Market Overview

The size of the human resources (HR)/general affairs (GA) outsourcing market (a total of 14 major market segments) increased 5.9% year on year to 11,663.1 billion yen in FY2023.  

The breakdown by each market category was as follows: the shared services market (consisting of shared service centers and school administration outsourcing) increased 1.9% year on year to 578.0 billion yen; the HR operations outsourcing market (consisting of payroll calculation outsourcing, attendance management ASP services, corporate training services, RPO, and assessment tools) expanded by 4.8% year on year to 1,065.5 billion yen; the GA outsourcing market (consisting of EAP, health check support services, welfare outsourcing, and B2E services) grew by 4.1% year on year to 304.0 billion yen, and the recruitment market (consisting of temporary staffing, recruitment, and outplacement) grew 6.3% year on year to 9,715.6 billion yen, indicating that the recruitment market accounts for more than 80% of the total HR/GA outsourcing market.

Noteworthy Topics

The Trend of Not Wanting to Run the Indirect Sales Departments by Valuable Internal Personnel and Relying on Outsourcing Became a Tailwind for Expanding Outsourcing Market

The range of operations to rely on outsourcing services has expanded year by year. More and more companies tend to outsource the entire indirect sales operations and do not intend to have any internal personnel involved in indirect sales operations.
In addition to the traditional outsourcing of system operations, companies are now eager to outsource human-mediated business processes. They are striving to optimize the work processes by combining systems and business process outsourcing (BPO) from a strategic HR perspective.
In the market segment where outsourcing services have already been implemented in overall large enterprises, the target prospects have shifted from large enterprises to SMEs. Such increased, broader targets for service implementation are a strong tailwind for market expansion.

Future Outlook

Japanese companies, which are characterized by doing everything in-house, are looking to outsource more, taking the opportunity of the mandatory retirement of HR personnel who have worked for the company for a long time.
In addition, there are broader prospects for service delivery, with more repeat business from corporate clients, more complex services for existing clients, and deployments to new SME clients.

Such a trend has invigorated the outsourcing vendors targeting Japanese large, medium, and small enterprises, making it another expectation for market expansion.
Especially, the demand for outsourcing of operations from SMBs has been growing rapidly as they have realized that the services are affordable when combined with cloud services, which continues to contribute to the flourishing of the market. The demand from SMBs is expected to further drive the market growth in the future, as it is continuously spreading in the HR/GA outsourcing market.  

Research Outline