The recession put most employers on the ropes financially, a position in which the HR outsourcing market hopes to take advantage of, suggests a new white paper by an HRO company.

During tough times, businesses want to reduce employment costs, eliminate HR risks and improve efficiencies, which mean HR outsourcing solutions become more appealing. In the report titled “Preparing for the Rebound: How Human Resources Outsourcing Can Help Business through Uncertain Economic Times,” analysts at CPEhr, a California-based HRO firm, examined industry studies on the HRO market.

Citing data from IDC, a research firm, the report claims that outsourcing HR functions rapidly outpaced other segments of the business process outsourcing industry.

The HRO market grew by nearly 70% over the past six years, with employers worldwide spending more than $103.3 billion on the services in 2007.  

The white paper also explains that the industry growth slightly sagged in 2008, but industry researchers estimate that the HRO market increased at a compound annual growth rate of nearly 10% in the United States through 2009. 

In addition, Everest Research Institute, an independent research firm, reports that HR outsourcing transactions in North American reached $25.4 billion by the end of 2007, an increase of 19% over the previous year. Market analysis outlined in the report indicates that HRO transactions increased by 11% ($2.9 billion) in 2008, according to CPEhr researchers.

“Reports indicate that as the economy begins to recover and employers look to rehire lost personnel, their priorities will continue to focus on cost-containment and improving efficiencies,” says Ari Rosenstein CPEhr’s director of internet marketing. “Our research points to outsourcing human resources as a cost effective and efficient way to reach those goals in 2010,” he adds.

The white paper outlines three key employment priorities when considering HR outsourcing:

• Stabilizing operating expenses. Following a dismal 2009, employers are looking to reduce unnecessary expenditures, specifically in the area of labor costs.

• Reducing employment risks. Employers are preparing for potential labor-related litigation by reviewing policies, updating HR documentation and training management.

• Enhancing employee performance. Employers are compelled to find new ways of motivating and training their workforce to maintain a positive attitude while managing increased workloads.

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