HR Outsourcing - The Emerging Trends



Authors: Sanjib Dutta
Senior Faculty Member
ICMR (IBS Center for Management Research).

HR outsourcing market is booming and India is one of the emerging players in this market. The article explains the reasons for the growth in this segment and India's contribution to HR outsourcing.

Major consultancy firms are predicting a big boom for HR outsourcing as a whole. According to Gartner, McKinsey and others the outsourcing market is expected to touch US$ 78 billion by 2004. Gartner predicts that the worldwide HR outsourcing market will grow from $21.7 billion in 2000 to $58.5 billion in 2005.1 HR outsourcing is expected to be the fastest growing segment in the outsourcing market. 80 percent of companies now outsource at least one HR activity, and the number is growing fast.

Though some analysts argue that by outsourcing major HR activities, the number of HR jobs is decreasing, others feel that on the contrary by outsourcing these kinds of repetitive and administrative jobs, higher-level HR professionals get the time they need to tackle strategic workforce challenges. With the growing market there are a number of vendors available who cater to the diverse needs of various markets and provide HR services, including staffing, payroll, benefits administration, training, employee relations, and compensation. Consequently, what started in the 1980s as a simple payroll outsourcing has exploded into a $32 billion a year business involving all facets of HR.

In just four years, one HR services provider--Exult--has grown from a start-up with a handful of people to an established company with 1,500 employees and more than $400 million in annual revenues. Other big players include Accenture HR Services, ADP, Fidelity, Hewitt, and Convergys.

Service Line in India

  Market Potential (in billion)

Human Resources


Customer Relationship


Payment services


Content Development and others




Health care


Source:, 4th August 2003

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1] Management Trends in Outsourcing.