Report Overview

Global Human Resource Outsourcing Market Size – Industry Trends & Forecast Report 2027

 The Global Human Resource Outsourcing Market is growing with a CAGR of 6.18% and touched USD 102.25 Billion in 2020. The market is expected to reach USD 153.67 billion by 2027. Human Resource Outsourcing is a predetermined agreement between an employer and an external third-party provider in which the employer transfers the responsibility of HR functions to the external providers. This could be specific to any particular function or outsourcing the entire HR functions. As HR professionals search for ways to spend less time and money on transactions and administration and concentrate on more organized tasks, outsourcing has become increasingly relevant. This time and resource-saving translate into financial savings for the company. Many businesses retain talent acquisition, hiring, and succession planning in-house while outsourcing welfare administration, payroll, and other predictable activities to third-party vendors. This saving of time and resources also interprets savings for the business. 

                                                                                           Source: BlueWeave Consulting

Global Human Resource Outsourcing Market Overview:

The continuous digitization of human resource outsourcing is driving the market demand positively. The demand for modern advanced recruitment processes is being driven by the increasing digital literacy in industries such as BFSI, healthcare, IT, hospitality, retail, and other sectors. Also, the emergence of advanced analytics, the Internet of Things (IoT), and 360-degree feedback is letting organizations implement and manage daily HR tasks through Recruitment Process Outsourcing. Thus, constant technological advances and the growing acceptance of modern digital tools are expected to boost the human resource outsourcing market's development during the prediction period.

Global Human Resource Outsourcing Market Forecast and Trends

Growth Drivers 

Ability to focus on core expertise

Considering the diverse functions that HR management is responsible for, it is easy to imagine all of the paperwork and administrative tasks that go along with performing those HR functions internally.These tasks can be highly time-consuming for the HR staff. Outsourcing certain HR duties free up precious time for internal HR professionals, thus, enabling them to concentrate on more critical issues.

High cost related to HR Management

The cost of HR management can get pretty high considering all the activities that a traditional HR department is responsible for. This is a problem, particularly for those organizations that do not want their HR to be in charge of all HR functions, such as recruiting, selection, payroll, compliance, and training. If, on the other hand, a company plans to recruit a large team in the same department, it must be responsible for not only the employees' wages but also for perks, taxes, and other company benefits. Since the HR department does not directly produce income for the business, maintaining in-house HR requires a substantial allocation of capital.

Restraints

Challenge in choosing the right agency

Though there are several benefits of outsourcing HR-related activities, there are some limitations too. One of the significant issues in the HRO process is determining which HR functions should be outsourced and which firm should be chosen to outsource. This is one of the most significant challenges because it may unfavorably affect a company’s performance if selected wrongly. Before outsourcing any in-house HR-related activity to an outside agency, one needs to be sure about the benefits and losses of outsourcing it.

Impact of COVID-19 in the industry

The global outbreak of COVID-19 has left businesses concerned about their future prospects, as the extended lock-down has resulted in a severe economic downturn. Companies' Human Resource departments have long been concerned with the well-being of their workers.  With the advent of the COVID-19 pandemic, almost every company or institute, regardless of scale, has been obligated to obey the laws and regulations governing remote working strategies. In this scenario, one feature in which the capability of the HR stands out is to function crosswise across the globe and help to bridge the gaps and safeguard the stability of the business.

Global Human Resource Outsourcing Market: By Type

Based on type, the global human resource outsourcing market is categorized into talent acquisition, employee relations and compliance, payroll services, workers compensation, employee benefits, pre-employment skill test, employee screening, background verification, and sexual harassment training.

The talent Acquisition segment is expected to hold the largest market share over the forecast period. HR practitioners can make better strategic decisions with the help of talent management tools. Such tools help them align organizational goals with talent acquisition and succession planning activities, thereby raising their overall performance. Moreover, it also offers features, such as inviting, recruiting, and retaining the employees believed to be the organization's assets. Additionally, the rising popularity of social media platforms and video platforms for recruiting is the latest trend driving the segment growth.

Global Human Resource Outsourcing Market: By Application

Based on application, the global human resource outsourcing market is segmented into BFSI, Healthcare, IT, Hospitality, Retail, and others. Of these, the IT segment holds the largest market share due to the increase in the acceptance of cloud-based technologies and the need for a well-organized management system. Better accessibility is provided by cloud-based HR payroll platforms and solution services so that companies can focus on their core business with ease. Additionally, the high demand for system automation and sourcing candidates based on work profiles and organizational structure is expected to drive demand for HR solutions across many industry sectors.

Global Human Resource Outsourcing Market: Regional insights

In 2020, The HRM market was dominated by North America. The region is likely to maintain its dominance during the forecast period. The major reason contributing significantly to the growth of the industry is the presence of numerous HRM solution providers. Organizations in the United States are focusing on increasing labor efficiency and productivity by using HRM strategies for time and attendance management, payroll, and talent management operations, which is expected to fuel the growth further. As an early adopter of new technologies, North America has demonstrated rapid adoption of cloud-based technology.

Competitive landscape

Key players in Global Human Resource Outsourcing Market are Accenture PLC, Capita plc., Northgate Capital, LLC, Xansa Plc., Vertex Inc., Ceridian HCM, Inc., ADP, LLC., IBM, Oracle, Aon Hewitt, and Adecco S.A.  and other noticeable players.        

The global human resource outsourcing market is highly competitive. As a result, market players are forced to constantly innovate in order to thrive, grow, and retain competitive positions.To stand out in the market, competitors are increasingly leveraging technological innovation and development to optimize the performance of their existing HRO software.

Recent Developments

• In July 2019, Ultimate Software introduced Employee File Storage, enabling HR professionals to securely exchange information with third parties regardless of their location.

• In October 2018, Oracle introduced AI capabilities in HCM, allowing the HR-trained bot to answer basic HR questions quickly and easily.

 Scope of the Report

By Type

• EmployeeRelationsandcompliance
• payroll services
• workers compensation
• employee benefits
• Talent Acquisition
• Employee Screening and Background Verification
• Pre-Employment Skill test
• Sexual Harassment Training

By Application

• BFSI
• Healthcare
• IT
• Hospitality
• Retail
• Other

By Region:

• Asia Pacific
• North America
• Europe
• Middle East & Africa
• Latin America