HRO: Raining While the Sun Shines
Outside my window it is raining, there are some thunder rumbles and the sun is shining. How does that average out? Partly rainy, sunny with 100 percent humidity, scattered sun showers? What will the weather do next?
As I take another look at the latest NelsonHall HR Outsourcing Confidence Index (hey, it’s summer and there is not a lot of new news), it seems much like my local weather conditions. The sun is peeking out, but it is still raining in places.
The overall Index was generally positive with reported increases in growth and pipeline. Confidence in the next 12 months was up at 115 (100 equals no change). Under the average scores, there are an unusually wide range of responses within each area. While some are seeing the sun peek through, others are still out in the rain with some thunder, producing an average that does not tell the whole story.
• Pipeline growth averaged 23 percent, pretty good considering. The swing was from +10% to + 40%
• Payroll and benefits administration were the relative sunny spots for both current and anticipated growth. There was pipeline optimism for RPO, but the outlook was still cloudy for multi-process HRO and learning services
• On average, providers estimate that sourcing decision-making is still frozen in 25 percent of their clients and prospects, though the upper quartile of respondents still estimate that 50 percent or more of their clients and prospects have frozen the sourcing decision-making process
• Despite the continuation of declining volumes within existing deals and the reluctance of clients to undertake significant up-front investment, the recession is encouraging organizations to view HRO as a mechanism for transforming their cost base, and organizations are increasingly considering platform-based approaches provided these involve minimal investment or fixed cost. Accordingly, there are signs that the level of new deals is beginning to outweigh the impact of the gloomy recession on client volumes and pricing
New client activity and cost-driven deals led contract signings, with some expansion of scope with existing clients. Even with such relatively positive news, providers are still a bit pessimistic in estimating the upturn. There are still concerns about reducing volumes in existing deals and only 1/3 of companies are expecting the upturn to take place in 3Q09. For 55 percent, the future does looks sunnier in 2010.
All this said, business is being done. And those providers who can leverage client buying triggers, like those outlined in my July 24 “Fast, Flexible and Free” blog, will have the opportunity to grab their patch of the sun while others will still be forced to carry a rain umbrella.
Linda Merritt, Research Director, HRO, NelsonHall
Tags: benefits administration outsourcing, hr outsourcing, hro, hro buyers, HRO contracts, HRO deals, HRO outlook, HRO pipeline, HRO providers, hro research, learning outsourcing, multi-process hro, nelsonhall, payroll outsourcing, recruitment process outsourcing, rpoYou can comment below, or link to this permanent URL from your own site.