Three Forces Shaping HRO for 2012

As 2011 comes to a close, let’s look ahead to 2012 and the three current trends that will continue into the New Year and beyond.

HR SaaS has been around for years. Now that the breadth of cloud coverage is in the HR ERP space it is opening up the middle market for HRO at long last, and is swimming upstream into the large client market. HR mobile applications are proliferating and vendors will be hard-pressed to deal with the rising demand by clients and participants for more on-the-go functionality. What seemed like an innovative differentiator is quickly becoming a competitive requirement.

HRO globalization has long been on the agenda of many HRO vendors, mainly targeted by major multinational companies (MNCs), but there are only so many global MNCs. We are now seeing additional focus on regional service networks for multi-country companies. HRO activity in emerging markets is also picking up for MNCs and for in-country client services. Expect to see HRO acquisitions, partnerships, and new offices for sales and service delivery grow in 2012 as service providers continue to fill-in geographic footprints and service gaps.

The globalization of RPO will continue to be a big story in 2012. RPO vendors are gearing up to meet the demand and two of the largest acquisitions in 2011 included SourceRight (part of SFN Group), which was acquired by Randstad, and The RightThing, which was acquired by ADP.

The growing global RPO demand was illustrated in a big way by Kenexa when it was awarded with a five-year RPO contract by Eli Lilly and Company, which includes recruiting in Asia Pacific, Europe, and the Americas. NelsonHall estimates the deal to be worth more than $50 million, one of the largest RPO contracts to date.

HRO contract awards will continue to increase across Asia Pacific, with some year to year variability due to economic conditions. Three years ago, ~10% of contracts included Australia, with half of those for clients headquartered in Australia. Two years ago, it was ~11%, with about an even split of Australian-based clients. In the past year, the number has jumped to ~16%, with the majority of contracts for clients based in Australia.

China has also emerged as a client base for HRO, including for in-country services. As emerging market companies reach a fast-growth stage and expand their services internationally, the need for HR technology, processes, and delivery capabilities can outstrip the local talent base for HR. For example, Manpower made two acquisitions in China, REACH HR in South China and Xi’ and Fresco in Henan Province.

These are three of the forces shaping the future of HRO. Those HRO vendors that are able to update their portfolio of services and quickly and cost effectively invest in the acquisition or development of new capabilities will gain an advantage in the growing marketplace for HRO.

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

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Explore posts in the same categories: Acquisitions, HR Mobile Apps, hr outsourcing, hr outsourcing research, HRO Activity, HRO contracts, HRO providers, hro research, HRO Service Provider, HRO Strategy, HRO Vendors, Mobile Apps, nelsonhall, outsourcing research, RPO providers, rpo research

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