The UAE HR Outsourcing Services Market Research Report Forecast: (2022-2027)

Market Definition

Human Resource Outsourcing is a service where an organization hires a professional third-party organization to manage its human resources activities & diverse administrative tasks. These services also enable an organization to enhance the overall HR function while increasing compliance & retaining the top talent. While there are different types of HR Outsourcing services, the most extensively utilized ones across the UAE are: 

• Professional Employer Organizations (PEOs) look after the management of the employees & the clients while providing HR & administrative services.
• Administrative Service Organizations (ASOs) are the other type that also provides HR & administrative services and is popularly availed by different organizations across the UAE.

The other varieties of HR Outsourcing services include the following:

• Multi-Process Human Resource Outsourcing
• Recruitment Process Outsourcing
• Learning Services Outsourcing

Since the UAE government is investing substantially in different industries for the economic diversification of the country away from oil & gas, other sectors are witnessing a boom and offering several growth opportunities for the people. It, in turn, is stimulating the demand for HR Outsourcing Services and driving the industry. 

Market Insights

The UAE HR Outsourcing Services Market is projected to grow at a CAGR of around 8.96% during the forecast period, i.e., 2022-27. The market is driven by the growing government focus on the country's economic diversification away from oil, thereby investing substantially in various other sectors. It, in turn, is demonstrating a rising number of business establishments throughout the UAE, instigating the need for professional HR outsourcing services to hire suitable candidates and manage the organization.

Besides, spreading awareness among businesses about the benefits of these services to enhance the overall operational efficiency is also instigating the organizations to investing in human resource outsourcing services. In fact, with rising digitalization and the establishment of companies in the country, the need for data optimization generated by the firms is also boosting the demand for HR outsourcing services and driving the market.

Moreover, as different organizations are recruiting employees using digital platforms like social media for outsourcing to identify the appropriate resource, these service providers are gaining massive popularity for the optimization & improvement of resources, thereby fueling the market growth.

Furthermore, other factors that back the massive utilization of these services include the rising need for recruitment analysis by companies, growing user awareness, and the swift inclination of organizations toward using intelligence technologies. Nonetheless, as the potential of the internet & technologies is yet to offer various new internet advancements, the industry across the UAE shall witness a positive influence and presence of untapped opportunities for the leading players during the forecast period.

Market Segmentation

Based on Services:

• Payroll 
• Benefits Administration 
• Recruitment Process 
• Learning Services 
• Multi-Process Human Resource 
• Others 

Of them all, Payroll services are anticipated to witness burgeoning demand and contribute significantly to the UAE HR Outsourcing Market during the forecast period. It owes principally to the growing awareness among businesses about the prominent perks of these services like legal, tax, and accounting support, ensuring that the employees receive their paychecks accurately & timely, with minimal risks.

Besides, these services are delivered by an external provider, enabling the company to manage its payroll & simplify legislative compliance while taking off the massive administrative burden from the team. Hence, the demand for payroll HR outsourcing services is escalating rapidly among different businesses in the UAE.

Furthermore, their payroll services also allow the business companies to register & control incidents, calculate, pay, & distribute payroll, and manage leaves, vacation time, incentives, and other payments that are not a part of the employee salary. It, in turn, is boosting the popularity & demand for these services among companies & stimulating the overall market growth across the UAE. 

Based on End-Users:

• Government
• Non-government
  • Healthcare
  • IT & ITES
  • Hospitality
  • BFSI
  • Others (E-commerce & Retail, Manufacturing, etc.)

Here, Here, Hospitality Industry across the Non-Government end-user is anticipated to make a substantial contribution to the UAE HR Outsourcing Services Market during the forecast period. It owes principally to the massive tourism in the country, demonstrating a substantial influx of tourists, migrants, & pilgrims. As a result, the establishment of various hospitality facilities like hotels, resorts, restaurants, cafes, and other facilities is accelerating rapidly.

It, in turn, is instigating companies to procure HR outsourcing services to hunt for talented candidates that can work with hotels, restaurants, resorts, event spaces, banquet halls, and catering companies, among others. These talent acquisitions are principal to finding suitable forces to manage the front office, back office, housekeeping, kitchen, & other positions. Hence, the demand for these services is escalating rapidly & cater to the burgeoning requirements in the hospitality industry throughout the UAE.

On the other hand, the Healthcare industry shall also make significant contributions to the industry through 2027. It owes principally to the growing government focus on diversifying the economy away from oil & gas, demonstrating substantial investments in other industries, including the healthcare sector. In addition, especially after the pandemic, the establishment of healthcare facilities with robust facilities rose dramatically high to address the exponential patient influx.

It, in turn, stimulated the demand for HR Outsourcing Services to set up a robust management team to look after the diverse requirements of facilities & patient care. Moreover, as the government is strengthening the healthcare industry to attract medical tourism to the country, the demand for HR outsourcing services is anticipated to witness an upsurge and contribute to the overall industry expansion in the coming years.

Nonetheless, other sectors like E-commerce & Retail, Manufacturing, etc. shall also gain momentum in the market during the forecast period. As these sectors are increasingly integrating digitalization to widen the product & service offerings & customer base, the need for excellent HR mechanisms is stimulating the industry & driving the demand for outsourcing services.

Moreover, HR outsourcing services in these sectors understand the importance of managing staff as the perception of customers can significantly influence the behavior of front-line retail staff. Therefore, several businesses in these sectors are procuring outsourced services & training the staff to handle customer queries & complaints, thereby building a positive brand image.

Possible Restraint

• Disconnection with Staff & Cultural Alterations Restraining Organization to Procure Services

Since HR Outsourcing Services are diverse, it also brings challenges for the investors like disconnection with the staff. When these services are transferred to computer software or offsite third parties for management, it somewhat loses the connection between the employees and sometimes does not entirely understand the needs of employees.

Moreover, no when understands the office culture better than the employees themselves. Hence, when the services are outsourced to third parties or computers, team members might feel insecure, less engaged, & even less productive at times. It is also why several organizations are restraining themselves from opting for HR outsourcing services and hampering the fledged market growth. 

Key Questions Answered in the Market Research Report:

1. What are the overall statistics or estimates (Overview, Size- By Value, Forecast Numbers, Segmentation, Shares) of the UAE HR Outsourcing Services Market?
2. What are the region-wise industry size, growth drivers, and challenges?
3. What are the key innovations, opportunities, current & future trends, and regulations in the UAE HR Outsourcing Services Market?
4. Who are the key competitors, their key strengths & weaknesses, and how do they perform in the UAE HR Outsourcing Services Market based on the competitive benchmarking matrix?
5. What are the key results derived from surveys conducted during the UAE HR Outsourcing Services Market study?