR with respect to reviewing and Not Average Moderate /
Successful Success Very Successful
technology roadmap. Almost three- incorporating new functionality
quarters of organizations in our study with each HCM release. Just
14% 50% 37%
have created a formal HR technology over a third of organizations
strategy to improve the employee report strong success here.
Source: ISG | Figure 13
experience. These organizations
There has been a lot of discussion over
consider themselves generally How Successful Is Your Organization at . . .
the years about enabling HR partners
successful in translating their strategy
to be more strategic. Developing a Leveraging HR Tech Solutions to Be Proactive?
into actual improvements in employee
three-year technology roadmap and
experience through HR technology. Not Average Moderate /
planning for new technology updates Successful Success Very Successful
It is encouraging that the practice of
helps shift organizations to a more
formalizing a strategy on employee
strategic, proactive model. Data in 21% 48% 32%
experience and taking steps to
the graph to the right demonstrate
achieve it is increasingly widespread.
that organizations are not effectively Source: ISG | Figure 14
Organizations report a relatively less leveraging their HR technology to
successful outcome in maintaining a be proactive; less than one-third
three-year HR technology roadmap; of respondents report moderate or
only 37 percent of organizations greater success in this category.
claim to have moderate or

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2023 Survey on Industry Trends in HR Technology and Service Delivery

HR Process Maturity
To achieve HR efficiency and maximizing business value. The How Successful Is Your Organization at . . .
effectiveness and provide a positive most successful companies agree Harmonizing HR Processes across Business Lines?
employee experience, it is critical to on global design goals and establish
optimize processes. Roughly three- a clear path to limit exceptions. Not Average Moderate /
Successful Success Very Successful
quarters of organizations report at
least some success in optimizing A related area of opportunity is
17% 53% 29%
their HR processes to align to their enabling agile teams and processes
HR technology platform. An equal in the HR organization. While the
desire for increased agility showed Source: ISG | Figure 15
number also report success optimizing
processes to the “moments that up as a key driver for purchasing
How Successful Is Your Organization at . . .
matter” for employees and managers. HR technology in this year’s
study, just 35 percent report solid Enabling Agile Teams and Processes?
According to our study, organizations success in enabling agility.
Not Average Moderate /
are relatively less successful in Successful Success Very Successful
harmonizing HR processes across Harmonizing processes and
business lines, with just over one- moving to a more agile model are 14% 51% 35%

third of organizations describing important goals for many modern

moderate or better success. There HR organizations – and are areas Source: ISG | Figure 16
is always a balance in meeting where ample opportunity exists.
the needs of a specific business
line with overall enterprise goals
of simplifying operations and

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2023 Survey on Industry Trends in HR Technology and Service Delivery

HR Service Delivery Model

An HR organization’s ability to align This year’s study shows: While the market is seeing progress further standardizing HR delivery
its service delivery model to its in aligning the model, responsibilities often reveals improvement
technology and processes is integral • Two-thirds of organizations have and skillsets, there are clear opportunities.
to its success. Shifting transactional aligned their service delivery opportunities that remain, including:
model to their HR technology • Only 40 percent of respondents
services to self-service or shared
platform. • Service delivery alignment report success in leveraging
services and leveraging higher-
requires significant change HR as a strategic partner,
level HR business partners for more • 60 percent of organizations cite
management, a fact that more indicating a clear opportunity for
strategic services are common ways above-average success redefining
than one-quarter of organizations organizations.
organizations improve HR service responsibilities and optimizing the
delivery. To achieve the value of continue to underestimate.
HR interaction model.
full transformation, organizations • Measuring and reporting on HR
should examine HR delivery options, • 66 percent claim above average
service delivery effectiveness
including new roles, changing success aligning, hiring and
is foundational to improving
responsibilities and shifting skillsets. upskilling employees for the new
HR services. One-third of
The new model often requires new model.
companies surveyed struggle
skills and capabilities that may not to measure and track service
• Two-thirds of organizations state
currently exist in the organization. delivery effectiveness. Despite
they have had above-average
success in optimizing their significant investments in HR
service delivery model to improve transformations, leaders often
their employee experience. do not take the time to monitor
effectiveness. Measuring and

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2023 Survey on Industry Trends in HR Technology and Service Delivery

Service Delivery Model Utilization What Is the Primary Delivery Model Your Organization Has
Implemented for the Following HR Functions?
A strong preference for centralized regional strategies and solutions.
HR services (whether with internal Multi-national companies struggle
Talent Acquisition (Recruiting) 23% 43% 22% 12%
shared services, outsourcing or with a range of challenges, including
hybrid models) remains clear. Less multiple payroll systems, a lack of Workforce Administration 21% 45% 19% 15%

