It’s known as global multi-process human resources outsourcing, or MPHRO, and apparently it’s on a roll.
According to a new report from the Everest Group, the global MPHRO market is expected to continue at a 6-percent to 8-percent annual-growth rate over the next three years. That translates to more than $5 billion by 2020.
The growth will be fueled by employers increasingly seeking strategic partners with the expertise to support a next-generation HR model, says Anil Vijayan, Everest Group’s practice director and co-author of the report. In that scenario, technology is leveraged to not only provide cost reduction and process efficiency but also orchestrate a seamless, intuitive employee experience, he adds.
The researchers found that the basis of this next-generation MPHRO model are digital tools and concepts, primarily analytics, automation and cloud. For example, analytics solutions can have a significant impact in mitigating all business challenges faced by enterprises through enhanced visibility and control. Despite the growing adoption of basic analytics solutions, however, advanced analytics penetration within HR still remains relatively low.
Among the report’s findings:
- The MPHRO market has witnessed adoption from first-time outsourcers as they venture into cloud-based HR services delivery;
- North America continues to dominate as the primary decision-making location. However, its share is slowly being eroded by other geographies such as Asia, Eastern Europe and the Middle East;
- MPHRO deals on third-party SaaS-based platforms are witnessing much faster adoption rates. Among prominent third-party platforms, Workday has witnessed the highest traction, followed by SAP SuccessFactors; and
- Manufacturing and financial services still lead the adoption in MPHRO, but non-traditional adopters such as healthcare and retail have seen an uptick in adoption.
Regarding the cloud, it is now a major disruptive force in re-engineering HR operations, as cloud-based solutions not only provide an elevated employee experience, but also offer an integrated view of the data, allowing enterprises (or providers) to glean strategic insights to overcome many talent-related challenges, according to the Everest report.
“The most critical issues facing enterprises today are HR challenges such as the scarcity of talent, the high cost of HR operations, and providing employee experiences that are required to maintain competitive positioning,” Vijayan says. He adds that increasingly, enterprises of all sizes are looking to their MPHRO service providers, seeking strategic partners that can guide them through the HR transformation journey to digitalization.
“The importance of third-party advisory has increased sharply, and, going forward, digitally-driven, orchestration-led engagements will form the primary deal archetypes in the ever-evolving MPHRO marketplace,” he says.