Internal or external, HR services are usually expected to deliver efficiency and cost reduction. But the benefits needn’t stop there. By lifting limits around the scope of services you can expect from an external provider, you can break HR free of its transactional role and move it up the value chain.

Take technology as an example. Ongoing management and maintenance are necessary but insufficient to fully leveraging digital HR capabilities. When you erase the boundary between operations and strategy you can get a solid pulse on your technology vendors’ product road maps and be more prepared to deploy new capabilities and quickly integrate them into enhanced business processes.

A multinational auto manufacturer realized it needed more than operational know-how when it sought a technology solution for complying with the European Union’s (EU) Posted Workers Directive. Designed to protect the rights and working conditions of employees on international assignment, the directive requires a significant amount of pretravel documentation. Compliance is further complicated by the relatively short lead time involved and the fact that each EU member state has implemented the directive in a slightly different way.

The company engaged a cross-functional team to build a system that employees could use to submit their travel information. The team chose a cloud-native deployment so the application management services provider could maintain high system availability and ensure all transactions (that is, business trips) reached authorities within mandatory time frames. The same team also designed the solution to reflect the nuances of compliance in each EU country—from proof of social insurance coverage to permanent establishment, economic employer and payroll taxes—so HR could empower not just business travelers but also other processes within the company.

Although shared services centers are often seen as a cost-saving measure, they can be more than transactional engines. Facing significant cost pressures, a regional hospital system is working to provide back-office services for finance, supply chain and HR. It is engaging providers to support with change management, digital transformation and application management services across all functions by taking a boundaryless approach—along with cloud-based business process outsourcing services for the HR team specifically. These services are valuable enough that the shared services center can charge back for its work, initiating their program to create a profit center within the organization.

Beyond removing boundaries between different groups of people, what about the ones between people and technology? Analytics and artificial intelligence (AI) have now advanced to the point where it’s possible to blend human and digital workers to enable an entire operating model—from employee learning and engagement to information-driven HR business partner capabilities.

A federal agency started down this road after its HR team found itself grappling with poor-quality outputs and long turnaround times. The system that supported the team was not only outdated but also tightly paired with legacy interfaces. This forced HR staff to rely on error-prone manual workarounds. The result was complicated and costly HR processes with little to no transparency for customers.

To help with this situation, the agency’s external service provider developed a modernized, cloud-based solution for employee onboarding and orientation. The provider hosted the new solution on the government’s secure cloud platform, reducing maintenance costs and limiting agency overhead. Then it deployed a digital agent workforce to carry out roughly 40% of the workload. New employees gained an intuitive interface. Agency HR professionals could focus their efforts on complex cases. All stakeholders—including new hires, HR specialists, help desk workers and quality-control personnel—could check on the progress of their tasks seamlessly.

In today’s world of work where transactional work can increasingly be automated, strategic decision-making based on insights gleaned through data and analytics are at a premium. Such insights help HR leaders spot what changes need to occur and keep them on track for achieving them. This is the new how of work—one where work is less based on performing administrative tasks that can be increasingly performed by applied AI, and more based on the human capabilities needed to make judgment calls and continuously improve human decisions informed by a steady stream of data and analytics.

HR leaders can lean into new relationships with external service providers to help—many of whom are already managing the systems that produce this data. Consider the experience of a large pharmaceutical and biotech company that was dealing with significant market disruption. Its top-selling drug was going off patent while its latest blockbuster drug candidate remained under review by the US Food and Drug Administration. Intent on retaining employees during this sensitive time, the company asked its HR service provider to help it understand what was driving employee attrition so HR could implement specific interventions.

The provider developed a retention predictive model based on data from the company’s human resources information system. Working with the model, the provider’s analysts scored each employee’s risk of voluntarily leaving the company, then identified top risk drivers at the individual level to customize interventions. The analysts discovered that a modest 1% retention improvement would yield the company $19 million in cost savings. On top of that, the new analytics framework replaced six older analytics solutions, saving the company another $750,000 or more per year.