Ovum warns vendor consolidation and cloud services transform HR services but not necessarily complex BPO

From the adoption of horizontal business process outsourcing (BPO) to the demise of the leading providers’ service in large deals, the market for multi-process human resources (HR) outsourcing has evolved consequently, says Ovum. According to the global industry analyst firm, it remains uncertain as to whether advances in HR-related technologies will directly affect the adoption of complex BPO services.

In a new report*, Ovum analyses the market dynamics of multi-process HR BPO to understand if buying behaviour is changing or whether buyers are focusing on less strategic investments. The report reveals that buying organizations show a preference for a shared services approach, single-process BPO, and the deployment of new modules or functionalities to existing systems. Also, it outlines that the market for multi-process HR BPO is dominated by a small set of vendors.

“Despite the hype around cloud services, the demand for multi-process HR BPO is confined to company-specific circumstances such as M&A or a lack of centralization and therefore standardization,” says Thomas Reuner, principal analyst at Ovum. He continues: “The wider market, however, shows a preference for shared services, single-process BPO, and a technology refresh of existing systems.”

“As in other segments of the IT services market, the impact of cloud services and mobile extensions has so far been modest. Beyond complex BPO contracts, however, the impact is significantly greater as many organizations deploy these solutions as part of a technology refresh of existing systems. Ovum sees demand for complex BPO contracts coming from a different direction, namely the bundling of transactional back-office processes such as finance and accounting (F&A) and procurement.”

Finally, “Cloud components and mobile extensions are transforming HR services and single-process HR BPO, but so far this has not led to higher demand in multi-process engagements.”

 

 

 

 

 

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