IDC Observes C-Level Executives Having a Growing Influence in HR Outsourcing

FRAMINGHAM, MA – APRIL 23, 2001 – A recent IDC survey of 300 CEOs, VPs, and HR directors revealed that the HR services market is undergoing major changes. In fact, even the person at client organizations responsible for deciding the use of HR services is reaching new heights. According to IDC’s survey, CEOs and CFOs are becoming increasingly involved in HR services decision making as larger projects are undertaken to connect HR processes more closely with organizational goals and objectives.

 

"The decision to use HR services must align with an organization’s overall business strategy," said Marc Pramuk, senior analyst for IDC’s eHuman Resources research program. "It is, therefore, becoming more crucial for C-level executives to be involved in the process of evaluating HR outsourcing strategies to ensure their fit with the company’s goals and business strategy."

Another key finding from IDC’s survey shows the importance of Web-enabled services and self-service capabilities. The majority of respondents said it is important that HR service providers offer Web-enabled services and indicated that self-service capabilities are an important consideration. However, companies still express fears over security, cost, and access to data.

"HR processes are increasingly being automated," Pramuk said. "This is changing the role and responsibilities of HR service providers – both as consultants and as outsourcers. Additionally, there are significant challenges in linking disparate technologies that result from mergers and acquisitions and from decentralized HR strategies. This underscores the importance of having integrated HR systems that can reduce costs while streamlining processes. All of these factors that complicate HR are driving the need for more comprehensive, Web-enabled HR services, and this is fueling significant growth in HR services."

Significant growth indeed. IDC estimates the U.S. market for HR consulting and outsourcing services will more than double its size in the next five years, reaching $45.9 billion in 2005. Business processing outsourcing (BPO) is the fastest-growing segment of HR services. BPO is a distinct form of outsourcing where there is a shift in management responsibility to an external vendor. Spending on HR BPO services will more than triple to $9.7 billion in 2005.

All the information from IDC’s survey can be found in its new report, Human Resource Services Marketplace, Part 1: U.S. Forecast and Analysis, 2000-2005 (IDC #B24302). Additionally, this report forecasts revenues in the market through 2005 by the following segments: HR consulting, HR processing services, and HR business process outsourcing. Other segments examined include payroll and benefits administration. The report also discusses major trends impacting the market as well as growth drivers and inhibitors. It includes recommendations for vendors competing or thinking about competing in the human resource services market. To purchase this report, contact Jim Nagle at 1-800-343-4952, extension 4549, or at jnagle@idc.com.

For more information on the eHR Services program, please contact Jill Toole at jtoole@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

 

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