IDC and EquaTerra Note Major Changes in the Human Resources Business Process Outsourcing Marketplace

FRAMINGHAM, MA – JUNE 21, 2007 – Global independent research and advisory firm IDC, and EquaTerra, a global sourcing advisory firm announced in a joint telebriefing today that the marketplace is seeing major changes and shifts in human resource outsourcing (HRO) adoption, deal trends, and provider positioning.

As the first-generation of these contracts begin to reach their expiration periods, buyers are becoming increasingly savvy. As existing contracts are renegotiated and recompeted, the market for HRO has become more competitive. IDC projects healthy revenue growth in this market from $11 billion worldwide in 2006 to $19 billion in 2011.

Some key findings from the briefing include:

— As standalone HR outsourcing grows in the forecast period at a compound annual growth rate (CAGR) of 8.3%, comprehensive BPO, combining multiple HR functional towers, is growing at a CAGR of 14% for the same period.

— Buyers are increasingly combining HR functions with others, including finance and accounting, creating 'multi-tower' deals.

— After a steady decline, HRO pricing is on the rise and HRO provider profitability is increasing.

— Large, global HRO deals are on the decline. Only two to four are projected in 2007.

— Demand is outstripping supply. HRO providers are capacity-constrained.

— New providers are still entering the market.

"Comprehensive HRO contract durations are tailing off after several years of growth and are now averaging seven years," said Lisa Rowan, program manager for HR and Talent Management research at IDC. "This may reflect greater adoption by mid-market firms that are new to the market and who are accustomed to shorter engagements."

As HRO moves beyond single-function deals, buyers are finding it more important to take a strategic view of their objectives and desired outcomes. "We see lots of activity in the HRO market, but the buyer landscape has certainly changed as more organizations understand the reality of HRO. It is a complex undertaking that requires careful planning, clear communication of strategy and purpose, and significant effort to design an outsourcing governance organization that can manage all of these moving parts. There are benefits to be had, but not without effort," said Mark Hodges, EquaTerra Chairman and Co-Founder.

This research is a combination of findings by IDC and EquaTerra, providing a collaborative and comprehensive view of the HRO marketplace by the premier research and advisory firms in the sector.

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 .

About EquaTerra

EquaTerra advisors help clients achieve sustainable value in their business processes. With an average of more than 20 years of industry experience in over 600 global transformation and outsourcing projects, our advisors offer unmatched industry expertise. EquaTerra has deep functional knowledge in Finance and Accounting, HR, IT, Procurement and other critical business processes with advisors throughout North America, Europe and Asia Pacific. We help clients achieve significant cost savings and process improvement with outsourcing, internal transformation and shared services solutions.

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