HR is at a turning point where it must evolve or face being dissolved within the business, according to a new report from Deloitte.

The advisory firm concluded that HR needs to prove it can make a strategic contribution to the business, or it will diminish as virtually all HR administration can be outsourced in the future.

The report also found the challenge for HR over the next few years would be ‘rapidly changing economics', reduced growth and the increase of redundancy programmes.

Aaron Alburey, a director in Deloitte's human capital consulting practice and one of the report authors, said: "HR is at a crossroads. It needs to become capable of contributing to board-level discussions and make transactional HR a secondary function. If it fails to do so its functions will be handed over to individual businesses within the organisation to manage for themselves and corporate strategy will continue to be determined without any significant input from HR.

"If these fundamental challenges are not addressed who can blame the business from wrestling control of the people agenda."