UAE HR Outsourcing Services Market Research Report Forecast: (2024-2030)

Market Definition

Human Resource Outsourcing is when a company hires a third-party organization to manage some or all of its human resource activities and administrative tasks. These services enable the company to focus more on its core business and save on overhead costs by outsourcing HR and administrative tasks to specialist HR firms. While there are various HR outsourcing services available, the most utilized are:

• Professional Employer Organization(PEO), the company enters a co-employment contract.
• Administrative Service Organization(ASO), handles all HR activity but the employee strictly remains under the leading company.

Market Insights & Analysis: The UAE HR Outsourcing Services Market (2024-30):

The UAE HR Outsourcing Services Market size is valued at around USD 500 million in 2024 & is estimated to grow at a CAGR of around 6.2% during the forecast period, i.e., 2024-30. The fast-growing economy of the UAE is the primary factor behind the growth of the HR outsourcing services industry in the country.

Increasing public and private investment in various sectors, regulatory reforms, and establishment of economic zones in line with the Vision 2030 plan of the UAE are crucial growth factors. The government’s initiatives to increase the ease of business have made the UAE an attractive market for many MNCs. There has been a significant increase in the number of businesses operating in the country. This created a demand for various outsourcing services such as administrative services, recruitment services, and payroll services among others. The UAE’s future-forward initiatives increased the demand for infrastructure management services, such as cloud engineers and cybersecurity analysts; software and applications development, and data and artificial intelligence (AI).

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Moreover, HR outsourcing services have several benefits, which make it a sensible option for businesses. These benefits include reduced overhead costs and ease of compliance. HR outsourcing reduces the overhead cost of the company significantly by eliminating the need for an in-house HR department. While the ease of business in the UAE has increased, there are still complex labor laws that can be resource-intensive to comply with. Leaving compliance to the HR service provider improves the operational efficiency of the business as the focus can be on the core activities. These benefits are other driving factors for the UAE HR Outsourcing Services Market.

The UAE HR Outsourcing Services Market Driver:

Economic Diversification Plans Driving Market Growth – The UAE government is focusing on economic diversification to decrease its oil dependency. While the oil industry is still a major part of its economy, the government is making significant investments in the non-oil sector which consists of industries such as healthcare, IT, hospitality, and tourism. The Government is also trying to attract more foreign investment, for which various new policies and reforms are introduced, and restrictions removed, making the UAE business environment more liberal and favorable for companies to set up shop in the UAE. This is being done as a part of the UAEs Vision2030 plan.  All these factors attracted various companies to the UAE and the number of businesses grew, increasing the requirement for human resource and their efficient management and compliance with laws. HR outsourcing emerged as the ideal solution, driving the market towards growth & expansion.

The UAE HR Outsourcing Services Market Challenge:

Communication Gap & Lack of Flexibility Affecting Productivity – Outsourcing HR management can mean losing communication with the employees, In-house HR manager connects with employees, and listening to their concerns is part of the job for an HR manager, outsourcing can mean that the employee's concerns may take longer or are never addressed. This could make them feel disconnected from the organization and demotivate them, affecting their productivity. The in-house HR manager would address these concerns, ensure employee motivation, and be more flexible with the employee's needs, as they will be connected with the employee in person, giving it a human touch and making the employee heard and valued. Thus, outsourcing HR services can hurt the employees and ultimately affect their productivity, thus organizations hesitate to adopt HR outsourcing services, negatively impacting the growth & expansion of the HR outsourcing services industry in the country.

The UAE HR Outsourcing Services Market Trend:

Technological Integration in HR Processes – Integration of technology into different business aspects has been a trend throughout the business world. Naturally, HR also is using technology to make the processes more efficient and streamlined. Automation using artificial intelligence, machine learning, and data analytics are making various HR processes more streamlined. Many leading HR service providers are using technology to enhance their services. Whether it is employee onboarding or payroll management using technology makes it more efficient and precise. Companies can conduct elaborate performance evaluations effortlessly, and make more informed, data-driven decisions for their practices using machine learning and data analytics. This tech integration is transforming the HR outsourcing services industry in the UAE.

The UAE HR Outsourcing Services Market (2024-30): Segmentation Analysis

The UAE HR Outsourcing Services Market study of MarkNtel Advisors evaluates & highlights the major trends and influencing factors in each segment. It includes predictions for the period 2024–2030 at the national level. Based on the analysis, the market has been further classified as:

Based on Services:

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

Payroll management service command the largest share and is anticipated to grow the most during the forecast period as well. Payroll services manage employee compensation with ease and precision, taking the burden off of the company. The reason behind it is to make sure that employees get compensated fairly and timely while decreasing the administrative responsibilities for the company.

Moreover, outsourcing payroll systems has many benefits, it is cost-effective, as a payroll system or employee managing it is not required. It also streamlines the process of payroll calculation and planning which is a rather lengthy process, it also reduces the risk of late payment, and miscalculation, and also enhances security by reducing the probability of funds misappropriation. Outsourcing payroll management also addresses the issue of compliance as the HR service providers are usually well-read on the policies of the country.

Based on End-User:

• Government
  • Oil & Gas
  • Healthcare
  • Public Utilities (Aviation, Infrastructure Facilities, Ports, etc.)
  • Others (IT & ITES, Education, etc.)
• Non-government
  • Healthcare
  • IT & ITES
  • Hospitality
  • BFSI
  • Others (E-commerce & Retail, Manufacturing, etc.)

Based on End Users, the non-government segment holds a larger share of the market owing to its sub-segment, the hospitality sector. The hospitality sector has the highest demand for HR services. The hospitality sector in UAE is showing rapid growth owing to various government initiatives to promote tourism in the country as part of the Vision 2030 plan. With more tourists staying, there is a spur in the establishment of new hotels, cafes, and resorts, and several events are being organized to entertain and attract these tourists, demand for skilled workers who can work the front desk, back end, kitchen, waiting staff, housekeeping, and others for this growing hospitality industry has increased drastically, and large workforce is required to tackle the requirements. Large workforce requires efficient management, hence HR services are outsourced to make the hiring and managing of staff efficient and streamlined, making the hospitality sector the largest user of outsourced HR services in the UAE.

The UAE HR Outsourcing Services Industry Recent Development:

• 2023: TASC to launch Falek Tayyeb to boost Emiratisation. TASC Outsourcing has announced the launch of the region’s first recruitment app exclusively for Emirati nationals.
• 2023: Dulsco Group, a provider of integrated People, Environment, and Talent solutions, acquired Edinburgh-based Advance Global Recruitment Ltd (AGR), specialists in energy recruitment.

Gain a Competitive Edge with Our UAE HR Outsourcing Services Market Report

1. UAE HR Outsourcing Services Market Report by MarkNtel Advisors provides a detailed & thorough analysis of market size & share, growth rate, competitive landscape, and key players. This comprehensive analysis helps businesses gain a holistic understanding of the market dynamics & make informed decisions.
2. This report also highlights current market trends & future projections, allowing businesses to identify emerging opportunities & potential challenges. By understanding market forecasts, companies can align their strategies & stay ahead of the competition.
3. UAE HR Outsourcing Services Market Report aids in assessing & mitigating risks associated with entering or operating in the market. By understanding market dynamics, regulatory frameworks, and potential challenges, businesses can develop strategies to minimize risks & optimize their operations.