HRO Manager Blog

HRO Market On a Steady Incline

Vanessa Beaty — Mon, 23 Jun 2008 16:20:33 +0000

The Human Resources Outsourcing market has gone to $2 Billion in what seems like a split-second. The US $2 Billion industry has seen an annual growth spurt of 28 percent, showing a growth of nearly four times that of the general HR services market itself. During 2005 the HRO market saw nearly 40 deals signed which caused that year to become the turning point for the market in general.
The concept of Human Resources has been a major factor in outsourcing decisions with regards to staffing transfers and downsizing. HR functions, typically led by benefits administration, payroll administration and HR information and technology, are primarily the target for outsourcing and are beginning to see a major increase in offshore movements. While these movements are becoming the norm within HR functions, they are currently used in a little less than half the major outsourcing transactions that we see in force presently. This will of course increase as more and more companies begin to realize the substantial savings of this option. However with the skepticism that many buyers have of offshore skills, the HR industry is still a bit behind many other areas that are currently being outsourced. Major suppliers are currently focused on elevating offshore HR skills so it may not take long for the HR industry itself to make its mark with others such as IT and customer service that are currently being adopted as offshore options.
There is currently more complex work being outsourced to India by those thought of as giants among international corporations. Intel is expected to invest more than $1 Billion and JP Morgan Chase is planning to add another 4000 or more employees. India has increasingly seen a steady rise in outsourcing work. In the past year they have seen a major increase by Wall Street firms and larger globally based banks.
At the beginning of 2008, Ceridian saw a major growth in Human Resources Outsourcing, including eight new employers in the United States alone to add to the eight existing HRO clients that the company maintains who extended their contracts with Ceridian HRO. The company’s portfolio now consists of 29 US clients who are currently engaged in offshore outsourcing.
You will remember that a few months ago EquaTerra and IDC presented a flash report that predicted the growth and changes that would take place in 2007. Mark Hodges, EquaTerra founder and Lisa Rowan, IDC Program Manager, both presented interesting details into current and future HRO trends, forecasts for the market and lessons that were learned in the past few years that will help to ensure the future expansion of the industry.
As a standalone HR outsourcing has continued to increase at an annual growth rate of 8.3 percent. Comprehensive BPO when combined with multiple HR functions is also growing rapidly at an increase of 14 percent. Although HR outsourcing pricing was recently seeing a steady decline, it is now on the rise again and provider profitability is increasing at a steady rate overall.
What this means for the HR manager is that the multiple process Human Resources Outsourcing market has been constantly maturing over the past three years. With prices continuing to fall, outsourcing is becoming a much more attractive option than if was just a short time ago. Also, while standards have not yet been set, they have evolved steadily and are allowing suppliers to leverage scale across their customer bases. Offshore HRO services has become a reality and is now commonplace in many new deals, where just a few years ago this was simply a foreseeable option, although not really a strong reality. With stronger capabilities for suppliers and a constantly increasing competition in the market, pricing has gone down considerably from 30 to 50 percent in some segments. Those who have an existing outsourcing contract have a very attractive negotiation opportunity and new buyers are seeing much better pricing structures than before.
The bottom line is that Human Resources Outsourcing is a growing industry that is not simply for the large players any longer. More mid-sized buyers are beginning to come around to the effectiveness and cost-efficiency of offshore outsourcing. The number of providers is steadily growing, giving more options to all market sizes. Many of the larger powerhouses are offering or have already consolidated offering comprehensive services that include a large number of functions instead of simply one major service. Competition is a good thing. It can help to drive down costs while also offering choices for businesses that will enable all segments of the market to select providers that will best meet their individual company needs.

HRO and the HR Professional

Vanessa Beaty — Mon, 24 Dec 2007 08:15:04 +0000

There is a terrific interview over at HRO Today entitled HRO and the HR Professional. Its very professionally done, informative and definitely worth the read.
HRO and the HR Professional

Another Acquisition for IBM

Vanessa Beaty — Wed, 14 Nov 2007 02:02:12 +0000

BI and Performance Management Software industry has experienced a major consolidation wave in acquisitions space. The first to happen was the acquisition of Hyperion by Oracle, followed by the acquisition of Pilot Software by SAP. The third acquisition to happen now is the acquisition of Cognos by IBM. IBM and Cognos have been partnering for nearly 15 years with extensive technical integrations and eight pre-integrated joint solutions already supporting many joint customers such as the NY City police department, Blue Cross/Blue Shield of Tennessee, Canadian Tire, MetLife and Bayer UK. This acquisition will be the 23rd acquisition for IBM with other major acquisitions up till now being with Princeton Softech, FileNet, Ascential Software, DataMirror, SRD, Trigo, DWL and Alphablox.
Please review this for a complete Press Release from IBM on the Cognos acquisition :
IBM to Acquire Cognos .

