The Market Segments of MPHRO

NelsonHall’s 2011 Targeting Multi-Process HR Outsourcing (MPHRO) report identified four unique market segments that MPHRO buyers fall within and their characteristics.  Let’s take a closer look at each.

The first segment, “multi-country standardization,” makes up 15% of the MPHRO market and contains buyers looking to centralize processes within certain geographies.  Buyers in this category typically have a presence in more than 20 countries and more than 10k employees. MPHRO services are either deployed regionally for these clients or globally and include HR administration and payroll. Another service often incorporated in this segment is technology to support other HR functions.  The main driver for MPHRO within this sector is to centralize processes within geographies and gain consistency.  Of the four market segments, this one has the highest growth rate for the next five years.

“Client-specific shared service transformation” is the second market segment and the largest at 48%.  Again, buyers in this group have operations in 20+ countries, with an average of 50 countries.  Employee headcount is more than 30k and typically averages more than 100k. Services include the entire HR service line (i.e., HR administration, payroll, benefits, training administration, and learning administration) with buyers in this category purchasing MPHRO to make their HR departments more effective by implementing best practices.  In the next five years, growth will be modest, but its overall market share will shrink due to decreased total contract values.

The third segment contains buyers looking to focus on their core business.  This is the second largest category at 24%.  These buyers have operations in one or a small handful of countries and tend to be start-ups or buy-outs.  Average employee headcount is 8k, but can be as little as 1k.  MPHRO services utilized by this group are HR administration, payroll, and sometimes recruitment or training administration.  The main reason MPHRO services are procured by this group is to obtain HR capability quickly so internal focus can be applied somewhere else, as often experienced by organizations experiencing high growth, especially in emerging markets.  Growth for this segment will continue to be strong.

Buyers looking for “technology-led HR service enhancement” make up the final segment at 13%.  These organizations are usually in just one country with employee headcount ranging from 1k to 50k+.  The service scope includes a technology upgrade, HR administration, and payroll.  The driver for MPHRO services for this group is to update an antiquated system and improve processes.  Like the “core business focus” segment, growth for this segment will steadily continue.

Stay tuned to find out success factors for service providers within each segment.

Amy Gurchensky, Research Analyst, HRO, NelsonHall

Explore posts in the same categories: benefits administration, HR Administration, hr outsourcing, hr outsourcing research, HR Technology, hro, hro research, lbpo, multi-process hro, nelsonhall, payroll outsourcing, Training

Tags: benefits, HR, HR administration, hr outsourcing, HR technology, hro, learning, MPHRO, multi-country standardization, multi-process hro, nelsonhall, payroll, training

You can comment below, or link to this permanent URL from your own site.