HRO Confidence Continues to Pick Up (some) Steam

Results from NelsonHall’s just-released quarterly HR Outsourcing Confidence Index – which gauges the health of the HRO industry via input from a wide range of HRO service providers – indicate the higher level of confidence we began seeing in Q3 2009 has continued into Q1 2010. 27 percent of providers are much more confident in the growth of their business over the next 12 months as compared to the previous 12 months, 40 percent are slightly more confident, and 33 percent are as confident. That we didn’t see any “less confident” responses is a good sign in and of itself!

Looking at relative revenue and pipeline growth in Q4 2009 as compared to Q4 2008, in ranked order by specific HRO processes on a 1 – 5 scale (with 5 being strong increase), providers stated:

RPO:  4.6 revenue growth; 4.4 pipeline growth

Payroll: 4.0 revenue growth; 4.0 pipeline growth

Multi-Process HRO: 3.8 revenue growth; 4.0 pipeline growth

Benefits administration: 3.5 revenue growth; 3.0 pipeline growth

Learning: 2.8 revenue growth; 3.0 pipeline growth

The providers also stated average HRO revenue growth was 16 percent in Q4 2009 compared to Q4 2008, and pipeline growth was up 40 percent in the same 12 month period. All these numbers – which are consistent with what my colleague Linda and I heard at NY HR Week earlier this month – indicate the HRO industry is picking up a bit of steam after being in a figurative bed-ridden state for the past two years.

Need more evidence of an HRO industry recovery? A resurgence of contracts signed in Q1 2010 – including KellyOCG’s multi-year RPO contract with Novartis Pharma France, NorthgateArinso’s managed payroll and hosted HR software contract with Johnson Service Group, Ochre House’s RPO contract with Agilent Technologies in EMEA, Ceridian’s contract with Fifth Third Processing Solutions for payroll and HR services, and Xafinity’s contract for pension administration services with Loganair – tell part of the story. And up quarterly earnings reports – such as Manpower’s 12.5 percent revenue increase in Q1 2010 as compared to Q1 2009, and SeatonCorp’s 26 percent increase in the same 12 month period – tell us even more.

All of this shows the HRO industry is gaining momentum, and there’s a brighter prospect for HRO in the year ahead. We may not be sprinting by the end of the year, but the cast is off, the walker is gone and we may be off crutches by December 31!

Gary Bragar, Lead HRO Analyst, NelsonHall

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, recruitment process outsourcing, rpo

Tags: benefits administration outsourcing, Ceridian, hr outsourcing, hro, HRO Confidence Index, HRO providers, hro research, Kelly OCG, learning outsourcing, multi-process hro, nelson hall, NorthgateArinso, Ochre House, payroll outsourcing, recruitment process outsourcing, rpo, Xafinity

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