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HR outsourcing value rises significantly

HR outsourcing value rises significantly

Total spend between January and September 50 percent higher than the value of deals signed in 2014, according to the arvato Quarterly Outsourcing Index. Deals worth £338 million were agreed in the first three quarters of 2015. HR contracts account for 24 percent of all UK outsourcing deals signed between January and September. Average contract value has nearly quadrupled in the first three quarters of this year when compared with 2014 – 193 percent year-on-year rise in value of deals agreed in Q3

Analysis of the outsourcing sector in 2015 has found that the use of external partners to handle HR services is continuing to grow. The spend on HR outsourcing contracts in the first three quarters of 2015 has already surpassed the total value of contracts signed in 2014, according to the arvato UK Quarterly Outsourcing Index. Organisations across the public and private sectors have procured deals worth £338 million between January and September of this year – 50 percent greater than the total spend in 2014 – representing a growing demand for outsourced HR services such as recruitment and payroll.

The research, compiled by business process outsourcing (BPO) partner arvato in partnership with industry analyst Nelson Hall, indicates that organisations are procuring larger and longer HR outsourcing agreements. According to the findings, average deal value has nearly quadrupled in the first three quarters of 2015 when compared with last year, with the length of contracts growing by 17 percent. Deals for HR services have accounted for almost a quarter of all outsourcing agreements signed in the UK between January and September. Throughout 2015, organisations have largely procured contracts for learning and development and recruitment, together with several multi-process deals in payroll. Focusing in on the third quarter of 2015, the new data revealed significant year-on-year growth with the total value of HR deals rising by 193 percent when compared with July to September 2014. According to the findings, average contract value rose 486 percent year-on-year, with agreements lengthening by 38 percent.

Debra Maxwell, CEO, CRM & Public Sector, arvato UK & Ireland, commented: “From attracting, retaining and developing talent to providing administrative services for employees, HR is a business critical function for organisations across all sectors. The growth we’ve seen this year demonstrates that businesses and public sector bodies are increasingly turning to partners to deliver positive, transformational change across their HR operations, whether that’s by freeing-up resources to focus on more strategic business activities, or accessing external expertise in areas such as recruitment.” The arvato UK Quarterly Outsourcing Index is compiled by leading BPO and IT outsourcing research and analysis firm Nelson Hall, in partnership with arvato UK. The research is based on an analysis of contracts secured in the UK market during July to September 2015.

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