HR BPO Leadership Depends on Global Reach, Careful Client Selection, and Achieving Economies of Scale in a Capacity-Constrained Market, IDC Reveals
FRAMINGHAM, MA – NOVEMBER 6, 2007 – HR business process outsourcing (BPO) remains the fastest-growing segment of HR services, however, the growth rate is down over prior forecasts, a new study published by IDC reveals. IDC forecasts the market to grow at a compound annual growth rate (CAGR) of 13.7% in the United States to reach $18.9 billion in spending by 2011. IDC research indicates that the slowing of growth in the market is due in part to the fact that suppliers are busy implementing acquired businesses and are carefully scrutinizing prospects for fit. "'Shall we outsource?' are words uttered often in the HR executive suite today," said Lisa Rowan, program director for IDC's HR and Talent Management Services. "Known as a way to lower costs, most HR executives have to consider HR BPO in order to achieve a reputation for being strategic. Despite the current slowing of the HR BPO market, IDC envisions continued worldwide growth in the market with particular interest within the midmarket segment."
Additional findings from IDC's study include the following:
* Deal activity is on the decline as IDC found that 2006 contract activity did not quite match that of 2005, and with contracts already announced through September of 2007, 2007 has very little chance of matching 2006.
* The world is flattening and as a result the desire to have commonality and consistency across the organization is increasing in importance. As a consequence, global reach is one of the factors contributing to recent vendor success in HR services and BPO in particular. Unfortunately, each country needs its own variances to support local culture and this takes time and money.
* Investments in talent management technology are soaring. The same is holding true when it comes to HR BPO. Buyers of services may not look to outsource the whole talent cycle but they will be looking for vendors that have a firm grasp on talent and may favor those vendors with sophisticated knowledge and consulting in this space.
IDC's study, 2007 HR BPO Competitive Landscape: Not Business As Usual (IDC #209236) examines the worldwide HR BPO market and competitive landscape. The purpose of this document is to provide an analysis of the leading players that are realizing success in the HR BPO market and present a view on how these players are currently performing and offers a comprehensive list of contracts by provider. In addition, the report discusses the dynamics of HR BPO and how it is evolving and offers insight to service providers on how they might grow their HR BPO businesses by aligning their offerings with market demand.
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