Benefits Administration – Not a Lame Duck HRO Process

Although we’ve indicated that our most recent HR Outsourcing Confidence Index found benefits administration lagging behind other HR services in terms of revenue and pipeline growth, it’s important to put that into proper context:

• On the NelsonHall HRO Confidence Index scale of 1 to 5, with 5 being “strong increase” and 3 being “unchanged,” benefits admin came in at 3.6 relative HRO growth, right behind learning (3.7), and multi-process and payroll (both at 3.8)

• Benefits admin outsourcing contracts are indeed being won in 2010

For example, Mercer announced today that it added 10 new benefits admin clients – a mix of defined contribution, health and benefits, and total benefits/total retirement outsourcing – to its portfolio in 1H10. The new deals include leading brands such as CBS Corporation, Primerica and Global Equity Capital, LLC. In total per these new agreements, Mercer is now servicing nearly 190,000 additional benefits admin participants.  

Additional benefits wins announced in 2010 include:

• Xafinity, for pension administration, by BAE and Loganair

• Workscape, for both its Outsourced Benefits Administration (OBA) web-based benefits administration service and for employee call center support, by Global Imaging Services, a wholly owned subsidiary of Xerox

• Workscape, for its OBA solution, by kgb, a multi-country directory assistance and information services company

• Convergys, a contract renewal for COBRA, leave of absence and annual enrollment services, by Office Depot

And benefits is not just being awarded as a standalone service. Rather, it continues to be provided along with multi-process HRO services. For example, Ceridian earlier this year was awarded a contract by Fifth Third Processing Solutions which included payroll, health and welfare administration, HR compliance, time and attendance, leave administration and learning and recruiting technology. And Hewitt and International Paper entered into a five-year contract renewal deal which covers payroll, workforce administration, health and welfare administration, recruiting support activities, SAP application support and help desk services, call center and HR manager support activities, learning administration and flex staffing management services.

As clients continue to seek reduced costs, ensure compliance with health care reform, increase employee satisfaction, better leverage technology, and improve delivery of services to employees – including self-service capabilities – I believe we will see continued growth in benefits admin outsourcing. NelsonHall is currently conducting a Benefits Administation Market Study. When it’s complete we’ll take a deeper-dive look at just how much it’s growing, and in which specific areas.

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

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One Comment on “Benefits Administration – Not a Lame Duck HRO Process”


  1. Benefits Administration is steady and sticky revenue with dependable and predictable growth for quality providers. However, due to the technical complexity of pension administration and cafeteria/flex benefit plans, it is often addressed as a standalone SPHRO tender, rather than as a bundled service. Tenders are also not usually comparable to MPHRO in terms of contract size. These two reasons cause Benefits Administration to be overlooked as an important revenue generator within an MPHRO environment. Organisations with a solid Benefits Administration proposition should recognise this as a significant differentiator, rather than overlooking its significance.

    Girish Menezes
    Principal, Buck Consultants
    http://employeereward.blogspot.com/


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