An article by Sara E. Savage of HRE titled HR Spending on the Increase discusses a new IDC report that predicts increased HR BPO spending as well as higher reliance by companies on HR consultants for advice on winning the war for talent.
The article states "how in 2005, U.S. companies spent $41.3 billion on HR services, an amount IDC projects will increase to $68.3 billion by 2010. HR BPO spending is especially on the rise, up 15 percent from 2004 to 2005. In 2005, U.S. companies spent $8.9 billion on HR BPO service in 2005, and are expected to spend 16 percent more by 2010 ($18.9 billion). Twenty-three percent more HR BPO contracts were signed in 2005 than the year before, a trend IDC forecasts will continue."
What I found most interesting was how "the majority of U.S. spending is on HR consulting, which reached $17.5 billion in 2005, a 12 percent increase over 2004. IDC reports the graying workforce as one of the drivers of the increase, as companies seek help from third parties to recruit and retain talent. IDC forecasts consulting-service spending will reach $28.6 billion in the United States by 2010, a growth rate of more than 10 percent."
Lisa Rowan, program manager of HR and talent-management services at IDC is quoted as saying "there are going to be some [worker] shortages, and employers need to assess individual risk and take appropriate steps. We are seeing an uptake in consulting services as companies look to third parties for help."
The aging of America (and Asia) presents tremendous opportunities across all HR supplier sectors, not just for consulting, recruiting and talent management companies. And although we are seeing a whole new group of interesting companies ready to address these changing demographics, such as RetirementJobs.com (see John Sumser's ER News for a good overview of this company), we are surprised at how few existing HR suppliers are capitalizing on these opportunities.
One of the most obvious missing from the party is Employee Assistance Providers (EAPs) and Work/Life companies. These employee benefit firms represent a healthy and profitable multi-billion dollar sector of HR services. In fact, over 90% of Fortune 500 firms contract with an EAP and/or Work/Life company for a whole range of employee benefits that deal with everything from substance abuse to helping employees with their child care needs. Included in these EAP and Work/Life benefit programs are services to help employees not only care for their aging loved ones but also prepare for their own aging and retirement. Yet, few EAP and Work/Life companies have carved out these services and tailored/branded them to meet the current needs of HR departments with regard to talent acquisition and retention of older workers. On the flip side, few existing consulting, recruiting and talent management companies have reached out to EAP and Work/Life companies to pursue partnership and distribution opportunities.
Look for more partnerships amongst these sectors as HR suppliers that used to operate within their own silos begin to partner with companies outside of their silos - a trend that has really begun to accelerate within the last 5-10 years.