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This IDC study outlines IDC's predictions and assumptions relating to market forces affecting the Western European HR management services market, and the impact they will have on market forecasts, the size of the opportunity for providing HR services in Western Europe in 2005 and over the next four years, and the key recommendations from IDC for maintaining and growing HR services revenues in the coming years.
The performance of service providers in 2004 suggests that confidence is returning to this market, with evidence of a growing project and contract pipeline.
IDC has made the following key forecasts for the period 2004 to 2009:
The Western European HR Services market will grow from $24 billion in 2004 to $34.3 billion by 2009 with a CAGR of 7.4%.
The HR BPO market will continue to represent the fastest growing spending segment, with growth projected at a CAGR of 16.5% over the forecast period, 2004?2009. This translates as an absolute market growth of $2.2 billion in five years.
The HR consulting services market, which represented 34.9% of Western European HR services spending in 2004, is expected to grow at a CAGR of 7.5% over the forecast period.
The HR processing services market, in which payroll services represent nearly 70% of spending, is forecast to grow with a CAGR of 5.6% for the 2004?2009 period. This low CAGR disguises much higher growth rates for fully managed payroll services. The take-up of benefits administration services, continues to lag behind the U.S. market, however.
"Corporate governance, pension reform, compliance, productivity, process efficiency, and HR costs have all helped stimulate demand for HR services in 2004. However, in established markets such as payroll and HR consulting, market growth has been slowed by competition among service providers and the downward pressure on service fees this has exerted," said Mike Friend, research manager for IDC's European Business Services research.
"The real action lies with HR business process outsourcing," said Friend. "The continuing rapid growth of the HR business process outsourcing market has buoyed up the market and reflects a dynamic shift in customer buyer behavior. It has also demonstrated that a market for HR BPO services exists outside of the U.K., Benelux, and Nordic markets."
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