As the unemployment rate continues to decline, the demand for HR-related services will increase. Furthermore, businesses are expected to increase spending on professional services, including consulting, as corporate profit rises
Los Angeles, CA (PRWEB) December 02, 2013
HR consulting services have a buyer power score of 3.8 out of 5. The higher the score, the better the negotiating conditions are for buyers. The score reflects a marginal increase in prices over the past five years. Supplier margins have risen since 2008, largely due to consolidation that occurred during the recession. Unfortunately for buyers, says IBISWorld analyst Kevin Culbert, increased margins are not expected to translate into greater buyer power in 2013 as prices rise. Demand is expected to rise in 2013 as the unemployment rate continues to decline and businesses increase their consumption of outsourced services as corporate profit rises. These trends will boost input costs, specifically labor, which represents the greatest input cost for HR consulting firms. Although HR consulting services are expected to get more expensive, prices will likely rise in moderation.
There is a considerable range in prices. Although a wide price range can increase a buyer's power at the negotiating table, it is important to note that price is not the primary factor for most buyers when choosing a supplier, continues Culbert. Other factors, including experience and brand name, are also considered. Furthermore, the cost of switching providers is moderate, especially when a buyer's management or accounting system uses a supplier's proprietary software. These factors ultimately limit a buyer's negotiating power. Another factor that will limit buyer's power going forward is the expectation of continued supplier consolidation over the next three years. During the past three years, two new giants emerged in the market after two separate acquisitions: Towers Watson and Aon Hewitt. The decline in the number of service suppliers, particularly large players, reduces the number of operators that large clients can turn to for HR consulting needs.
Prices vary based on the scope of a project, the type of work being completed for a client and the type of contract. Consultants use a variety of methods to calculate billing rates, and the needs, urgency and budget of a client play into these terms. For example, a consulting firm might need a team of consultants on a project rather than an individual. Similarly, prices are also sensitive to the size and organization of the client organization. For example, benefits and compensation consulting services are likely to be higher at a company with 500 employees and multiple levels of management compared to a company with a dozen employees sharing one manager. For more information, visit IBISWorld’s Human Resources Consulting procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of human resources (HR) consulting services. HR consultants provide advice and assistance across a variety of organizational matters, including communication, benefits and personnel issues. Specifically, HR consultants offer advice and assistance in one or more of the following areas: human resource and personnel policies, practices and procedures; employee benefits planning, communication and administration; compensation systems planning; and wage and salary administration.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.