HR Services Market Shows Modest Growth in 2006 with Slower Growth in HR BPO Fueling Slight Downturn in Outlook, IDC Finds

FRAMINGHAM, MA – APRIL 23, 2007 – In 2006, HR services spending started to level off and grew 8% worldwide over 2005, according to a new study published by IDC. Growth in spending in the Americas outpaced all other regions. This level of growth is slower than the growth from 2004 to 2005, due in part to a slowdown in execution on 2005 HR business process outsourcing (BPO) contracts.

"The worldwide market for HR services showed slower growth in 2006," said Lisa Rowan, program manager for HR and Talent Management Services at IDC. "HR service providers have an opportunity to enhance their business proposition through the pursuit of several strategies, including focusing on talent/recruiting management and on less-served mid-market buyers. Buyers are advised to seek greater understanding of their future talent risks due to a re-emerging war for talent and to take a closer look at all of their HR processes as possible candidates for outsourcing to strengthen their strategic position in the enterprise."

Among the key results presented in IDC's study are the following:

— The worldwide market for HR services in 2006 showed an increase of 8% over 2005. In the United States, HR services grew 8.7%.

— HR executives are advised that they can achieve a higher level of strategic relevance to the organization by looking to outsource portions of HR, especially highly transactional processes. IDC warns buyers, however, that some HR BPO vendors are resource constrained by complex client implementations that are not yet at a steady state.

— IDC predicts that the software-as-a-service (SaaS) delivery model may threaten and encroach upon traditional outsourcing services during the forecast period, especially for mid-market buyers.

This IDC study, Worldwide and U.S. HR Management Services 2007-2011 Forecast (IDC #206320) contains a five-year forecast for the worldwide and U.S. markets for human resource management services, including discrete HR outsourcing (i.e., processing), HR consulting, and full-service HR outsourcing (i.e., business process outsourcing). The study describes key observations as well as defines and quantifies the worldwide and U.S. market opportunity for HR service providers and presents recommended strategies for buyers and providers to take advantage of the opportunities. In addition, the report presents key factors that may influence the timing and magnitude of market opportunities, including both accelerators and inhibitors. The study concludes with guidance for service providers to help them distinguish or expand their services brand in the market and for buyers to best take advantage of services.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 900 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 90 countries worldwide. For more than 43 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com .

###