Emerging Options: HR Off-shoring / Outsourcing – A New Business Opportunity
posted in Outsourcing News and Top Outsourcing deals, New Outsourcing Destinations |Source: Times of India
Considered a dirty word in most organisations, especially those with a strong labour union, yet, HR outsourcing (HRO) is fast catching up worldwide, with many Fortune 500-firms indulging in the new outsourcing trend. Considered a niche market, no small wonder then that HRO is now worth a good $20-billion globally, and still growing. Boding well, it is good news for India, as with an off-shore component of nearly 50%, most of the HRO business is actually coming to its shores.
While, most of the HRO market seems to be concentrated in US and Europe i.e. two-thirds of the market still US-based, while Asia has only 4-5% of the buyers and the rest in Europe. “There are around 160 active deals around the world,” confirms Gaurav Gupta, Country Head – Everest Group, who has just completed a global study on the niche HRO sector, and adds: “Only 18-buyers account for 25-27% of the big business.”
According to experts in the field, eight such mega deals were finalised and signed, just last year. Though most HRO deals are signed in US or Europe, 50% of them with some off-shore component are sent to India. “A major chunk of this is coming to India. And, 26% of HRO transactions have over 50% of contracted services being provided from an off-shore location,” Gupta says.
Subsequently, HRO activities are grouped under two major processes:
1. Transactional activities like HR related IT processes, employee data management, pay roll functions and,
2. Judgement-based processes like training, curriculum designing, preparing job descriptions.
Only a few years old, the last couple of years or more have seen HRO suppliers in India engaging in increased activity, and it is Bangalore and Gurgaon that have emerged as market leaders, and with the highest concentration of HRO suppliers. It could be, because most big HR players like Hewitt Associates, Fidelity Employer Services, ACcenture, ACS are based in these cities. Even so, Mumbai, Pune, Hyderabad and Chennai down south, also seem to have attracted a fair share of firms, who have set up HRO-centres in them.
And, in a wise move, Indian suppliers are not only courting the international HRO market, they are also looking at and inviting partners to scale up their businesses on the domestic front. “The domestic HRO market too will start opening in the future,” feels Gupta. It won’t be long before more and more Indian firms realise the need to outsource some of their processes to free HR management time.
And, it won’t be long before everyone is cashing in on this new outsourcing trend.
