Perturbed by the longer implementation timeframes, customization and complexity in catering to larger corporations the human resource outsourcing (HRO) firms now shift their focus to medium sized companies, according to a study by Everest Research Institute (ERI) on ?Gathering Momentum: Mid-market HRO?. The study focusses on large corporations having more than 15,000 employees and mid-size companies with headcount between 3,000 and 15,000 on aspects of changing marketing dynamics, transaction characteristics and implication for buyers and sellers. The HRO transactions in the Asia-Pacific region in the mid-market segment is at low 0.1% .

?To take advantage of barely penetrated mid-level market, suppliers have developed profitable offerings by leveraging economies of scale and standardized solutions. This is why we are seeing a significant increase in HRO suppliers including offshore suppliers?and offerings focussed on midmarket buyer,? says Monica Barron, vice president, HRO research.

HRO suppliers can potentially look into higher profit margin given the relatively higher price point in the mid-market, according to Rajesh Ranjan, Research Director of ERI. ?Since mid-market buyers oftern lack an existing ERP and want access to better technology to support HR services, they are generally more open to adopting proprietary solutions as well as highly standardized offerings from the suppliers,? adds Ranjan.

Elaborating on the transaction volume, he said, ?as of December last year, 116 out 229 HRO transactions were in the mid-market segment with a promising market potential of 5450, 6350 and 5050 companies in the US, Europe and Asia respectively.?. The ERI study further reveals that outsourcing by mid-level companies is in the areas of transaction-intensive and regulatory processes primarily in data administration and technology in support of training, recruitment and compensation. Although suppliers such as Hewitt, ExcellerateHRO, IBM, Xansa, and Xchanging have signed deals they don?t have a focussed offering for the mid-market segment, points out the study.