Don’t believe that Europe is incapable of producing the mega deals. This year, Unilever’s HRO deal, the largest ever on an annualized basis, established the EU as a hotbed of outsourcing activities. Now if only the works councils and labor unions see it that way.

by Andy Teng

Unilever, the BBC, Boots, Nestle, and a number of other large deals during the year proved that the European HRO market is every bit as hot as its North American counterpart. Don’t believe it? Consider this: the Unilever deal will probably be the only one worth more than $1 billion this year.    

Whether it’s a public-sector play or wholesale HR transformation at a publicly held corporation, outsourcing is making its presence felt throughout Europe, even in countries where strict labor laws have become roadblocks to widespread adoption. Despite the opposition, the deals listed here—all of which were signed by buyers that have European headquarters— prove that European organizations are sincere about saving money for their shareholders or taxpayers.    

For instance, the BBC’s decade-long accord with Capita is a serious statement from a quasi-public entity about cutting costs. This 10-year commitment is aimed at transforming the broadcaster’s HR resources while saving millions each year. Similarly, IKEA, the home furnishing giant, signed a contract indicative of a larger trend among buyers: standardizing the platform on which payroll is processed.   

These and other deals are taking place all because Europeans are growing less intimidated about outsourcing. Sure, you still see resistance from unions in the cases of the BBC and Carillion, but the objections haven’t mounted to serious contention. Moreover, as workers accept the idea that transparency, efficiency, and alignment are positive changes, we suspect pushback against HRO will gradually diminish. Even with a head start, it’s taken the American market, which has very lax labor laws, some years to reach its current maturity point. The European market will likely to reach its own equilibrium in time.    

When that happens, we expect the market to take another turn currently unfolding in the U.S.: the development of the mid-market. As the large enterprise segment saturates, expect to see smaller organizations—typically those with fewer than 10,000 employees—begin to embrace the global HRO phenomenon. Many in the U.S. are already climbing aboard after seeing their Fortune 500 counterparts successfully implement outsourcing strategies. We foresee Europe following in a similar pattern.   

Finally, we would like to acknowledge global sourcing advisory firm TPI for assembling this list. As one of the largest consultants in the HRO arena, TPI has particularly keen insight into the mega deals executed in the past year, a number of which have included their participation. TPI’s research and knowledge are as comprehensive and thorough as any in this space, and we appreciate the firm’s willingness to share with HRO Europe’s readers.   

We hope this section provides you with helpful insight into the deal-making taking place in Europe. Although market perception is that the EU is light years behind the American market, these contracts clearly beg to differ. And with much more room for growth, expect Europe to further blossom in the outsourcing space.

CLICK HERE FOR THE LIST OF THE TOP EUROPEAN DEALS(PDF)