than 23 percent of organizations consolidated reporting and analytics, HCM Application Maintenance Support (AMS) 15% 50% 18% 17%
indicate the use of a decentralized compliance issues and non-standard Workforce Management (Time and Attendance) 22% 43% 19% 15%
model across any of the HR service approaches to vendor management
Compensation Administration 16% 48% 23% 13%
categories. There has been an and governance. The changing
increase in adoption rates for internal landscape is forcing multi-national HR Reporting & Analytics 19% 42% 23% 15%
shared services, particularly in companies to look carefully at country- Learning Management 14% 46% 26% 13%
compensation administration, talent level payroll decisions and recognize
Performance Management 15% 44% 21% 20%
acquisition (recruiting) and HCM the need for a more centralized
application maintenance support. For and standardized approach to risk, Health & Welfare Benefits Administration 18% 39% 24% 19%

the areas of payroll, global mobility, compliance, cost and governance. Global Mobility 14% 40% 28% 18%
health and welfare and retirement
Payroll 13% 41% 28% 18%
administration, some degree of
Retirement Benefits Administration 17% 36% 30% 17%
outsourcing is more prevalent than
pure internal shared services. Internal Decentralized Internal Shared Service

Outsourced Hybrid Internal / Outsourced

Payroll in particular has been an
active market as organizations Source: ISG | Figure 17
evaluate more robust global or

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2023 Survey on Industry Trends in HR Technology and Service Delivery

When we break down service delivery or begin use of HR outsourcing came

models, we see that 68 percent of from organizations with less than
organizations expect to begin or 10,000 employees, at a significant
increase their reliance on shared 71 percent.
services and 60 percent expect to
begin or increase their reliance on How Do You Expect Your Use of the Following HR Service
outsourcing. These both represent Delivery Models to Change through 2023?
higher numbers than our last survey,
which saw 55 percent beginning or
increasing their reliance on shared
services and 50 percent beginning Shared Services 16% 52% 15% 3% 13%
or increasing their reliance on
outsourcing. The results indicate
strong growth in both models as
organizations undergo or continue
Source: ISG | Figure 18
significant transformation activity.

The largest increase in shared services

over the past 18 months came from
HR Outsourcing 15% 45% 13% 9% 17%
organizations with greater than 50,000
employees, of which a whopping 85
percent indicated an intent to increase
(or begin) use of shared services. The
largest increase in intent to increase
Begin Use Increase Use Decrease Use Stop Use No Change

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2023 Survey on Industry Trends in HR Technology and Service Delivery

HR Outsourcing Impact HR Outsourcing

Outsourcing is generally seen as a Organizations with 20,000-50,000 HR Outsourcing improves our service delivery quality
successful strategy to achieve HR employees are the second most Employees
service delivery goals. Seventy-seven likely. This second group is most 5,000 - 9,999 72%
percent of survey respondents likely to see cost reductions.
10,000 - 14,999 84%
that rely on HR outsourcing agree
that it improves service quality, 15,000 - 19,999 72%
and 59 percent agree that it
20,000 - 49,999 81%
reduces costs. Organizations most
likely to state that HR outsourcing Greater than 50,000 76%
improves service delivery quality
NET 77%
and reduces costs are those that are
leveraging mobile-enabled employee
and manager self-service (ESS/ HR Outsourcing reduces our cost
MSS) and live chat capabilities. Employees
5,000 - 9,999 62%
When looking at the impact of
outsourcing by organizational size, 10,000 - 14,999 59%
we find that organizations between 15,000 - 19,999 56%
10,000 and 15,000 employees are
most likely to report that outsourcing 20,000 - 49,999 67%
improved service delivery quality. Greater than 50,000 55%

NET 59%
Source: ISG | Figure 19

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2023 Survey on Industry Trends in HR Technology and Service Delivery

Direct Access
HR organizations continue to evolve For chatbots, there are a growing efficiency and boost employee and HRIT investment cited in the next two
their modes of engagement to achieve number of customer success candidate experiences. And based years), we expect to see a rise in these
higher levels of self-service and an stories across HR, recruiting, payroll on the increasing priority of the numbers in 2024 and beyond as well.
improved user experience. Mobile- and benefits to drive operational enabling service delivery tools (top
enabled employee self-service
(ESS) and manager self-service Modes of Engagement Supported by HCM Platform for HR Lifecycle Events
(MSS) jumped significantly this year
to the top position and are used
by 61 percent of organizations. 61%

Significant opportunity in ESS and 52%

50% 49%
MSS adoption remains. Fewer than 44%
half of organizations leverage chatbot
technologies for self-service, and
even fewer – around 28 percent of 28%
respondents – offer knowledgebase/
portal capabilities. Organizations
with more than 50,000 employees
ranked particularly low in these
two areas, with just 32 percent
leveraging chatbots and 15 percent
Mobile-enabled Live Chat Voice/Email ESS-MSS Chatbots Knowledgebase
leveraging knowledgebase/portal. ESS/MSS (desktop only) or Portal
Source: ISG | Figure 20

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2023 Survey on Industry Trends in HR Technology and Service Delivery

