HRO
O
ver the years the Human Resources Outsourcing (HRO) industry has gradually matured and the whole HR BPO space has transformed from a mere cost saving initiative to a driving force for adding business value. The traditional belief that HRO is simply a measure to reduce the burden on HR is changing and the strategic significance of HRO is being acknowledged more and more. So how has the year 2012 been for HRO? The global HRO market retains its optimism, very much the way it did last year. But things are definitely not going to be the same, as the market continues to evolve under the influence of some significant changes-changing employee demographics being one of the most significant. Of all the forces acting together, two primary forces are driving global HRO ahead in these tough times - HRO becoming a more strategic initiative for enterprises and HR service providers coming out with new technology innovations. Targeted for multinational companies for a long time, HRO is now attracting interest from mid market enterprises as well and this is going a be a strong catalyst for growth in the coming years. Also the concept of employee engagement is going to hold a lot of significance. According to GIA’s, Human Resource Outsourcing(HRO): A Global Strategic Business Report, the global market for HRO is estimated to reach US$199.6B by the year 2017, driven by the increasing need for alignment between business operations and HR, cost reduction, compliance management, understand changing policy framework and access to key technologies. The global HRO market is clearly divided into two parts - MPHRO and Single process HRO. Although some growth has been evident in all forms of HR outsourcing contracts, its the single process HRO space that is demonstrating an aggressive pace of growth. RPO dominates the
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The need to evolve HR practices in order to cater to a younger workforce will be felt more. Rajiv Raghunandan strategic business practice head, HRO and S&F, Infosys BPO
single process HRO space and is the fastest growing segment right now.
Market Estimates According to Everest Research, the MPHRO market remains a consolidated space with few leading players dominating the scene. Top players like Aon Hewitt, IBM, Accenture, NGA, ADP etc account for around 80% of the market share. Similar is the case with Benefits Administration where top 3 players, including Aon Hewitt, Fidelity and Xerox account for 70% of the market share. Single process functions like RPO and Learning are relatively fragmented markets with numerous service providers playing together. The market is still in a phase of cautious optimism and growth in 2012 is expected to be very much in line with what we saw last year. The MPHRO space has grown around 2% over the last year and stands at around $ 3.1 B. The RPO segment has grown over 27% over the same time and currently stands at around $1.4B. Benefits, the most matured market in the HRO space, remains the largest in terms of value, currently around $5B. Globalization & Growth Of Emerging Markets Multi country capabilities are high on enterprises agenda as they explore new, emerging markets and attempt to break geographical boundaries. Enterprises that venture into new areas should be aware of the rules of the land. Local knowledge and experience is very crucial and if they can’t get
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