Emerging Markets Driving Growth in Multi-process HR Outsourcing Market, According to Everest Group Study | Press Release

Posted On June 13, 2012

Multi-process HRO Market Projected to Grow 6 Percent in 2012

DALLAS, June 13, 2012 – The global Multi-process Human Resources Outsourcing (MPHRO) market grew by a modest 2 percent in 2011, and the market is projected to grow 6 percent in annual contract value (ACV) this year, according to a new research report, Multi-process Human Resources Outsourcing Annual Report 2012 – Continued Reinvention. The study, published by Everest Group, a global consulting and research firm, projects the MPHRO market will reach US$3.3 billion in 2012.

Although there were a similar number of new MPHRO deals in 2010 and 2011, the market experienced nominal overall growth in 2011, primarily due to smaller sized contracts and contract non-renewals and terminations of legacy deals. Existing contracts, on the other hand, saw significant scope expansion contributing to market growth.

Everest Group’s MPHRO market projections for 2012 include:

  • New contract signings will not experience rapid growth but will maintain a steady pace.
  • End-of-term activity will continue to shape the market with a decreasing number of terminations and non-renewals, but an increase in transfers will occur as providers offer robust transition methodologies and creative financing options.
  • Beyond North America and Europe, adoption of MPHRO will gain further traction in emerging markets such as Asia Pacific and Latin America.
  • The appeal of multi-tenant Business-Process-as-a-Service (BPaaS) will increase. MPHRO solutions based on Software-as-a-Service (SaaS) software, such as Workday, will be increasingly considered but gradually adopted.

“While deal terminations are of concern to the industry, we see that to be limited to a few providers. On the other hand, the scope expansion within existing deals signifies buyers’ desire to build onto their successes,” said Rajesh Ranjan, vice president. “Moving forward, we also expect to see procurement play an increasingly important role in managing HR-related spend in the coming years.”

Other report findings for the 2011 MPHRO market include:

  • Although North America and Europe comprised 68 percent of MPHRO adopters, the Asia Pacific region saw significant growth in new deal signings.
  • Manufacturing, services and retail sectors saw increased traction in MPHRO, while adoption in the financial services and hi-tech sectors decreased.
  • Global sourcing in MPHRO continued to increase, with India remaining the most popular offshoring location while significant growth also occurred in Southeast Asia and Latin America.
  • Mid-market buyers, defined as companies with 3,000-15,000 employees, continued to be strong post-recessionary adopters of MPHRO, whereas large-market adoption trends have been irregular since 2008.
  • MPHRO deals were wider in scope as transaction-intensive processes became core and talent management components were increasingly considered.
  • Interest in the multi-tenant BpaaS model continues to rise.

Accenture, Aon Hewitt, IBM and NorthgateArinso together account for 53 percent of the MPHRO market in terms of ACV. ADP led providers in terms of new deals signed in 2010-11, largely due to the provider’s significant presence in the mid-market. Aon Hewitt achieved run-away success in terms of total contract value (TCV), holding 48 percent of TCV share, followed by IBM with 15 percent. India-heritage providers started to make their mark, albeit in smaller deals only.

“Last year saw a significant amount of M&A activity as providers were largely focused on advancing capabilities and gaining market entries,” said Ranjan. “We expect to see providers invest in building more robust analytics and integrated talent management offerings, work to move single-process HRO customers towards multi-process engagements and continue to tap into emerging markets.”

Other service providers covered in detail in the analysis include Caliber Point, Capgemini, Capita HR Solutions, Ceridian, Genpact, HCL, HP, Infosys, Logica, Neeyamo, TCS, Wipro, Xchanging and Xerox.

Everest Group’s analysis includes multi-process HRO contracts with a minimum of three HR processes covering 3,000 or more employees that were signed as of November 2011.

For more information or to purchase the report, Multi-process Human Resources Outsourcing Annual Report 2012 – Continued Reinvention, or inquire about other research services, please visit research.everestgrp.com, email [email protected] or call +1-214-451-3110.

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