Reporting and Analytics Capability

HR organizations are increasingly Clear opportunities remain, but ability to surface HR insights to drive organizations say they are continually
finding success in fostering a results indicate that not only is action is improving. Underpinning investing in applications or data to
data-driven culture in HR, with 43 there desire for data, but that the this positive direction: 72 percent of improve their HR analytics capability.
percent describing themselves as
moderately or very successful. With How Would You Rate Your Organization’s Success
an increased thirst for data, there
is increased pressure to deliver the
data insights the business needs. Fostering a data-driven culture in HR 16% 41% 43%
Organizations were slightly less
positive about providing direct access
to the data needed, with 32 percent
of organizations rating themselves Leveraging predictive analytics to enable 18% 45% 36%
insights-driven decision-making
moderately or very successful. Just
over a third indicate good success
in establishing enterprise-wide HR
metrics that give them a common Establishing enterprise-wide HR metrics 15% 49% 35%
set of definitions and data across the
organization. A similar percentage (36
percent) report success leveraging
Providing HR professionals with direct access to
predictive analytics to enable 16% 52% 32%
the data and information that they need
insights-driven decision-making.

Source: ISG | Figure 21 Not Successful Average Success Moderate / Very Successful

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2023 Survey on Industry Trends in HR Technology and Service Delivery

Conclusion: Executive Guidance

In this year of constant change, knowledgebase) to achieve 4. Get started on AI if you haven’t. 6. Evaluate shared services and
uncertain market dynamics the next level of HR efficiency There are plenty of promising outsourcing as effective strategies
and ongoing talent challenges, and improved experience. use cases – whether in talent to lower cost and improve
organizations need to drive results Organizations should consider acquisition, talent marketplace, service quality. Both models are
through their HR investments. We see the full end-to-end model, skills management or learning. achieving results in the market,
organizations acting in meaningful recognizing the importance of Leaders who do not embrace and now is the time to evaluate
ways; they are changing their these service delivery tools in AI solutions risk falling behind new service delivery models and
technology and operating model, creating the right experience and missing opportunities to solutions. Create a business
focusing on enabling a more agile way and achieving efficiencies. capture greater operational case to review strategic options,
of working and achieving cost savings. 3. Take time to get the foundational
efficiencies, better insights and weighing the investments required
The following executive guidance is elements for HR analytics right.
improved employee experiences. and considerations aligned with
based on the results of our survey and Analytics continue to be a topic 5. Prioritize the ongoing support
your future state objectives.
our experience working with clients of discussion and, while many model. Companies often adopt HR 7. Employ speed as a strategy.
through their transformation journey. organizations feel they have SaaS without the full understanding Seek products that support
progressed on this journey, there is of the pace of change and how change and agility. To the extent
1. Double down on process
still much to do in terms of defining best to operationalize the new you can simplify your technology
optimization. Simply put, investing
the right metrics, effectively model. Think through governance footprint, harmonize processes
in business processes leads to
tracking them, recognizing trends at the beginning. Plan (and and create a more agile operating
higher business value. Prioritize
and taking swift action. Stepping budget) to review and take model, you will be able to better
the hard work to harmonize
back to align on data you want to advantage of enhancements, support growth and react to the
processes across the enterprise.
capture and ensure consistency incorporate new technologies and changing needs of the business.
2. Focus on enabling technologies in the enterprise will accelerate capitalize on market innovation.
(e.g. chatbot, live chat and success on the backend.

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2023 Survey on Industry Trends in HR Technology and Service Delivery

Authors

Stacey Cadigan Saskia Goods

Partner Director

Stacey Cadigan leads the unique insight and the ability to Saskia Goods has more than 20 recruiting and learning. She has
Human Capital Management ask the right questions to help years’ experience in HR technology, helped countless clients transform
and Enterprise Transformation organizations find solutions to leveraging her expertise to help their business and align their HR
practice at ISG . With more than effectively align their HR initiatives clients achieve their technology technology initiatives and service
25 years in HR, she has leveraged with their vision. Stacey has been and operational goals. Her delivery model with their strategic
her deep experience and expertise named “HRO Superstar” by HRO experience helps her establish vision for the HR function.
to help clients achieve their Today Services and Technology long-term trusted partnerships with
strategic, operational and financial Association every year from 2016 to her clients and work across many
objectives. Through her wide- 2022. strategic initiatives within HR and
ranging experience in HR strategy technology. Saskia has partnered
and transformation, HR technology, with the leading providers in
HRO and RPO operations and cloud ERP and has a specialized
transitions, she has developed background in HCM, talent,

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 ISG (Information Services Group) (Nasdaq: III) is a leading global
technology research and advisory firm. A trusted business
partner to more than 900 clients, including more than 75 of
the world’s top 100 enterprises, ISG is committed to helping
corporations, public sector organizations, and service and
technology providers achieve operational excellence and
faster growth. The firm specializes in digital transformation
services, including automation, cloud and data analytics;
sourcing advisory; managed governance and risk services;
network carrier services; strategy and operations design;
change management; market intelligence and technology
research and analysis. Founded in 2006, and based in Stamford,
Conn., ISG employs more than 1,600 digital-ready professionals

isg-one.com operating in more than 20 countries—a global team known for

its innovative thinking, market influence, deep industry and
technology expertise, and world-class research and analytical
capabilities based on the industry’s most comprehensive
marketplace data. For more information, visit www.isg-one.com.