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HR outsourcing to boom in 2008: Study
Our Bureau
Bangalore, Nov 5 After remaining flat for nearly three years, outsourcing of HR functions is expected to boom by the end of this year.
According to a study by the Everest Research Institute, a global strategy consulting firm, the cumulative total contract value of HR outsourcing transactions including payroll, benefits, employee data management, information systems and contact centres, is expected to touch $25.4 billion by the end of this year.
The report attributed the flat rate of growth since 2005 to the limited capacity of suppliers.
“But now existing suppliers are building capability and new suppliers are entering the market, indicating continued market evolution and growth,” according to Ms Monica Barron, Vice-President, Everest Research Institute. Another growth driver is a componentised HRO model where buyers are breaking up the outsourced engagement into components and outsourcing them in phases. According to the study, Accenture, Convergys and IBM have gained significant HRO market share in terms of total contract value while Hewitt remains the market leader in terms of annual contract value. The report also says that the average size of the transactions remains less than $100 million and that there has been an increase in the number of smaller transactions. In almost 85 per cent of transactions, HR information systems were outsourced, signifying the key role of technology in HRO.
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