As organisations evolve, HR Operations is no longer a back-office function – it is emerging as a critical enabler of transformation, efficiency, and employee experience.

HR leaders are increasingly evaluating three strategic pathways: building a new HR Operations function, outsourcing to external providers, and bringing operations back in-house. Each approach carries distinct implications for control, cost, agility, and colleague experience:

• Building from the ground up: This involves designing a centralised model aligned with business strategy, defining scope, and investing in capability.
• Outsourcing: Offering scale and cost efficiency but requires strong governance, careful vendor selection, and a robust employee experience strategy.
• Reintegrating in-house: This provides greater control and alignment but demands investment in talent, technology, and change management.

Steph McCleery, Associate Partner within the HR Practice at Eton Bridge Partners, recently spoke with experienced HR leaders who have guided HR Operations through periods of significant change. This conversation comes at a time when, in 2025, we have seen a notable increase in demand for HR Operations leadership, driven by enterprise-wide transformation, cost optimisation, and the need for scalable, data-driven service delivery.

Whether you’re building a new HR Operations function from scratch, outsourcing, or bringing services back in-house, we explore what’s at stake and what C-suite leaders need to consider when deciding the best model for their business.

Building an HR Operations function from scratch: Design for impact

For organisations consolidating entities or scaling rapidly, building HR Operations from the ground up can be a powerful enabler of growth and agility.

Dolena Orr, who led the transformation of HR Operation at Vanquis Bank, advises starting with clarity: “Decide early on what functions sit in HR Operations. Is it a self-service hub, or will you include ER, Systems, Compliance?”

In regulated industries, governance and data integrity are paramount. But in all sectors, the same truth applies: expertise matters.

“Hiring specialists costs more upfront, but efficiency gains repay the investment.”

Designing around the employee journey – not just internal structure – ensures seamless experiences. Automate where appropriate, but don’t lose the human touch. If AI tools are introduced, ensure clear policies are in place and avoid over-reliance. “Having people with the expertise and knowledge makes all the difference. It will cost a little more at the outset, but the efficiency and outputs pay for themselves,” she added.

Other key recommendations include:

• Create focus groups or continuous improvement teams to test changes.
• Plan robust onboarding for any external hires into the Operations team.
• Align HR Operations with the wider HR strategy to reinforce partnership and accountability.

An in-house model gives you control and flexibility, but requires consistent investment in training, tech, and process improvement.

Outsourcing HR Operations: Strategic considerations for sustainable value

On the flip side, outsourcing HR operations can make a lot of sense, especially if your business needs to scale fast, cut costs, or tap into specialist expertise. But it’s not a hands-off solution. It requires careful planning, active oversight, and smart vendor management.

Joanne Whitlie, a seasoned HR transformation leader with 15 years at a global manufacturing and consumer goods company, led a major outsourcing initiative and shared key insights for HR leaders considering this route: Start by deciding what HR capabilities you want to retain in-house. Outsourcing everything often leaves you with loss of internal expertise that can be hard (and expensive) to rebuild later.

Joanne stresses three non-negotiables: governance, cost control, and employee experience: “You can lose key internal capability when you outsource – and without continued investment, it’s difficult to bring that back,” she warns.

To avoid common pitfalls:

• Benchmark providers rigorously: seek tech-forward partners with relevant case studies and customer testimonials.
• Avoid single-provider dependency: split functions across specialist vendors.
• Negotiate short-term contracts (2–3 years) with exit plans built in — think 30/60/90-day transitions.
• Invest in relationship management: internal roles focused on vendor oversight, audits, and continuous improvement are essential.

Employee experience must remain central. Data reporting, process alignment, and time zone compatibility all affect how outsourcing is felt internally. As Joanne puts it: “Outsourcing lets you set direction, but you lose some control. You gain scale, but must manage experience closely.”

Above all, do not underestimate the complexity of transition. This is not a side-of-desk project. Appointing a skilled project manager is vital to mitigate disruption and land the change effectively.

Rebuilding HR Operations in-house

When a business outsources core HR operations, it often loses critical internal capabilities. Without continued investment in these skillsets, re-establishing them later becomes a significant challenge. The decision to bring HR operations back in-house is not just a tactical shift, it’s a strategic transformation that demands executive sponsorship, long-term vision, and operational discipline.

The journey to insourcing HR Operations is complex, but essential for control, consistency, and colleague experience.

Mark Murphy, former Director of HR, Digital, at BT, led a major insourcing initiative: “It’s labour-intensive and complex, but critical it lands well to create and deliver a seamless colleague experience.”

For many global businesses, outsourcing has led to fragmented services and inconsistent processes. Rebuilding in-house allows for standardisation, policy alignment, and a renewed focus on service excellence.

Reintegrating HR Operations offers control and cohesion, but demands:

• A clear definition of scope and structure: central hubs, accountability, and decision-making authority must be explicit.
• Policy alignment and digital enablement: offer real-time data insights, streamline outdated policies, and focus on automation.
• Investment in new skillsets: managing HR Operations internally often means hiring differently, operational, digital, and analytical expertise are key.

The upfront investment can be costly, with ROI only visible over time. Leadership buy-in is essential, as is engagement across the business. Mark recommends: “Understand the organisation’s appetite for change and tailor your approach accordingly. This will help shape the communication strategy and ensure alignment across functions.”

Done well, in-house HR Operations liberates HR Business Partners to become true strategic partners, driving talent agendas rather than dealing with operational ‘noise’.

Choosing the right HR Operations model for your business

Ultimately, the right HR Operations model depends on your organisation’s maturity, strategic priorities, and appetite for transformation. Outsourcing, insourcing, or centralising – there’s no one-size-fits-all. The best HR Operations model depends on your company’s goals, risk appetite, culture, and readiness to change.

But one thing is clear: HR Operations is now a critical driver of business performance. It’s no longer just about processes or routine tasks. It’s about enabling agility, supporting strategy, and delivering an experience that attracts and retains talent.

If you are considering building or transforming your HR Operations function and would like to discuss executive hiring needs, get in touch with Steph.