The HR outsourcing space has traditionally been active and has continued to grow over the years. The outlook for HR outsourcing will remain positive owing to several factors. As organizations continue to free up time for their internal HR for greater business contribution and small companies struggle with establishing HR management standards, the appeal of outsourcing will continue to be attractive across all segments of the market. Technology is playing a very important role to create several new opportunities in this market and with the continuation of new technology innovations, new kinds of outsourcing services and service arrangements will continue to flourish.

RPO will come in a big way

The concept of recruitment process outsourcing, which was mostly an interesting idea 12 months back, has entered mainstream HR thinking in India. Organizations realize that the efficiencies that RPO can provide is far greater during difficult talent market scenarios and hence, the RPO market will continue to expand in India. This poses a threat to the traditional recruiting market and thus, the service market will be abuzz with several companies introducing RPO services in the coming times. That said, RPO service providers will have to invest in creating good quality services and also invest in good IT infrastructure if they hope to survive in this competitive market.

One of the key reasons why RPO will grow in the coming months is the increasing influence of social media and big data products. Social media has enabled much easier accessibility of talent market information compared to the traditional static talent databases, which organizations relied on mostly. Coupled with that, talent products based on big-data architectures are facilitating the availability of more in-depth insights about the talent market. An example of such big-data insights can be the answer to a query like, “In which city can we find the most number of candidates with 9 years of a specific skill?” Such insights were unavailable in traditional talent-based products. Equipped with such rich talent market information based on solid technology infrastructures, RPO service providers can enable efficiencies for an organization, which are much more value-adding that traditional recruitment processes. As organizations continue to battle for talent at all levels, the RPO market will be among the fastest growing in the months to come.

Opportunities from HR’s changing role

A number of consumer organizations we spoke to have revealed that they plan to increase their investments in HR outsourcing in the coming months. A key reason behind this trend is the changing nature of HR’s role in the organization. HR, which was until now predominantly a transactional role, is rapidly transforming into a consultative and advisory role for the organization. As a result, progressive CHROs are gradually phasing out the transactional HR processes to outsourcing partners to create more space and opportunity for internal HR teams to be a manager of the human capital in the organization and a contributor to business strategy. Some organizations have very aggressive plans with outsourcing comprising multi-year and multi-service deals and spanning the entire employee lifecycle from recruitment to exit management.

The external business environment will be a key factor in shaping the outlook for HR outsourcing services in India in the coming times. The industry will be looking to hire good talent to identify and manage the good opportunities that it presents. In addition, outsourcing providers will need to import best practices from global markets to create value-adding opportunities. For example, concepts such as virtual executives on a contractual or temporary arrangement may not be too far away in the Indian market. While the Indian consumer continues to mature, it is also the responsibility of the HR outsourcing companies to introduce new concepts and create new opportunities.

Opportunities:

1. Recruitment process outsourcing
2. Value-added services
3. Multi-service outsourcing


Threats:

1. Talent availability
2. Low consumer maturity
3. Expectations of global standards