Executive Summary

As the global HR Outsourcing (HRO) market moves towards maturity in the developed economies of the West, Asia Pacific, especially the emerging markets within the region such as India, China, and Indonesia, have emerged as stellar performers on the global stage. While the overall Asia Pacific market is expected to grow at ~12%, the emerging countries within the region are expected to grow at a much faster pace of ~25%. This is significantly higher compared to ~5% growth rate expected for the mature markets of North America and Europe.

With an eye-catching, rapid growth rate that is expected to be buoyed by a vast and still untapped potential, Asia Pacific has emerged as the HRO story to talk about. With the current market size of US$2 billion, the Asia Pacific HRO market holds total potential worth US$28 billion. The penetration rates for the APAC region continue to remain in the single digit range; thereby, indicating that the current HRO market in Asia Pacific, especially the emerging market segment, is just the tip of the iceberg.

Over the last few years, the HRO market in Asia Pacific, especially the emerging markets, has shown signs of moving up the maturity curve, led by high demand from growing domestic corporates as well as increasing maturity of the local players who have started offering solutions of global standing and bringing in affordable technology, both contextualized for the local market. It is what is driving business both in Multi-Process HR Outsourcing and Single-Process HR Outsourcing (MPHRO and SPHRO), especially Recruitment Process Outsourcing (RPO).

Interestingly, the global major players are lagging behind or facing tough competition from locally entrenched players. In the initial days, when the Asia Pacific market was yet to show its potential and pace, it naturally did not feature on the radar of the global major players. With the market now showing tremendous potential, these international players are facing a tough challenge from the local players who have established ground in the market with their innovative, well packaged offering and solution models suitable to the unique needs of the Asia Pacific region. These tend to differ significantly from the solution that the leading players dish out in the more mature Western markets, which are not finding success in Asia Pacific given the lack of proper contextualization.

This has led to an interesting situation where the biggest names in the game are missing out on the biggest opportunity – a situation which is bound to correct itself soon, as the global majors prepare to aggressively target Asia Pacific. The face-off between the Davids and the Goliaths of the HR outsourcing space will be an exciting watch for the buyers as they reap the benefits of this epic battle!