Introduction

There are some major shifts taking place in the 11-year old multi-process Human Resource Outsourcing (HRO) market. While the fundamental drivers behind outsourcing multiple human resources processes are still strong, the ways and means to achieve them are changing. In a challenging economic environment, buyers are looking to reduce their direct and indirect cost in the shortest time possible. Existing suppliers continue to refine their strategy to serve their clients profitably while new suppliers are eyeing underserved areas. In this backdrop, this report provides comprehensive coverage of the global 2008 HRO market including detailed analyses on market size and buyer adoption, transaction characteristics, and supplier landscape. This report will assist key stakeholders (i.e., buyers, suppliers, and technology providers) understand the changing dynamics of the HRO market and will help them identify value creation opportunities as well as identify potential risks involved.

Scope       

• All human resources outsourcing contracts as of July 30, 2008 with a minimum of three HR functions and servicing more than 3,000 employees
• Global focus: North America, Europe, Asia Pacific, and Latin America
• All suppliers having signed at least one HRO transactions
• All industries

Contents

This report examines the global 2008 HRO market and provides insights, detailed analyses and implications for stakeholders along three key dimensions: market size and buyer adoption; transaction characteristics and value proposition; and supplier landscape. Each dimension is discussed in detail (and illustrated with supporting data and analysis) to provide the reader information in easy-to-apply, bite-size pieces. For example, market size and buyer adoption offers the following insights, among others:

• Market size & growth: The multi-process HRO market slowed down in 2008, and we estimate it will reach US$ 2.9 billion by the end of the year, in terms of ACV.  Compared to 47 new deals signed in 2007, we expect 28-32 deals to be signed in 2008. However, multiple factors will ensure market growth in the future
• Changing dynamics: In a slowing economy, buyers prefer a componentized model over a wide-scope transformation model. An “offshore-led” lift-and-shift model is coming into play for buyers looking for early cost savings
• Buyer adoption trends: Buyer adoption varies across geography, industry, and employee segments. Demand from Continental Europe and the UK continues to rise; manufacturing, high-tech and telecom, and financial services are the leading adopters of HRO; in terms of number of deals, the mid-market is growing at a faster rate than the large market
• Potential and penetration: The multi-process HRO market has low penetration, especially in the mid-market. Both the mid-market and large market have comparable revenue potential