HR Outsourcing Market on Rebound as Enterprises ‘Future Proof’ Operations

AI Search People

The market for multi-process HR outsourcing will grow at a 5% to 7% rate between 2020 and 2022, driven by employers’ need to prepare their operations for future services and demands.

According to consulting firm the Everest Group, enterprise-level organizations need to ensure their HR functions are focused on speed, agility, resiliency and digital capabilities if they’re to keep up with changes in the workforce and the work environment.

The market for multi-process HR outsourcing will grow through 2022, driven by employers’ need to prepare for future services and demands. @EverestGroup #HR #HRTech Click To Tweet

In particular, HR is under pressure to adopt automation and AI technology in order to increase agility; use data and analytics to increase visibility and transparency and strengthen decision-making; and leverage the employee experience to enable remote work and increase efficiency.

“Digital will have a vital role to play in helping enterprise HR functions prepare for the ‘next normal,’” said Everest Group Vice President Anil Vijayan. During the Covid-19 pandemic, enterprises have learned that a good digital infrastructure helps reduce manual tasks and improve flexibility. “We expect digital adoption to accelerate even further” in outsourcing deals, he said.

In its MPHRO State of the Market Report, the Everest Group also found:

  • North America is the most mature geography for MPHRO adoption, followed by Europe-UK and Asia Pacific.  
  • Financial services and manufacturing comprise a major share of the MPHRO market. Healthcare and life sciences have grown significantly and should grow further.
  • There has been a marked increase in the inclusion of talent management processes as buyers look toward taking an end-to-end approach to their MPHRO deals.
  • Output-based pricing continues to be the most popular pricing model. However, input-based pricing is being used in some emerging markets and first-generation contracts.
  • The top four providers—Alight, Accenture, ADP and IBM—accounted for more than 40% of market share in terms of annual contract value.
  • Leading providers experienced strong traction in more mature markets. In emerging markets, local players featured more prominently.
  • ADP has significant presence across the top four industry segments for MPHRO. TCS has the highest number of deals in the retail industry segment.

Everest Group says buyers of MPHRO now see access to better technology, employee experience and improved insights and analytics as being among the most important drivers of their decision-making.  

Image: iStock