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European
BPO spend set to boom over next five
years
The
spending by European firms on BPO services such as financial
services back office, procurement, and customer care, is set to rise
to E18.9bn by '11, from E11bn in '06, reflecting a five-year
compounded annual growth rate of 11.5%. The report by Forrester,
titled 'European Business Process Outsourcing Spending Forecast:
2006 to 2011,' - covering enterprise spending growth in the 25 EU
countries as well as Norway and Switzerland - highlights the
upcoming trends in expenditure on BPO
services.
According
to the report, this spending will take place in six BPO services -
financial services back office, customer care, finance and
accounting, human resources and procurement, and other
industry-specific and unique business processes - with
HR BPO claiming the largest chunk
of the total European BPO spending during
'06.
In fact,
HR BPO will continue to command the
biggest spending share leading right up to the year '11, Forrester
said.
'UK firms lead, spending
E1.4bn in '06, followed by German and French firms at E587m and
E500m,' it added.
Financial services' back office BPO was a close second in
terms of opportunity
'Ongoing automation and standardisation within the financial
services industry means firms here are likely to outsource the
processing and administration that underpins financial services and
insurance products.
Spending will increase at a compound annual growth rate
(CAGR) of 10.4% from '06 to '11,' it
said.
The
report projected that finance and accounting (F&A) BPO spending
will display the highest CAGR amongst the BPO services at
16.4%. 'From '06-07
nearly all countries will raise their expenditures on
F&A BPO, with the growth rates
ranging from 8-10%. In
most outsourcing-experienced countries like the Netherlands and the
UK, F&A BPO spending will seize about 13% of the total BPO
spending in '11,' it said.
Forrester
pointed out that overall, the uptake and spending in Europe was
spread unevenly, with firms in IT advanced countries like the UK,
Netherlands, and the Nordics and in the large economies of France
and Germany spending relatively more on BPOs. Besides, firms in
Austria,
Belgium,
Spain, and
Switzerland will spend
more than Euro 100 million on BPO per country in 2011, with a CAGR
in excess of 10.5%.
_______________________________________________________________________________
Recruitment
Process Outsourcing (RPO) : Report by Recruiting Roundtable, a
membership program of the Corporate Executive
Board
In 2006,
the Recruiting Roundtable polled 163 recruiting executives from
large organizations to determine how many recruitment processes were
outsourced to a third-party. Although just 4.3% of
responding organizations reported that the vast majority of their
recruitment processes were outsourced and roughly 20% reported that
they do not outsource at all, nearly three-quarters of organizations
reported a portion of their processes were outsourced. The Recruiting Roundtable
followed up with additional research and analysis on large-scale RPO
engagements at 43 large organizations, of which 16 were outsourcing
a critical mass of their recruiting
processes.
Recruiting
Roundtable Managing Director Russ Selinger stated, 'Most recruiting
organizations today are outsourcing non-core recruiting activities
such as background checks and screening. While many large
organizations have considered outsourcing key recruiting activities
such as candidate attraction, screening, selection and on-boarding
for all or part of their hiring needs -- the actual incidence of
this in practice is relatively small.'
Survey
results
Respondents
were asked how they expected key cost and
quality metrics would change by incorporating RPO into their
recruitment strategies and how metrics were actually impacted. Overall, results often fell
short of expectations:
- Prior
to outsourcing, one-half of these organizations expected service to
hiring managers to increase.
- Less
than one-third of organizations achieved the manager service
improvements as expected, nearly 20% points below
expectations.
- While
more than half of organizations expected sourcing costs (excluding
agencies) to decline, only one-quarter reported that these costs
were reduced, more than 30% points below
expectations.
-
Although roughly one-half of organizations expected agency costs to
decline, less than one-third of organizations reported an actual
reduction in agency costs, more than 20% points below
expectations.
Williams noted,
'While the overall feedback on large-scale RPO engagements generally
fell short of expectations, our research reveals that some
organizations are successful with this structure. Most often, they are using
RPO either as a means achieve scale in their recruiting operations
or as a way to meet a specific gap such as the lack of resources or
expertise within a certain area. Many large organizations can
generate this scale on their own while others have the opportunity
to obtain benefits by outsourcing specific functions, business units
or candidate populations to complement their in-sourced recruitment
operation.' | 
