Outsourcing of human resources processes is set to grow by 4.7 per cent worldwide by the end of 2006, according to analyst firm Gartner.

The company is predicting that the market for human resources business process outsourcing (HR BPO) will reach $24.6bn (£13bn) this year, an increase of 4.7 per cent on 2005.

Overall, Gartner says it expects the whole of the BPO market to reach $134.7bn (£70bn) this year, an increase of 8.3 per cent on the previous one.

HR has long been identified as a key area for outsourcing, usually in the areas of payroll and benefits administration services, says Robert Brown, research director for Gartner.

'As a back-office function, aspects of HR are often deemed critical, yet non-core functions for outsourcing and are usually most companies’ first stop on the sourcing journey for BPO,' he said.

'Payroll outsourcing is also a key area for consideration among small and midsize businesses that are often underserved by larger, more-strategic forms of BPO.'

What do you think? Email feedback@computing.co.uk

Further Reading:

• Lloyds TSB outsources HR systems to India
• Firms value access to skills from outsourcing R&D
• Cambridge Council renews outsourcing deal