Global organisations are trying to scale up operations in the Indian market and the space will likely see consolidation in the coming years
HR outsourcing and niche service providers constitute the third largest revenue segment in the industry. From a construct perspective, this segment has two predominant types of service arrangements― project based or single contract deals and large scale multi-year arrangements. These services typically cover the complete breadth of the employment lifecycle and include services such as candidate assessments, payroll and benefits, RPO, training process outsourcing (TPO), engagement, performance management, and exit and outplacement services. The market comprises global players that are apt in multi-functional process outsourcing services, pure play global HR process experts, and domestic homegrown players.
Post liberalization, Indian corporations have steadily witnessed more global players entering the market equipped with best-of-breed business practices. These disruptive developments exposed Indian corporations to competitive threats unprecedented in the erstwhile closed economy times. In response, Indian corporations adapted through expansion into global geographies, diversifying product and service lines, and introducing global best practices. Human capital management thus evolved as a crucial component of organizational strategy. With the HR function shifting to a strategic focus, the need for process-level partnerships is increasingly gaining importance.
2012 reflected the impact of the economic slowdown on the job market. Attraction and retention of high quality talent has become a critical ingredient of organizational success. With lesser jobs, the competition for quality talent has intensified. While the trend is expected to continue across the next few months, value-based services such as assessments and RPO have seen a consequent rise in demand. According to SmithaAffinwalla, Head of Consulting at DDI, as the HR market in India is maturing, the need for depth of value increases. There is an increasing need for service providers in this space to understand the need of the market. Rajesh Ranjan, Vice President at Everest Group, highlights that there is a huge opportunity for homegrown Indian corporations in this space as they have a deeper understanding of the market and have the means and resources to respond in indigenous ways. At the same time, global organizations are trying to scale up operations in the Indian market and the space will likely see consolidation in the coming years.
Technology will play a pivotal role in driving the next generation of opportunities in this space. According to PankajBansal, CEO of PeopleStrong HR Services, there are significant opportunities in the payroll and benefits space with the Indian market likely to witness the emergence of large homegrown players co-existing alongside global corporations.