IDC: HR services spending grew over 10% worldwide in 2005, primarily due to the recovering economy, and will experience a compound annual growth rate (CAGR) of 9% from 2006 through 2010. The study also reveals a significant increase in deal activity, indicating that growth will continue in future years as recent deals mature and begin contributing to recurring revenue streams.

The worldwide market for HR services showed solid growth in 2005. In 2006 and beyond, the focus will turn to managing talent as a key area for expertise. With a scarcity of resources in both the North America and Asia/Pacific regions, buyers of HR services will seek consulting services to better scope their talent risks and identify top performers and look to outsourcing as a strategy to do more with less.

The study finds that the North American and European markets grew solidly and represent the largest markets for HR services. The United States in particular outpaced all other countries with a 12.5% increase in 2005 over 2004, due in part to an improving economy and lower unemployment. Although smaller than the North American and European markets, the Asia/Pacific market experienced the most dramatic growth as employers in a number of countries expand their presence due to offshoring contracts, along with the market opening its doors to payroll processing and other HR services.

• there is increased interest in the midmarket, where there are nearly 8,000 firms in the United States alone with 1,000–10,000 employees

• With reduced unemployment and a graying workforce particularly in the North America and Asia/Pacific regions, we are facing a reemerging war for talent

• The Asia/Pacific market which has been traditionally closed to payroll processing and other HR services has shown signs of opening to global suppliers

Worldwide and U.S. HR Management Services 2006–2010 Forecast: Talent Is the Word Publ 20060605