Indian BPO Security Issues

Vanessa Beaty — Sun, 04 Nov 2007 02:31:56 +0000

It was in 2005 that a Bangalore based BPO employee, Prathibha, was murdered. This incident created havoc around the country in an otherwise booming Indian BPO industry. The security of employees then became the primary focus of BPO companies and all companies operating at night came up with several security measures to counter the issues of security, especially to female employees. It is a normal practice for BPOs that operate at night to provide pick and drop facilities to their employees and prior to this Bangalore incident, not many companies had the practice of providing security personnel for each drop. In the aftermath of the Bangalore incident the companies came forward with measures such as “no first pick up should be a female employee” and “no last drop should be a female employee”. If it is necessary for a female employee to be last dropped then it was made mandatory to provide a security person for each such drop. In addition the companies vouched to do a stringent background check of each one of their transport suppliers and their drivers as well, preventing those drivers with a criminal background to be used for their services.
How many BPOs still continue to follow such stringent measures? The answer appears not to be not many, as the very recent incident in Pune, India suggests. A 22 year old female employee, Jyoti Chaudary, of IT Major Wipro call center was allegedly raped and murdered by the driver of a taxi which was hired by the company and an accomplice, according to the initial reports coming out in the media. Though complete details are not yet available, it does raise eyebrows as to why the female employee was first picked up. It also raises our concerns as to whether the employees are taking enough additional care as to ensure their own safety and security.
This incident again brought to light the rising security issues in the BPO industry and will have an impact on the industry as a whole. After the Bangalore incident, it has become a tough exercise for recruiters to convince female candidates to take BPO jobs on night shifts and most parents are now reluctant to allow their children to work on night shifts. Unlike other countries, in India, parents play a vital role in the career decisions of their children, at least during the initial stages of their careers. BPOs expect very good communication skills as the mandatory skill set and most female candidates possess good communication track records. If this incident adds to the existing fears of night shift jobs in the BPO industry, particularly among female employees, the Indian BPO industry will definitely face productivity issues in the near future. It has become a waiting and watching game to see how BPOs will face the rising issues of security and employee safety.

Cognet HRO Global Delivery Center

Vanessa Beaty — Wed, 24 Oct 2007 02:35:52 +0000

Cognet HRO recently announced the launch of its global delivery center located in Chennai, India reports HRO Manager. Please review this for more information on this Press Release :
Cognet Global Delivery Center

Nelson Hall RPO Forecasts

Vanessa Beaty — Tue, 09 Oct 2007 02:40:31 +0000

It’s good news for RPO players. Nelson Hall, a leading independent BPO analyst firm, in its latest research found that RPO is the fastest growing service emerging in support of organizations and talent management requirements. It forecasts the RPO industry to see an annual growth rate of 37% and become a $7 Billion market by 2010. The research also finds the growth to be broad-based, not just restricted to the United States, but emerging markets such as India also to have their piece of the pie.
Key findings revealed in the Nelson Hall report include:
Vendors need to be able to perform an integral role in the development, implementation and execution of their clients, Talent Management and Workforce Planning Strategy.
Standalone RPO represents a much greater share of the market than does RPO provided as part of a multi-process HRO offering – it is also experiencing the highest growth rates.
Clients are increasingly looking for a variable cost structure to pay for services based on usage.
Vendors need to be able to scale their workforce to meet demand for peaks and valleys.
Most current activity is in serving large companies. However, as the market is beginning to mature, increased demand is being send from small and mid-sized companies.
Service providers should provide a service that includes an onsite presence – globally today, only 31% of service providers work onsite but this proportion is expected to increase in conjunction with talent acquisition demand.
Most RPO services are provided from onshore multi-client delivery centers, but offshore delivery is seeing high growth, particularly for non-client facing work.
Service providers are partnering for access to technology and for support services such as assessments and background checks. They are also partnering with other recruiting providers, particularly where they do not have a geographic presence.
Acquisitions are common as service providers look to increase their geographical expansion and to improve recruiting capabilities.
please see this for the complete News Release :
Global Outsourcing Market $7 Billion by 2010

Resources From HRWorld

Vanessa Beaty — Thu, 27 Sep 2007 02:42:48 +0000

HRWorld.com recently published 100 Resources for Interviewers and Candidates. The publication can be viewed on the HRWorld.com site.

Article From HCI Executive Director

Vanessa Beaty — Tue, 07 Aug 2007 02:58:08 +0000

Sumeet Varghese who is currently the Executive Director of Human Capital Institute (HCI) in India wrote a fantastic article for HRO Manager. The article draws a realistic picture on globablized India and the importance of cultural values. Human Capital Institute is a high profile global HR institute and is well known for its advanced HR training workshops and research.
You can view the entire article by clicking here : HR Outsourcing

Upcoming HRO Workshop

Vanessa Beaty — Tue, 07 Aug 2007 02:52:03 +0000

A workshop on Understanding and Integrating Talent Management Technologies is planned by Human Capital Institute of India in Bangalore. The event is scheduled to take place this year on August 23rd. The workshop is going to be facilitated by Alan Schweyer, President and Executive Director for Human Capital Institute. Alan is best known for his long years of experience in HR and his famous book writings such as Talent Management Systems: Best Practices in Technology Solutions for Recruitment, Retention and Workforce Planning.
For complete details of this event please visit: HR Outsourcing

Mid-Size Market Demand

Vanessa Beaty — Tue, 07 Aug 2007 02:49:22 +0000

Though it is unlikely that we will see large size contracts in the short term, mid-sized market demand is definitely showing signs of continued growth and is expected to grow significantly in the future years.
Please view the complete article on the prospects of HRO growth :
Mid-market Growth Takes Off