Fueled by the increasing complexity of human resources (HR) processes and programs, the HR outsourcing services market is hot and getting hotter. In 1999, U.S. companies alone spent $7.3 billion on these services, and by 2003, that amount will soar to $10.2 billion.
"Companies are recognizing that their HR functions, though non-core, can bring tremendous value to their organizations when run efficiently," said Cynthia Murphy Doyle, senior analyst with IDC`s IS Outsourcing and BPO research program. "The creation of innovative benefit programs, self-service and Web-enabled HR systems, and training programs has placed new pressures on the already-strained human, technological, and financial resources within most HR departments. In response, many companies are outsourcing increasingly complex HR processes and functions with the expectation that the outsourcing vendor will bring leading-edge technology to the provision of efficient and cost-effective HR services."
According to IDC, companies that purchase HR outsourcing services will increasingly demand comprehensive, end-to-end solutions. As a result, vendors will have to expand their service offerings either organically or through partnerships and acquisitions.
A variety of vendors with different backgrounds, sizes, geographic scope, and capabilities are competing in the HR outsourcing services market, and their offerings vary widely based on their HR experience, target market, and level of technological expertise.
IDC divides the overall HR outsourcing services market into two segments: processing services and business process outsourcing (BPO). The processing services segment, which includes activities such as payroll processing and benefits claims filing, is the largest segment of the market. However, the BPO segment, which includes managing employee benefits and other HR administration duties, is growing at a rate almost three times faster than the processing services segment. The BPO segment will increase its share of the overall market from 10% in 1998 to 16% by 2003.
IDC recently published Human Resources Business Process Outsourcing: A Market Overview and Service Provider Analysis The report examines the competitive dynamics in the human resources outsourcing market. It forecasts U.S. spending through 2003, identifies industry trends, and makes recommendations for improving vendor positioning within the market. Additionally, the report profiles 11 of the leading HR outsourcing vendors, including ADP, Ceridian, IBM Global Services, and PricewaterhouseCoopers.
For more information or to order the report, please call Cheryl Toffel at 1-800-343-4952 extension 4389 or email at ctoffel@idc.com.
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International Data Corporation
International Data Corporation delivers accurate, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and adoption and technology trends, and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in more than 40 countries worldwide. IDC`s customers comprise the world`s leading IT suppliers, IT organizations, and the financial community. Additional information on IDC can be found on its Web site at http://www.idc.com.
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