U.S. HR BPO Spending Set to Reach $18.9 billion by 2010, IDC

Human resources (HR) business process outsourcing (BPO) is the fastest-growing segment of HR services and will grow at a compound annual growth rate (CAGR) of 16% in the United States, reaching $18.9 billion in spending by 2010, according to IDC. Overall, the landscape continues to evolve through mergers, acquisitions, and joint ventures.
In 2004, 37% of U.S. HR outsourcing spending was on HR BPO services. IDC projects that HR BPO services will continue to grow, reaching 46% of HR outsourcing spending in 2010 as the market solidifies and leaders achieve profitability through economies of scale.

Additional key findings from IDC's study include the following:

  • 2005 was an exceptionally strong year for HR BPO deal activity.   2006 has a slim chance of matching, but is not likely to exceed 2005 in terms of total number of contracts.
  • Global reach is one of the factors contributing to recent vendor success in HR services and BPO in particular.
  • There are emerging capacity issues at the high end of the market as vendors work towards implementing the many clients signed in 2005.

The IDC report, Worldwide and U.S. HR BPO 2006 Vendor Analysis: The Answer Is in the Margin, studies the market for HR BPO services by examining its leading service providers and changes in market dynamics in recent years. 

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