HR Outsourcing - The Emerging Trends

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.