Top HR Outsourcing Trends to Watch in 2019

Jul 3, 2019

The adoption of HR outsourcing services is growing worldwide as businesses are increasingly outsourcing one or more of their HR operations to third party companies to reduce labour costs and maximize operational efficiency. Today’s HR outsourcing is no longer only about employee management but also includes various services such as recruiting, HR system design, HR software innovation, flow integration, employees’ degree of satisfaction, compensation planning, training, employee relations, planning of enterprise culture, and more. As cost-effectiveness and business efficiency continue to be the some of the key focus areas in the global business environment, the global HR outsourcing services market is also expected to flourish further, with several emerging HR outsourcing trends likely to have huge impact on the market growth over the next few years.

Benefits of HR Outsourcing

One of the key growth contributors to the global HR outsourcing market is the constantly growing need among businesses to reduce their operational cost and increase efficiency to counter rising competition. Outsourcing of HR services helps business to reduce operating cost as the expenses of outsourcing is relatively less compared with maintaining inhouse capabilities. This is because cost components such as expenses related to recruitment and training, maintenance of HR and payroll software, office rents, and time/cost spent developing and improving internal processes and managing the in-house team will get eliminated partially or fully.

Global HR Outsourcing Market Overview

According to the recent market report from SpendEge, the global HR outsourcing market size is predicted to register a CAGR of about 9% (in terms of category spend) by 2022. Continuous technological advancements and the increasing adoption of modern digital tools is expected to boost the growth of the human resource outsourcing market during the forecast period.

The report shows that the rapid advances in technologies such as the use of cloud-based HR management applications, IT advancements, and data analytics, are creating more opportunities for HR outsourcing companies to optimize and increase the quality of their HR services. This report also highlights that some of the technological capabilities that buyers of HR services should focus on while selecting service providers are data analytics capabilities for analysing HR data and cloud-based software applications that help to remove manual management of HR activities such as payroll processing.

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Top HR Outsourcing Trends to Watch in 2019


SaaS Powered HR Outsourcing

One of the top HR outsourcing trends that has been witnessed in the recent years is the growing application of cloud computing technology and the rise of HR services based on the software-as-a-services (SaaS) model. Thanks to the series of benefits that cloud computing can offer such as low costs, on-demand scalability, improved efficiency, reduced infrastructure requirement, and better security, SaaS powered HR outsourcing services are quickly gaining a greater share of the global HR outsourcing market. Moreover, SaaS HR outsourcing systems also support integrated management and real time software updates, which help clients to make strategic decisions more effectively. It is expected that the cloud-based and SaaS powered HR systems will be increasingly adopted by more companies and organizations through 2019.

Recruitment Process Outsourcing (RPO)

Since the recruitment process is one of the hardest and yet most crucial parts of HR operations, companies and organizations are fully or partly adopting RPO in their HR outsourcing in order to achieve higher efficiency and lower costs in their recruitment process. Third-party RPO services providers can often work as an extension of a company’s HR department, assisting or providing with a holistic hiring solution.  In addition, RPO service providers can also offer better expertise, advanced recruitment analytics, and the necessary technology and methodology needed to fulfil a client’s recruitment requirements. The global HR outsourcing market has witnessed a growing demand for integrating RPO into the HR outsourcing services, and this trend is expected to continue over the next few years.

Talent Management

People management plays an increasingly significant role in delivering businesses’ operational performance. Apart from recruitment and hiring, some of the key competences of a business often relies on how to retain and develop the most talented and superior employees. That’s why in today’s business world, talent management is under the spotlight more than ever before. This will require HR outsourcing companies to further develop and integrate effective talent management strategies in their services offerings.

Digital HR Outsourcing Solutions

Recent market developments have seen many leading HR outsourcing companies increasingly invest in new technologies to better serve their clients and digitize their business and operations. According to a Deloitte survey, 56% of companies are redesigning their HR programs to take advantage of digital and mobile tools. Among the respondents, 33% are using some form of artificial intelligence technology to deliver HR solutions, and 41% are actively building mobile apps to deliver HR services. Thus, continuous technological and advances and the increasing adoption of modern digital tools are expected to further boost the growth of the human resource outsourcing market over the next few years.

Big Data HR Analytics

As big data continues to shape the world of modern business, it has been widely adopted into HR analytics. It is expected that the requirement of big data HR analytics will be increasingly stronger for HR outsourcing services going forward. HR analytics refers to the applications of data, modelling, and analysis of employee-related factors to improve business performances. Such applications often consists of a wide range of data analysis and information management, such as data points specific to employees’ performance and their behaviour, skill sets data, workforce data, rewards data, and many more. Big data HR analytics allow companies to make data-driven, objective, and more effective decisions about their employees and the overall business.

Social Media Recruitment

The emergence of social media recruitment has brought new opportunities to RPO, and it is anticipated to be massively adopted by HR outsourcing services providers. HR outsourcing companies are adopting social media to source, advertise job vacancies, and generate leads for the best candidate. Payroll outsourcing firms are tapping social networking sites and the Internet to identify and screen potential talent and experienced people. More companies and organizations are also performing checks on professional and personal history of their staff members to obtain an insight into their personality. Employers have realized the potential of social media reach out to applicants instantly at a lower cost. This trend is expected to gain traction in the coming years.

Key Features of our Global HR Outsourcing Category – Procurement Market Intelligence Report

Supply Market Insights
Procurement Best Practices
Cost Saving Opportunities
Pricing Models
Negotiation Strategies
Category Risk Analysis
Key Supplier Analysis
Supplier Capability Matrix

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