HRO Today July/August 2014 - 58

Market Insight
Fast Change
The era of transition that we are now experiencing bears
little resemblance to the change during the decades of
outsourcing that have preceded it.
In the first generation of the market in the late 1990s,
pioneering outsourcing clients were concentrating on
" lift and shift " deals focused on labor arbitrage and costcutting.
By 2005, in the second generation of the market,
there was a peak in demand for HR outsourcing, and
providers were ruthlessly focused on industrialization,
standardization, and globalization.
In 2006, the market began to consolidate, and some
companies exited the area, while others were acquired.
As spending slowed, there was a need for change among
those that remained. To prepare for the next phase of the
market, successful providers began to step back, getting
their processes in order so as to better serve clients.
In the last few years, client organizations have begun to
look at HR outsourcing as an opportunity not only to save
money, but also to better manage key processes and gain
a strategic operational, talent, and revenue advantage.
And HR outsourcing providers have realized they need to
better meet client needs and offer more tailored services.
One way to appreciate the implications of this realization
is to look at Starbucks as an example of a highly
industrialized company. Highly industrialized doesn't
necessarily mean highly rigid-in fact, it's just the
opposite. Starbucks has a crystal clear understanding of
the market, their clients, and their cost structure. The
beverage company leverages industrial certainty and
confidence in its operating model to allow customers to
tailor drinks in seemingly infinite combinations of shots
and flavors.
Today, leading HRO providers are focused on offering
a full range of options to suit exactly what different
clients with changing needs are looking for. This differs
immensely from the standard with-or-without-milk style
of business that the industry offered not so long ago.
Transition to Wider Business Value
There has been much change, but it is far from over as
clients have a wide range of evolving requirements. As
the industry continues to mature, we expect to see a
continued focus on the business value of multi-process
work.
[58]
HRO TODAY MAGAZINE
| JULY/AUGUST 2014
According to Everest Group's
Multi-Process HR Outsourcing 2014
Annual Report, between 2009 and
2012 the industry witnessed a 3
percent compound annual growth
rate in both North America and
Europe, the Middle East and Africa,
to $1.79 billion and $1.09 billion
respectively.
Leading providers are driving the fourth generation
of the market, which is characterized by using data
and analytics to achieve continuous improvement and
to generate workforce insights. They're focused on
workforce productivity and business outcomes, such as
quantifiable revenue increases per employee as a result
of talent programs. The industry is also moving toward
developing more scientifically measured benefits, which
is important as other business units beyond HR are
increasingly becoming involved in analyzing results.
The Future
Through the last two decades of MPHRO, the demands,
nature, and scale of work have changed dramatically.
One thing is for sure: organizations are highly interested
in the business outcomes they can achieve when
outsourcing multiple human resources processes. As the
industry continues to mature in a changing climate, there
are strong opportunities for substantial growth and
continued specialization of HR services.
Jill Goldstein is managing director of talent and HR for Accenture
Operations.

HRO Today July/August 2014

Table of Contents for the Digital Edition of HRO Today July/August 2014

HRO Today July/August 2014 - 1
HRO Today July/August 2014 - 2
HRO Today July/August 2014 - 3
HRO Today July/August 2014 - 4
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