Indicators of an HRO Industry Rebound? Oh Yes!

Although the overall HRO industry has been in a downward spiral for quite some time, we are now beginning to see indicators of a rebound.

Let’s look at some facts from recent NelsonHall research:

•  Seasonally adjusted BPO total contract values (TCVs) were up 25 percent in 3Q09. This is in sharp contrast to 1Q09 and 2Q09, when TCVs were down 40 percent and 15 percent, respectively

•  48 percent of BPO buyers in North America, Europe and Asia Pacific reported that in 4Q09 and 2010 they are/will be preparing RFPs for new opportunities and 37 percent are planning to award new contracts, compared to 15 percent preparing and 8 percent awarding between 4Q08 and 3Q09

•  Our 3Q09 HRO Confidence Index – published in October – found that 44 percent of HRO providers were much more confident of their HRO business prospects, as compared to 10 percent in 2Q09

Recent contract award announcements – especially in learning and recruiting, which I view as early indicator process areas as outsourcing of more core processes such as payroll has remained relatively constant – also support the beginnings of a rebound. For example, General Physics Corp. last week announced an expansion of its HRO contract with a leading software corporation to include learning delivery and administration. And in recruiting, The RightThing reported eleven new contacts in 3Q09, including with NCR and Good Year Tire and Rubber Company, and a 30 percent increase in new client prospects. And our 3Q09 HRO Confidence Index determined a growth trend in learning services and RPO in both revenue and sales pipeline.

It is clear that corporations are now feeling a bit more comfortable with making HR-related investments, and this bodes well for the outsourcing industry when we use learning and recruiting outsourcing as an early indicator litmus test. The key to making the right HR-related investments in a still shaky economy goes back to the old adage, “People don’t plan to fail, they fail to plan.”  Not so for smart HRO buyers who are addressing their upcoming growth needs now.

Gary Bragar, Lead HRO Analyst, NelsonHall

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Explore posts in the same categories: hr outsourcing, hr outsourcing research, hro, HRO contracts, HRO providers, hro research, learning outsourcing, nelsonhall, outsourced learning, recruitment process outsourcing, rpo

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