HR outsourcing market to see continued strong growth

Dive Brief:

The global multi-process HR outsourcing market (MPHRO) will continue its 6% to 8% growth over the next three years, exceeding $5 billion in 2020, the Everest Group has predicted. The group's new report covers the 2017 to 2018 HRO market and analyzes the evolving market situation and buyer adoption trends.
The growth will be fueled by enterprises seeking strategic partners who can support a next-generation HR model where technology is leveraged to reduce costs, improve process efficiency and integrate a seamless, intuitive employee experience, the consulting and research firm said. Enterprises want to undergo end-to-end transformation of their HR processes rather than "focus on transactions in isolation," Everest Group noted, so more of these platforms include talent management capabilities.
HR has adopted a slew of cloud-based technologies, and favored platforms for MPHRO reflect that trend. Workday has seen the highest traction, followed by SAP and SuccessFactors.

Dive Insight:

Experts attribute the increase in outsourcing to HR getting a seat at the table and becoming a more strategic partner. Technology, the talent shortage and the skills gap are driving a shift toward a mixed approach to staff planning. Eighty-three percent of talent professionals say their goal is to have a more measurable impact on their businesses' performance, up from 57% in 2016. And 80% say their recruitment strategy is more about value creation than cost savings.

A pleasant employee experience enabled by tech can help an employer make a good impression on applicants and long-time employees alike. Companies with outdated tech have a tougher time landing top performers, according to a Harvard Business Review Analytic Services report; 58% of respondents to the survey said their technology offerings are a factor in candidates' decisions to work for them.

But training and technology can also help employers in keeping track of legal leave requirements and managing employee leave banks — a major HR headache that, when automated, can free up HR to work more closely with employees. The growing number of states and municipalities putting paid sick leave requirements in place has only added to the complexity of managing leave. Currently, at least 10 states and Washington, D.C., as well as more than 30 localities, require paid sick leave, but the details of the requirements vary, making compliance difficult for employers with operations in multiple jurisdictions.

But, even with paid sick and family leave requirements popping up like mushrooms after a spring shower, employers say they find managing intermittent FMLA leave more difficult than managing any other federally mandated leave, according to a Littler Mendelson's 2017 annual employer survey. Especially for FMLA leave, 40% of companies with 1,000 or more employees outsource, as do 27% of companies with 50 or more employees.