More Encompassing Solutions and Good Partners Are Key to Success in HR Services Market, IDC Says

FRAMINGHAM, MA – MAY 1, 2001 – The automation and Web-enabling of HR processes are changing the competitive landscape in the human resources (HR) services market. HR services providers have typically specialized in one specific area of the HR function – for example, payroll management, health and benefit administration, or staffing – and have not supported or strongly collaborated with service providers that specialize in other HR areas. According to IDC, however, the increasing demand for portals and self-service capabilities is forcing HR service providers to make their solutions more comprehensive.


"Organizations are interested in accessing HR services that integrate infrastructure, technology, processing, and management services along the value chain of HR activities," said Marc Pramuk, senior analyst for IDC’s eHuman Resources research program. "HR service providers that are too narrowly defined in their offerings will have difficulty successfully competing in this market."

To improve their ability to deliver an integrated, end-to-end solution, many HR service providers are forming networks of partners. IDC cautions, however, that for these partnerships to be successful, service providers must choose the right partner.

"Partnerships that realize their intended goals are less common than one would expect," Pramuk said. "A key contributor to the low success rate is not adequately identifying the correct partner in advance."

IDC recommends that when selecting a potential partner, service providers identify the skills they lack and compare this gap with the skills of the potential partner. This skills assessment should include not only expertise in specific HR functions, but also the structure required for service delivery. Market segmentation strategies should also be considered.

"If service providers do their homework up-front and select the best partner, the resulting relationship will not only create an integrated solution that better satisfies the clients’ needs, it will also provide a successful and profitable competitive model for achieving growth and performance goals," Pramuk said.

In a new bulletin titled Strategic Partnering: Tools for Identifying the Best Partnership Opportunities and an Analysis of Three Recent Announcements (IDC #B24350), IDC provides a tool that HR service providers can use to assess potential partners. The bulletin also discusses factors driving the need for partnerships and examines recent announcements between Accenture and Personic, Watson Wyatt and Workscape, and Exult and Deloitte & Touche. To purchase this bulletin, contact Jim Nagle at 1-800-343-4952, extension 4549, or at

For more information on IDC’s eHR Services program, please contact Jill Toole at

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

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


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