No Recession in HR Tech Spending

The recession does not appear to be putting much of a dent in company spending on HR technology.

According to Towers Perrin's annual survey on HR service delivery trends and practices:

• Only one in three companies (36%) expects to decrease spending on HR technology in 2009.
• 21% actually expect to increase spending this year.
• The remaining 43% of respondents reported that they are maintaining their annual HR technology budgets.   

Value of HR function recognized

The results of the survey underscore the value that companies continue to attach to the HR function as an integrated and complementary support system for achieving business goals and priorities. This view has prevailed despite the pressures on companies to search hard for cost savings throughout the organization.

Increasingly, companies view their budgets for HR technologies and systems as necessary expenses to support both long-term objectives and short-term needs. This marks a shift from a few years ago, when companies tended to view spending on HR technology more as a discretionary cost item.

According to the survey, only 11% of the organizations surveyed were compelled to cut their HR technology budget by more than 20%. By contrast, nearly two-thirds (64%) maintained or increased their year-over-year budgets.

Shift in HR service delivery priorities

Companies did indicate they were paying attention to cost, which emerged as one of the top three HR service delivery issues for the first time since Towers Perrin launched the survey series in 1997. Activities that companies had completed or had under consideration this year in response to the economic downturn include:

• focus more on cost-reduction strategies within HR services (65%)
• postpone certain service delivery initiatives (45%)
• shrink infrastructure (e.g., reduce staff) (37%)
• standardize service delivery tactics across locations (30%)
• try or consider new service delivery strategies (22%)
• accelerate service delivery decisions (21%).

Strategic support role remains intact

Nonetheless, even with the focus on cost-cutting initiatives at many organizations, the top HR service delivery issues cited by respondents were talent and performance management (35%) and streamlining processes and systems (also 35%). 

Only 12% said recruiting and staffing was an HR services issue this year, a sharp reduction from 32% in 2008. This no doubt reflects the cutbacks in hiring at many organizations in response to the sour economy.

Nearly two-thirds (63%) of organizations actively sought to increase the alignment of their HR strategy with the company's overall business strategy.

Towers Perrin's 12th annual survey on the state of HR service delivery included HR and HRIT executives from 332 organizations around the world. Well over half (58%) are global companies, while the remainder reported operations primarily in one country.

For more information about HR service delivery, e-mail us, or contact your Towers Perrin representative.