AMSTERDAM, August 9, 2002 - According to a recent report by IDC, the human resource (HR) services market will enjoy strong continued growth in Europe in the period 2002 to 2006, with HR business process outsourcing services in particular forecast to grow at a CAGR of 27.2% over the next five years. The HR services market in Western Europe grew across all service categories in 2001 and early 2002 - against a backdrop of falling ICT stock market values and despite a difficult economy - and will top $34 billion by 2006.
The findings highlighted that despite some well-publicized difficulties experienced by organizations such as BP in the outsourcing of its HR function to Exult, European companies are responding to the toughening economic environment and an increasingly competitive European market by focusing their attention on process improvements in back-office functions such as HR.
According to Mike Friend, Senior Research Analyst at IDC, "The bulk of recent technology investment and related outsourcing activity has been in customer services and customer retention. However, many companies are struggling to define what justifies as an appropriate return on their CRM investments. The current economic climate has encouraged organizations across Europe to focus their attention on driving through process efficiencies in their back-office operations. The outsourcing of HR processes or indeed the whole HR function is being increasingly seen as an important business tool in helping to manage inflated cost structures and improve operational capability."
Other key findings of the report show that:
· HR processing services spend, including payroll processing and benefits administration, is likely to see steady growth of 5.1% over the forecast period. However, the growth of the BPO market is likely to see a greater proportion of processing services revenues captured in broader BPO; hence IDC forecasts a declining share of discrete processing services in the total HR services market. · HR consulting services spend, which includes services such as HR strategy, HR best practices, HR process reengineering and process improvement, organizational design, and compensation and benefit design, is forecast to grow 13.6% over the period 2001 to 2006. Consulting services will become the largest HR services segment by 2005. · IDC forecasts the total European HR services market to grow at a CAGR of 11.4%, with growth anticipated to peak in 2004 at 12.3%. The growth of the HR services market beyond 2004, particularly the growth of the HR outsourcing services market, will to a large degree be determined by attitudes towards the BPO model in Germany, the largest economy in Europe.
About this report
European HR Management Services Market Forecast and Analysis, 2001-2006 (IDC#RH01J). This report examines the European human resource (HR) services market. It identifies key industry trends and market opportunities, and includes recommendations to service providers for establishing or enhancing competitive positioning in the HR service space to best capitalize on the appropriate opportunities.
It provides a detailed sizing for this marketplace, including a five-year forecast for growth in the overall market and for key market segments. These segments include: · HR processing services · HR consulting · HR business process outsourcing (HR BPO). This report is available to purchase at http://www. idc.com.
About IDC
IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at emea.idc.com. IDC is a division of IDG, the world's leading IT media, research and exposition company. All product and company names may be trademarks or registered trademarks of their respective holders.
For more information, contact:
Kathy de Haan
Marketing Manager
Tel: +31 (0) 20 4089509
k.dehaan@idcresearch.nl
Mike Friend
Senior Research Analyst
Tel: +44 (0)20 898 77157
mfriend@idc.com
Explore new economic landscapes, technology solutions, and strategies for IT investments at IDC's European IT Forum.
Date: September 16-17, 2002
Location: Grimaldi Forum, Monaco
For more information, visit http://www.idc.com/itforum02.