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This IDC study answers the following questions:
What are IDC's predictions and assumptions relating to market forces affecting the Western European HR management services market, and what impact will they have on the market forecasts? What is the size of the opportunity for providing HR services in Western Europe in 2005 and for the next four years? What are the key recommendations from IDC for maintaining and growing HR services revenues in the coming years?
The Western European HR management HR services market continues to represent a substantial services opportunity, with organizations across Europe increasingly investing in workforce management services as a means of driving out costs and increasing productivity in the enterprise.
The key findings of IDC's 2006 HR management services study include:
Western European HR management services spending will grow from $23.5 billion in 2005 to $33.7 billion by 2010 at a five-year CAGR of 7.5%. Despite a noticeable dip in 2005, HR business process outsourcing (BPO) will represent the fastest growing services segment, with growth projected at a CAGR of 15.5% over the forecast period 2005-2010. Pensions reform, productivity, and the aging workforce have emerged as just a few of the major challenges that will continue to drive spending in the HR Consulting services segment. The HR consulting services market, which represented 38.1% of HR services spending in 2005, is expected to grow at a CAGR of 7.8% over the forecast period. Increasing take up of benefits and training administration services as well as healthy growth in the mature payroll outsourcing market, will see the HR processing services market grow 5.8% in the period 2005-2010.
"Despite a dip in contract signings in 2005, it is HR BPO which will continue to be the growth engine of the HR services market in Europe," said IDC Research Manager Mike Friend. "Service providers in the HR BPO market are now moving from first to second generation in their evolution, with a critical component of that migration related directly to a restructuring of global service delivery models," said Friend. "First-generation HR BPO is largely built around client specific delivery silos. Second-generation HR BPO will be crucial to future growth of the market, since it will create the flexibility and scale to deliver low cost, high quality client services from multiclient, best shore locations."
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