Demand for large-scale outsourcing of human resources (HR) functions has fallen, according to research by an advisory firm.

The annual growth in the value of HR outsourcing deals has fallen from 50 per cent to 15 per cent from 2007 to 2008, Equaterra says.

Firms are trying to reduce short-term costs by making smaller deals which are more popular than taking part in multi-national arrangements.

Stan Lepeak, EquaTerra’s managing director of global research, said in future businesses are likely to adopt a global, cross-functional governance approach.

"Developing and adopting standardised outsourcing governance will be central to achieving business case objectives for multi-provider outsourcing efforts," he added.

The organisation carried out interviews with the top five outsourcing providers which involved talking to 200 consultants for the research.

In recent news, businesses may stop employees from working at home or having flexible hours because of the credit crunch, the Trades Union Congress says.