Fewer Vendors and Changing Leadership in the Shifting HR BPO Landscape, IDC Reveals
FRAMINGHAM, MA – OCTOBER 3, 2005 – According to a newly released IDC study, the human resource (HR) business process outsourcing (BPO) vendor landscape has shifted over the last 12 to 18 months, resulting in fewer major players due to mergers, acquisitions, and joint ventures. These moves have primarily been undertaken to position for competitive advantage in the area of HR domain expertise. The IDC Leadership Grid within this document illustrates the shifts in vendor dominance since 2003, in addition to the report's examination of the U.S. HR BPO market and competitive environment.
"Not all service providers possess the needed skills to win," said Lisa Rowan, program manager for IDC's HR and Talent Management Services. "HR domain expertise, particularly benefits, has emerged as a core competency, and talent management looms as the next competency that will be needed to gain share. In addition, we haven't seen the end of market consolidation as additional areas of HR expertise will likely drive further acquisitions."
In 2004, 37% of U.S. HR outsourcing spending was on HR and talent management services. IDC projects that U.S. HR BPO services will continue to grow at a CAGR of over 16% to almost $16.5 billion by 2009. With this growth and recent vendor contraction, the market leaders are beginning to emerge.
This IDC study also finds, however, that barriers for entry are rising despite increased interest in HR BPO services, resulting in fewer competitors entering the market as opposed to two years ago. In order to attract market attention and acquire new business, providers must now be able to illustrate that their competencies match the growing complexity around HR BPO engagements.
The recent study, U.S. HR BPO 2005 Vendor Analysis: The Evolving Landscape (IDC #33946), examines the U.S. HR BPO market and competitive landscape. The report provides an analysis of the leading players and their current performance, discusses the dynamics of HR BPO and how the landscape is evolving, and offers insight to services providers on ways to grow their HR BPO businesses through aligning offerings with market demand. Also provided in this study is an IDC Leadership Grid, which assesses the leadership potential of major U.S. service providers.
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