Outplacement is a service that companies offer to its exiting employees after a layoff, reduction in force, shutting down of a business unit or when merger and acquisition takes place. In earlier times, corporates had been using the traditional outplacement solutions to help their employees to land to a new job. In last few years, the purpose of providing outplacement services has been highly critical in terms protecting brand name, engagement with current employees and reduce the cost involved in layoff.
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Tech executives plan to increase the revenue by focusing on cost cuttingMarch 21, 2023
PayPal, HubSpot, and HarperCollins announce LayoffsFebruary 01, 2023
Google's parent company "Alphabet" has announced 12000 tech layoffsJanuary 25, 2023
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Outplacement Services Industry Benchmarks
The average annual savings achieved in Outplacement Services category is 7.70%
The industry average payment terms in Outplacement Services category for the current quarter is 59.4 days
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Outplacement Services market report transcript
Global Outplacement Services Market Outlook
Global outplacement services market size was valued at $2.38 Billion in 2022 and is expected to expand at a CAGR of 5.69 percent during the forecast period, reaching $3160.32 million by 2027.
The outplacement market is countercyclical, it tends to do better during down economies and vice versa. Due to flexible work arrangements, mass layoffs by global organizations and start-ups around the world have also grown the importance of outplacement services in 2023
Simultaneously, increasing career activism among companies to retain workers in a market, which is going through severe skills shortages, has led outplacement companies to further diversify their business portfolio to include proactive services not directly related to layoffs
The market for outplacement services is categorized into two segments based on end-users: Personal and Enterprise. Among them, the Enterprise segment is expected to exhibit the highest compound annual growth rate (CAGR). This can be attributed to the utilization of outplacement services by large enterprises for their workforce.
Global Outplacement Industry Trends
North Americas is a highly matured and the developed region, so the growth potential for outplacement services is increasing and would continue in the future. The European region is second most mature and developed region compared with others regions, such as LATAM, APAC, and MEA
The North America region is anticipated to exhibit promising growth in the coming years, driven by companies in the region striving to sustain their competitiveness in the market. This has led to resource limitations and employee exits as companies implement strategies to streamline operations and improve their competitive positioning.
Australia in the APAC region is considered to mature and developed market for outplacement services with a revenue projected to $242.47 million by 2027, growing at a CAGR of 4.7 percent
MEA is an underdeveloped market for outplacement services, due to the gap of maturity among the buyers and suppliers in the countries
The APAC market for outplacement services is moderately matures as developed nations, such as Australia and Japan, are better serviced for outplacement/career transitions services
Global Outplacement Drivers and Constraints
The key drivers are safety against litigation, growing customizable services, frequent mass hiring/lay offs. Whereas constraints are budget/funding from head, risks of fraudulent agencies approach, and employee privacy concerns
Safety against Litigation
It is considered as one of the drivers for the industry, as companies adhere to the litigation risk of not facing any legal action been provided by the employees for laying off and not providing any kind of support
Data Intelligence and Emotional Intelligence
The future of outplacement mainly lies on the two major components: data intelligence and emotional intelligence
- Data Intelligence would mainly focus on predictive analytics, big datasets, and data skills, whereas emotional intelligence would focus on element, such as individual support to the employee, insight sharing, and well-being focused
Frequent Mass Layoffs and Hiring
Companies doing frequent mass hiring, post which lay offs, lead to the growth of the industry, as they offer outplacement services to their employees
For e.g., COVID-19 pandemic lead to revised business strategies, including mass layoffs. This, in turn, lead to an increased demand for outplacement or career transition services for the affected employees, to help them overcome emotional stress and to provide the necessary training and guidance to pursue new career opportunities
Budget constraint is a major problem with most of organizations, generally small and mid-size organizations, which leads to a compromise for outplacement services
Risks of Fraudulent Agencies Approach
Buyers should be careful in assessing the service providers for outplacement services, as there might be fraudulent agencies, who give false promises for fulfilling the services for their employees
Employee Privacy Concerns
Due to individual’s privacy also the industry constraints for a growth, as not every individual would be willing to take up the services
Cost Structure Analysis : Outplacement Services
Cost components for outplacement services are showcased in this slide. The total cost incurred by engaging global vendor is comparatively higher than regional supplier. This information shall help HSBC in developing its cost-effective approach.
- The technology cost of regional providers is similar to that of global providers, as the global companies leverage on their efficient back office system maintenance compared to regional providers.
- The personnel cost will be higher for the global outplacement provider, as the average experience for career consultants is higher for global compared to a regional vendor, and hence, the salary paid as well.
The global suppliers operate through their subsidiary business units, network or association, M&As or third-party vendors across geographies
Regional suppliers operate through partnerships or M&As
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