LONDON--(BUSINESS WIRE)--Technavio’s latest ICT industry report covers the present scenario and growth prospects of the global human resource outsourcing market 2016-2020.
In this report, Technavio’s ITO and BPO research experts announce their key market highlights for the global human resource outsourcing (HRO) market. Their findings include:
Global HRO market to accelerate at a growth rate of almost 13% and surpass USD 284 billion by 2020
Technavio’s report states the global HRO market is currently growing steadily with significant growth potential owing to increased recruitment process outsourcing (RPO) and professional employer organization (PEO) services by large organizations to reduce costs, improve business efficiency, and focus on core strategic business activities. The market is projected to grow at a CAGR of close to 13% during the forecast period.
“RPO, a segment of HRO offered as a service, is a cost-effective solution for organizations seeking to create intense competition in the marketplace. RPO providers have now shifted beyond the back-office services and now guide clients in terms of the selection of the right talent through sophisticated methods such as benchmarking, best practices, and process improvement. Thus, cost saving becomes more of a strategy to utilize RPO services,” says Amit Sharma, a lead ITO and BPO research analyst at Technavio.
The report also states that the need to minimize compliance risks due to frequently changing labor laws and employment regulations with specific regions is driving both large and small organizations to outsource most of their human resource (HR) functions to enhance organizational productivity and gain competitive advantage. “Outsourcing compliance management to an external service provider not only helps the organization minimize risks but also boosts organization growth, profitability, and competitive advantage,” adds Amit.
Banking, financial services, and insurance (BFSI) and manufacturing: key leading end-user segments of the global HRO market
The BFSI and manufacturing segments are the key leading end-user segments contributing substantial revenues to the global HRO market. These sectors look for cost-efficiency and process improvement combined with a requirement for complex employee benefits and pension services for staff. The increased need to comply with regulatory standards has boosted demand for HRO services in these sectors.
With a market share of about 35%, the BFSI sector dominated the market in 2015. Although this segment’s market share will reduce a tad during the forecast period, it will continue to dominate the market over the next five years.
“Many BFSI organizations continually increase their investments to gain more profits, introduce new products and services, manage regulatory compliance, and meet growing customer demands, increasing the need for RPO. In terms of the number of deals and transaction volumes, this sector is the largest segment outsourcing RPO functions among all other sectors,” confirms Amit.
Increasing number of RPO contract deals to come from Latin America due to the region’s language and cultural affinities
Market share in 2015
The HRO market is the largest in the Americas, which held the majority share of about 44% of the market in 2015. North America is one of the key contributors due to notable factors such as managing compliance, greater alignment between HR and businesses, and access to new technology and skills.
Technavio analysts also expect the number of RPO contract deals to increase in Latin America during the forecast period with the increased demand for nearshore and offshore delivery requirements in the US and Europe. The region’s language and cultural affinities have attracted many clients.
The US is the key leading country in the HRO market with companies increasingly spending in payroll activities. This is driven by the high demand for cost-cutting and multi-country payroll outsourcing (MCPO) buyers consolidating multiple payroll systems to ensure compliance with local laws.
Browse Related Reports:
- GAO Market in Latin America - Market Research 2015-2019
- IT Outsourcing Market in APAC 2016-2020
- Global Procurement Outsourcing Market Research Study 2015-2019
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