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Global HR outsourcing renewal may bring in more jobs to India

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Most of human resource outsourcing (HRO) contracts coming up for renewal are likely to witness a significant restructuring .This shift is likely to see more such work being offshored to India.

Everest Group, in a study ‘Human Resources Outsourcing (HRO): End-of-Term Market in HRO’ said the areas of restructuring range from modifying the number and type of in-scope processes, to enhancing delivery models through global sourcing, to introducing alternative pricing models.

According to the research firm, about 75-85 % of engagements will likely be extended while 15-25 % will be repatriated or transferred to new suppliers. More than 111 HRO contracts, with a combined total contract value of about $6 billion, are nearing their term end in 2010-12 . Everest analysts foresee scope for reduction with largemarket buyers, whereas midmarket buyers will likely expand narrow scopes and leverage expanded supplier offerings that include talent management services.

“While extension is the most-preferred option, given the current economic climate and structural changes in the HRO market, recent end-of-term events see intensive renegotiation and contract restructuring,” said Katrina Menzigian, VP, Everest Group.

However, this trend in the contracts is expected to give a significant push towards offshoring more work to India. According to Everest, both mid-market and large market HRO buyers are expected to leverage offshoring much more in their second generation deals due to increased cost pressures in recent times.
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