The most popular HR outsourcing functions include:

  • employee training and development
  • payroll and tax administration
  • recruitment and onboarding
  • benefits administration
  • HR consulting

The human resource outsourcing market is growing due to the constant increase in employee demand and insufficient experience of the businesses with managing their remote teams. Besides, the digitization and automation of HR operations allow the companies to get the first-to-the-market advantage, rethink their strategies, and become more agile. 

HR Bit is here to shed light on other reasons for the HR outsourcing market growth and understand what factors are shaping its advancement.

Comments of Business Leaders on HR Outsourcing

What is the HR Outsourcing International Market Opportunity?

Modern enterprises understand the challenges of remote work, so they strongly emphasize attracting the right pool of candidates and making sure their values correspond with the company’s ones. Besides, businesses understand the significance of retaining human capital and managing resources efficiently.

So, sizing of the market opportunity HR outsourcing is involved with the companies’ understanding of the potential of HRM solutions and their strong desire to adopt these solutions. Besides, market players invest in HR outsourcing activities that are easily deployable and can shore up their remote working models. 

HR Outsourcing Market Growth Statistics

As per StrategyR, the “Education and Training Services” segment is one of the primary drivers of HR outsourcing market development. Notably, it’s expected to reach the size of $3,4 billion in the regional markets of the US, Canada, Japan, China, and Europe. Meanwhile, the Asia-Pacific market, led by Australia, India, and South Korea, is expected to reach $5,1 billion by 2027. 

The “Benefits Administration Services” segment is forecasted to grow at a CAGR of 5,2% within the next 7 years. 

The “Payroll Services” segment is projected to reach $21,3 billion and record a 4,1 CAGR during the period 2020-2027. 

Extensis HR mentions the survey’s results, which shows what HR services are outsourced most often. These include the following:

  • HR consulting – 45%
  • Benefits administration – 36%
  • Time tracking – 24%
  • Insurance services – 19%
  • Performance management – 10%

Additionally, 78% of companies said their HRO providers met and even exceeded their expectations regarding the cost of such services. Besides, Paychex concluded that 9 in 10 outsourced HR professionals have a voice in company strategy. 

More and more trends are emerging in the HR outsourcing market, and if you’re interested in this topic, you can check out our recent article about zeitgeisty tendencies.

Yet, HR outsourcing trends are most often associated with the emergence of new technologies, alternating employee demands, and the rapid appearance of HR outsourcing vendors that drive competitiveness. 

Human Resource Outsourcing Market: Components that are Driving its Development 

Since remote work is the new normal, it called for HR and talent management software aimed at retaining employees. Besides, such technological innovations aid in enhancing workflows, resulting in overall business productivity. 

Making strategic decisions is burdensome, and HR systems can help enterprises automate this task and monitor employees’ successes more effectively. Besides, such software helps to reduce the error rate and get more precise results after evaluating operational trends within the company.

As for SMEs and startups, most of them are implementing HR outsourcing services to reduce the burden of carrying out administrative and management tasks and focus on core organizational activities instead. Technologies remain indispensable here as well; most SMEs are expected to adopt cloud-based Human Capital Management in the short run. 

Additionally, the companies in the HR outsourcing market shifted their priorities due to the pandemic. This led them to the understanding that outsourcing is an “enabler of business transformation.” They view HR outsourcing as the most effective way of cost reduction, the demand for which is “increasingly critical.”

According to The Hackett Group, the top priority for remote HR professionals for 2021 is to become strategic advisors to organizational leaders. Also, many professionals suggest that the development of many businesses during the pandemic holds for outsourced HR professionals. 

It’s fair to say that HR outsourcing market growth significantly relies upon the companies that “hit reset” on usual workplace practices when they understood the ineffectiveness of applying these practices within a work-from-home environment. 

HR outsourcing helps SMBs and startups seize the moment and prevent the risks of riding the bench. 

You can also read the article about HR outsourcing costs.


By enabling business transformation, reducing company risks, providing financial benefits, and strengthening recruiting methods, the HR outsourcing market is expected to keep growing within the next decade.

Outsourcing one or more HR functions is smart organizational planning, especially when it comes to startups and SMBs. Sizing of the market opportunity HR outsourcing is predictable since it frees up resources and time, enabling businesses to focus on their core tasks and growth and allowing leaders to plan for short- and long-term goals. 

At HR Bit, we help our clients manage their remote employees, reduce the headaches related to taking care of payments, employee retention, and benefits, and elevating their human capital. 


Employees are the backbone of your company, so it’s time to take good care of them. Don’t hesitate to contact us and schedule a consultation.