HRO Today Global Winter 2015 - 17

Spotlight on APAC
The latest spurt of
growth has seen
activity in newer
countries such as
India, China, Japan,
Indonesia, Taiwan,
and South Korea.
players also have local expertise and a local connect which
provide a strong value proposition as buyers need people
who understand their language, culture, and operations.
But do leaders really need to care about APAC? After all,
in terms of revenue market share, APAC still isn't a huge
force. The answer is a definite yes since APAC-heritage
players are gaining prominence globally. The market share
of APAC-based players in terms of winning new deals in
2011 was 10 per cent which has now increased drastically
to 30 per cent between 2012 and 2013. APAC-based
players have leveraged their learnings gained through
experience from local deals to start to give tougher
competition to leaders in their home territories. They are
also able to offer a strong business case based on much
lower costs in terms of both technology and people. In the
past three years, the larger players have basically let these
players thrive unopposed by not focussing on the APAC
market which is becoming dangerous for them.
APAC is a new and fast-growing market, and analysts
at Everest Group think investment in APAC is a smart
one. APAC is the new growth engine not just in terms
of outsourcing, but for economic growth in general,
therefore investing in the market makes sense for
multiple reasons.
There are many regions for growth. Organisations will seek
outsourcing in more mature geographies such as Australia
or the faster growing ones such as India and China. It is
important to note that the varying geographies will have
varying needs that call for different technology models
and business strategies.
There are many different types of organisations that are
interested. Gaining traction with western headquartered
multinationals might be easier, but there is huge growth
expected to be driven by local multinationals and local
players. APAC buyers are largely mid-sized organisations
(between 3,000 and 15,000 employees) and therefore any
strategy should take that into account.
New entrants in APAC will focus greatly on the right business
model. Factors include:
Scope of services. APAC organisations are often more
focussed on transactional services, however we have also
seen significant uptake of judgment-oriented processes
in the region. Therefore, developing capabilities in both
areas is important.
Pricing model. Unlike the broader global market, APAC
market has significant play of full-time employee-based
pricing than just transaction-based pricing.
Technology model. APAC is more of a platform-focussed
market, although augmentation is also used in some
cases. Most organisations don't have robust HR systems in
place and that's why tie-and-run is rarely used.
Local culture and uniqueness. APAC is a completely
different market where local customisation based on
culture is important and hence local needs should be
focussed on.
As we look to the future in APAC, both organic and
inorganic is likely to occur. Providers need to develop
internal capabilities to cater to the market and leverage
partnerships with local vendors to provide a cost-effective
solution. The new entrant might also want to look at
inorganic opportunities to grow through acquisition of
focussed and smaller HRO players specific to the market.
Arkadev Basak is practice director for Everest Group.
WINTER 2015 | www.hroglobal.com
[17]
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HRO Today Global Winter 2015

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