Adoption of Integrated Outsourcing of HR Services

Global Market Outlook on Adoption of Integrated Outsourcing of HR Services

The HRO market continues to grow steadily, with high growth in RPO and PEO services. The global human resource outsourcing market is expected to grow at a rate of 9 to 10 percent during the period 2018-2022.

• The developed markets of North America and Europe are mature in HRO.
• The human resources outsourcing (especially in multi-process human resources outsourcing and recruitment process outsourcing) is facing a faster growth in the Asia Pacific region
• The Americas dominated the global human resource outsourcing market with around 50% share in 2017 followed by Europe in which the major contributor is the UK followed by Germany and France
• The majority of Human Resource Outsourcing vendors such as Capita Plc, Accenture and Adecco are based in Europe region.
• This is attributed to increasing number small and medium Business (SMBs) in Europe.
• The HRO trend is seen in benefits administration, payroll services, and multi-process HRO.
• Buyers select HR outsourcing in hybrid form or go for best of class suppliers

Buyer Trends – HR Outsourcing

Integrated HR outsourcing is growing and companies are trying outsource all activities to single player to ease the outsourcing process and for business results. So to get better ROI, HR department is trying different methods to optimize this function by consolidate suppliers, use best technology, etc.

Buyer trends

• Centralize the programs and functions which are repeatable and scalable and outsource end to end services to a single service provider

• Buyers are expecting a to have an integrated platform which is user friendly and easy to use

• Demand for support and maintenance functions are slowly increasing with the use of HRM software 

• Organization are trying different method to reduce spend and have spend visibility. People analytics is also growing

• Focus is shifting to employee experience and is implemented through HR digitalization and technology tools like wellness apps etc.

Buyer Trends and solutions

• Buyers are looking for HRO solutions mainly for two reasons 1. to reduce cost 2. strategic benefits by transforming their entire HR function.
• Manufacturing, financial services, and services industries had higher HRO adoption during 2015-2017 period.
• Traditional transactional processes like payroll, contact center, HRIS, and benefits were in the MPHRO deals during 2016 -2017 period.
• Off shoring is been adopted continuously, India is a preferred location and Latin America and eastern Europe are slowly growing.

HRO Growth Drivers and Constraints 

Human resource outsourcing is beneficial to many companies since it makes business processes very economical and efficient. The ease of vendor management, supplier relationship, cost reduction, expert solutions has derived the HRO market.

Drivers

• Access to outside HR expertise
• Improving service quality
• Ability to focus on core expertise
• High cost of remaining compliant with rapidly changing legislation
• Eliminate high volume of low-value transactional activities
• Reduce management distractions away from core business
• Leverage existing staff to focus on key competencies
• Reduce transaction costs

Constraints

Some factors hamper the growth of human resource outsourcing market. They are:

• Loss of control over the staff
• Lack of flexibility
• Outsourcing reduces the company to maintain relationships with their employee
• Possibility that the outsourced resource is not much benefit to the organization.
• Risk of data security and confidentiality
• Greater competitive advantage and speed of response