Report Overview

The rising need to improve HR value chain, digitization of HRO, and growing demand for neo-sourcing are projected to propel the expansion of the India human resource outsourcing (HRO) market during the forecast period between 2023 and 2029.

India Human Resource Outsourcing (HRO) Market - Industry Trends & Forecast Report, 2029

India human resource outsourcing (HRO) market size was estimated at USD 94.36 million in 2022. During the forecast period between 2023 and 2029, the size of India human resource outsourcing (HRO) market is projected to grow at a CAGR of 25.09% reaching a value of USD 361.45 million by 2029. Major growth drivers for the India human resource outsourcing (HRO) market include the rising preference of small businesses for outsourcing services, enabling them to concentrate on core competencies while entrusting human resource tasks to external service providers. Emerging economies like India, with a robust business ecosystem and a skilled human resource pool, have the potential to attract multinational firms and stimulate foreign direct investment. The focus on transactional services, including payroll, benefits, HR compliance, time and attendance, by outsourcing companies further augments the expansion of the HRO industry in India. Outsourcing HR functions allows businesses to easily adjust the size of their workforce based on requirements. Service providers offer adaptable packages that grant businesses on-demand access to essential HR tools, resources, and services, allowing them to maintain agility without the cost of an internal HR team. The growth of Indian human resource outsourcing services is further propelled by the availability of diverse services such as payroll and recruitment. The integration of artificial intelligence in outsourcing services streamlines processes like recruitment, contributing to market expansion. The increasing establishment of small firms in India, which predominantly outsource their human resource services, is expected to further accelerate the growth of the HRO market in the country.

India Human Resource Outsourcing (HRO) Market – Overview

The India Human Resource Outsourcing (HRO) market pertains to the sector in India where companies, particularly small businesses, enlist external service providers to handle various human resource tasks. These tasks encompass payroll processing, benefits administration, HR compliance, time and attendance tracking, and recruitment services. The market is experiencing growth driven by the increasing preference of small businesses to outsource HR functions. This allows them to concentrate on their core competencies while leveraging external expertise for human resource-related activities. Furthermore, the market benefits from India's robust business ecosystem, skilled workforce, and the integration of artificial intelligence in outsourcing services, enhancing overall efficiency and contributing to the expansion of the HRO industry in the country.

India Human Resource Outsourcing (HRO) Market

Growth Drivers

Digitization of HRO

The digitization of Human resource outsourcing (HRO) is a key catalyst for the growth of the India HRO market. Various industries, including BFSI, IT, healthcare, retail, hospitality, and manufacturing, are embracing HRO services such as RPO, PO, and LSO provided by vendors. RPO HR services, leveraging advanced analytics and 360-degree feedback, significantly enhance operational efficiency and enable real-time talent acquisition. These advancements present lucrative opportunities for companies in the HR outsourcing market. Additionally, the integration of technologies like IoT, cloud computing, big data, analytics, and augmented reality in industrial processes contributes to organizational structure integration, leading to cost reductions and improved overall productivity. As a result, these factors are anticipated to fuel market growth during the forecast period.

Restraints

Data Security Concerns

Data security concerns significantly impede the growth of the India human resource outsourcing (HRO) market. As businesses increasingly turn to outsourcing for HR functions, the risk of inadequate alignment with existing standards and the potential for unnecessary demands arise. This can lead to employee dissatisfaction, hindering market expansion. Service-level agreements may not comprehensively cover management decisions, fostering conflicts between client organizations and third-party providers. The profit-driven motive of some outsourcing companies might result in subpar services, negatively impacting clients' objectives. Additionally, the loss of control over sensitive information and high dependency contribute to restricting market growth during the forecast period.

Impact of COVID-19 on India Human Resource Outsourcing (HRO) Market

COVID-19 pandemic had a mixed impact on the India human resource outsourcing (HRO) market. The widespread adoption of remote work prompted a surge in demand for HRO services to manage distributed workforces. The focus shifted towards digitalization, with increased reliance on technology for recruitment, training, and employee engagement. However, uncertainties in the business environment led to a cautious approach, affecting market growth. Companies prioritized cost-cutting measures, impacting outsourcing decisions. The resilience of the HRO sector in adapting to the evolving needs of businesses, along with ongoing recovery efforts, will determine its trajectory in the post-pandemic landscape.

India Human Resource Outsourcing (HRO) Market

Segmental Coverage

India Human Resource Outsourcing (HRO) Market – By Type

By type, the India human resource outsourcing (HRO) market is divided into Employee Relations & Compliance, Payroll Services, Workers Compensation, Employee Benefits, Talent Acquisition, Employee Screening & Background Verification, Pre-Employment Skill Tests, and Sexual Harassment Prevention Training segments. The payroll services segment holds the highest share in the India human resource outsourcing (HRO) market by type. It is primarily due to its critical role in managing and processing employee payroll efficiently. Companies, particularly small and medium-sized enterprises, often opt to outsource payroll functions to streamline processes, ensure compliance with tax regulations, and reduce the burden of administrative tasks. Outsourcing payroll services provides cost-effective solutions, access to specialized expertise, and allows businesses to focus on core operations. As payroll is a fundamental aspect of HR management, its prominence in the outsourcing landscape contributes to the significant share held by the payroll services segment in the Indian HRO market.

India Human Resource Outsourcing (HRO) Market – By Application

Based on application, the India human resource outsourcing (HRO) market is divided into BFSI, Healthcare, Information Technology, Hospitality, and Retail segments. The information technology segment holds the highest share in the India HRO market by application. It can be attributed to the industry's high reliance on skilled workforce management and the dynamic nature of IT operations. Companies in the IT sector leverage HRO services for recruitment, payroll processing, and talent management to ensure agility in adapting to technological advancements. Outsourcing HR functions allows IT firms to focus on core business activities, enhance operational efficiency, and access specialized HR expertise. As a result, the IT segment emerges as a key driver, holding the highest share in the Indian HRO market by application.

India Human Resource Outsourcing (HRO) Market – By Region

Regionally, the India human resource outsourcing (HRO) market is segmented as North India, South India, East India, and West India. South India region is expected to hold the highest share in the India human resource outsourcing (HRO) market during the forecast period. South India has a robust and diverse economic landscape, hosting a significant number of IT companies, manufacturing units, and service industries. The presence of a skilled workforce and a growing number of businesses in this region increases the demand for HR outsourcing services. Moreover, South India is known for its progressive approach to technology adoption, aligning with the digital transformation trends observed in HRO services. These factors collectively position South India as a key contributor, holding the highest share in the Indian HRO market.

Competitive Landscape

Major players operating in the India human resource outsourcing (HRO) market include Randstad India Private Limited, Adecco India Private Limited, ManpowerGroup Services India Private Limited, TeamLease Services Limited, Innovsource Services Pvt Ltd, Quess Corp Limited, PERSOLKELLY India Private Limited, Careernet Technologies Pvt Ltd, ABC Consultants Pvt Ltd, HCL Technologies Ltd, Infosys Ltd, and Wipro Ltd. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In February 2023 - Boeing underwent restructuring, cutting 2,000 white-collar jobs in finance and human resources. Some functions were outsourced to Tata Consulting Services in Bengaluru, India, while others were eliminated through streamlined processes.

Scope of the Report

By Type

• Employee Relations & Compliance

• Payroll Services Workers Compensation

• Employee Benefits

• Talent Acquisition

• Employee Screening & Background Verification

• Pre-Employment Skill Tests

• Sexual Harassment Prevention Training

By Application

• BFSI

• Healthcare

• Information Technology

• Hospitality

• Retail

By Region

• North India

• South India

• East India

• West India