Enterprises are partnering with HR outsourcing (HRO) service providers to implement AI and analytics for improved employee experience and workforce performance, according to new research reports published by Information Services Group, a global AI-centered technology research and advisory firm.
The 2025 ISG Provider Lens™ Transformational HR Outsourcing (HRO) Services report for the U.S. finds that U.S. companies are at the forefront of adopting HRO services, which are now helping organizations expand the role of HR from a support function to a strategic differentiator. The global 2025 ISG Provider Lens™ HRO Services report, also published today, finds that a growing number of enterprises around the world are adopting multiprocess HRO (MPHRO) services that incorporate many functions within a unified service delivery model.
“Technology has an increasingly important role in optimizing costs and transforming the manager and employee experience, and companies are seeking to operationalize the benefits of AI and analytics,” said Stacey Cadigan, partner, ISG Human Capital Management and Enterprise Transformation. “The transformation has begun, and HRO service providers are helping to make it possible.”
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In technologically advanced U.S. enterprises, HR is moving from manual to digital processes and administration, a transition that is increasing efficiency and access to HR information, ISG says. Companies are working with HRO providers to enable decision-making based on real-time data and predictive insights from analytics. Many are adopting HR dashboards to track trends such as employee engagement levels, quality of hires and performance of outsourced services.
With the help of HRO providers, many U.S. enterprises are already using AI to automate and improve HR functions, ISG says. AI enables companies to automatically personalize employees’ experiences when using HR platforms and offer recommendations tailored to individual needs. U.S. companies are using generative AI for functions such as drafting job descriptions and doing first-level analysis of applicants. GenAI also powers new virtual assistants that field employee inquiries and requests. Using AI-powered analytics, employers are gauging employee sentiment and predicting attrition rates.
MPHRO services have evolved from cost-focused solutions to strategic enablers of HR transformation, the global report says. Enterprises partner with MPHRO providers on broad goals including streamlining and standardizing HR operations across regions, improving employee experience and integrating new technologies such as AI and automation. The scope of an MPHRO engagement typically spans core HR functions, recruitment, payroll, benefits administration, employee data management and other applications.
“MPHRO provides integration that helps companies reach their HR goals,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Emerging markets are using it to rapidly digitalize HR, and mature enterprises are seeking transformational long-term partnerships with providers.”
The reports also explore other U.S. and global HRO trends, including the rise of employee-centered health and welfare benefits administration and the growing demand for providers to address regulatory complexity and risk.
Source: BusinessWire
