The global market for HR business process outsourcing (BPO) is set to grown at 21% a year, reaching $7 billion in four years, say BPO analysts NelsonHall.

NelsonHall founder John Willmott commented: “Until now, most global HR outsourcing deals have been single-process engagements, such as localised payroll services; pensions and benefit administration; and recruitment.

“Now we are seeing the emergence of the multi-process market. Vendors are partnering with or acquiring other firms to broaden their HR service delivery capabilities to include: organisational and people development; employee data management; workforce planning and deployment; and human capital services.”

Cost reduction remains a key driver for HR outsourcing, according to the survey. Willmott explains that businesses that take the outsourcing route expect to see a cost reduction of between 20-40% as well as a marked improvement in the quality of their HR services.

Manufacturing and financial services industries continue to be key growth areas for BPO while retail and government are the likely contenders for presenting HR outsourcing opportunities in the future.

Competition in the market is high.

ADP commands a 17% share of the market making it one of the leading global HR outsourcing players. Hewitt Associates has the next largest market share, with 9% of the market as a result of its strength in benefits administration services and its recent acquisition of Exult, the market leader in multi-process HR BPO, where the company has an estimated 18% market share.