Keeping Your HRO Confidence UP

UP is a lovely animated Academy Award Best Picture nominated movie. UP refers to the balloon journey undertaken by seventy-eight year old Carl to fulfill a dream. It also refers to the journey of keeping your spirits up along life’s detours.

NelsonHall’s January 2010 HRO Confidence Index reflects continuing supplier confidence buoyancy in their business prospects over the next twelve months – with some slight bobbles. Compared to 1Q 2009, when the Index had deflated to a low of 90, vendor confidence is soaring with a 4Q score of 153. The bobble? 3Q 2009 was at a slightly more optimistic 159 on a scale of 0 to 200.

While there is improvement, reality is setting in that the recovery will be in an uncertain, low-growth environment. HRO vendors are still facing headwinds that will drag on sales. There is still some lingering buy-side frozen decision making, declines in volumes and scope of activity in existing contracts, resistance to contracts requiring initial client investments and unrealistic client pricing expectations.

Even with pipelines and confidence up, some buyer buffeting will continue. Buyers facing uncertain recovery in their own businesses will continue to look for cost advantaged deals with a clear path to ROI within 12-24 months. Throughout the recession and now as recovery begins, the transactional and basic services have shown strength, especially payroll and benefits administration. That is likely to continue throughout 2010 with some pick-up in multi-process HRO and learning.

Activity is rising in RPO, but the hard hit segment will take a while to recover from the decline in bread and butter hiring volumes and a thus far jobless recovery. According to an AP news article by Jeannine Aversa, normally the current uptick in temp jobs, up for the fourth consecutive month, is predictive of a coming return to staffing permanent positions. But given the so far tepid recovery, expect to see an extend period of increased use of temporary labor over a return to hiring.

In quite a change of the prevailing winds, the emerging market geographies are expected to be the higher growth markets in 2010. China and Asia Pacific have the highest expectations for increased revenues by HR vendors, followed by the U.K. and other parts of Europe including France and Germany. Optimism is also up for Central and Latin America. The U.S. trails in expectations, a sign of an anticipated slow recovery.

In UP, Carl does finally get to where he needs to be, picking up new friends along the byways. HRO is headed in the right direction and vendor spirits are up…may they also win many new client friends along the way.

Linda Merritt, Research Director, HRO, NelsonHall

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

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