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Mumbai December 19, 2007
BS Reporter

Outsourcing of human resources functions is poised to reach $2.85 billion by the end of this year and regain momentum in 2008. However, companies will have fewer choices in human resources outsourcing (HRO) suppliers due to clear segmentation in the supplier market, according to an analysis of the HRO supplier marketplace by the Everest Research Institute.

According to the study, Human Resources Outsourcing Global Supplier Landscape, HRO suppliers are making progress in building leverage across buyers by pushing for more standardised processes and moving towards multi-client platforms, a critical necessity for them to achieve profitability and serve buyers’ needs.

The report stated that suppliers are leveraging offshoring in 68 per cent of HRO transactions in the large segment, compared to only 23 per cent in the mid-size segment. Suppliers catering to the large market segment are expanding their delivery footprint to key offshoring locations with India emerging as the most common location.

While Hewitt remains to be the market leader in terms of number of transactions, its share dropped 13 per cent from 2005 to July 2007. Meanwhile players like Accenture, Convergys, IBM gained significant market share, during the same time period, in terms of total contract value.

Moreover, the segment also saw new entrants. Infosys, Tata Consultancy Services (TCS) and Wipro are all firming up plans to offer multi-process HRO solutions within a defined target and with technology strategy in place.

"Suppliers are focused on meeting the needs of buyers who are either looking for strategic benefits by transforming their entire HR organization or solely interested in cost take-out solutions," said Monica Barron, vice president, Everest Research Institute.