Archive for the ‘HRO Service Provider’ category

Highlights and Trends in the HRO Market for H1 2013: Part 1

August 7, 2013
Amy L. Gurchensky, HRO Research Analyst, NelsonHall

Amy L. Gurchensky, HRO Research Analyst, NelsonHall

It’s hard to believe that H1 2013 is complete, which makes it an ideal time to recap highlights and trends from the HRO world this year.

Overall Activity

There was a healthy number of new contracts awarded across all HRO service lines in H1 2013. In addition, renewals and contract extensions signed were consistent with H1 2012. There was, however, an increase in activity with organizations changing their existing service provider, particularly within benefits administration and RPO.

For the last few years, attention has been on the mid-market (500-10k employees), among other things, as an area for growth within HRO. Quarter-over-quarter, mid-market activity has made strides relative to the large market. In fact, in H1 2013, the majority of activity reported was from the mid-market.

Beyond HRO, the number of HR software contracts signed globally was up substantially compared to H1 2012. For example, in the U.S., ADP was awarded a contract for its Vantage HCM platform, including HR, payroll, benefits and onboarding modules, by The Paradies Shops covering 4k employees. In the U.K., Ceridian gained traction with its automatic enrollment module with Asda for 175k employees and WH Smith for 16k employees.

Payroll

Despite being a mature service line, payroll outsourcing does not disappoint. The biggest news reported in H1 2013 would have to be ADP’s acquisition of Payroll S.A., which will expand its LATAM payroll capabilities to Chile, Argentina and Peru. ADP already had in-country services in Brazil, and had capabilities through GlobalView and Streamline to serve multinationals in other LATAM countries.

Other news within payroll includes Acrede opening an office in Singapore to expand its global payroll reach into Asia-Pacific. Growth opportunities in the region include Japan and South Asia-Pacific.

RPO

The RPO market continues to be a hot one to watch. Contracts were awarded in various countries, including the U.S., U.K. and China, and ~20% of contract activity in H1 2013 was from multi-country deals.

The level of M&A activity was consistent with H1 2012, but the level of RPO partnerships has dwindled. Nevertheless, RPO vendors were busy expanding service offerings and delivery capabilities, and launching new websites. Some examples include:

  • Randstad Sourceright launching an RPO integrated assessment program
  • Manpower U.S. launching a multi-channel delivery model
  • Ochre House launching a COE to drive innovation
  • Randstad Sourceright opening a shared services center in Budapest
  • Hays launching a new mobile website
  • AMN Healthcare launching a redesigned website.

Although technically within H2, it is timely to mention the Pinstripe and Ochre House merger.

Learning

After a rather long lull, the learning BPO market has shown many signs of improvement. New contracts include Raytheon and GM Korea for content development and training administration services, and delivery of sales and non-technical training.

GP continued its acquisition frenzy focused on strengthening and expanding its geographic footprint with Prospero Learning Solutions (Canada) and Lorien Engineering Solutions (U.K. and Poland). Not to mention Capita’s acquisition of KnowledgePool.

Stay tuned next week for more highlights and trends from H1 2013 that are specific to benefits administration and MPHRO. I’ll also share some insights on what to expect in H2 2013 based on NelsonHall’s recent HRO Confidence Index survey.

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Countdown to the 2013 HR Technology Conference

July 29, 2013
Gary Bragar, HRO Research Director, NelsonHall

Gary Bragar, HRO Research Director, NelsonHall

This year’s HR Technology Conference, less than 10 weeks away, will be back in Las Vegas October 7-9 (please note onsite rooms are going fast, I had to stay at alternate hotels the past two years!).

With 6,000 people from 28 countries attending last year, I continue to find it an invaluable investment of my time to:

  • Attend presentations
  • View technology exhibits
  • Network with peers
  • Meet individually with companies that I do business with and others I want to learn more about.

Presentations: Session topics include:

  • Strategic View
  • Talent Management
  • Social in the Enterprise
  • Workforce Analytics and Planning
  • HCM and Workforce Management
  • Recruiting
  • Service Delivery
  • Expert Discussions & HR Tech Talks.

Be sure to check out the agenda at: http://www.hrtechconference.com/agenda.html

Highlights of just a few of the many presentations include:

  • High-Tech/High-Touch RPO: What the Doctor Ordered for Boehringer Ingelheim – presented by Corry Ioli, Executive Director, Talent Management & Acquisition, Boehringer Ingelheim and Sue Marks, CEO, Pinstripe
  • Goldman Sachs Buys RPO Eyes (and Hands) for a Quarter Million Resumes! – presented by Tom Osmond, Global Head of Talent/HCM Solutions, Goldman, Sachs & Co and Regina Lee, Division President, ADP
  • HR Tech Talks, presenters: I Come From the Water: Evolution of the Modern Manager, Kris Dunn, CHRO, Kineti; Clowns, Sharks, Anemone and HR – What Do They All Have in Common? Mary Sue Rogers, Global Managing Director, Talent 2
  • How Mobile, Social and Gamification Tools are Improving Employee Health – presented by Barry Hall, Principal and Innovation Leader, Talent & HR Solutions, Buck Consultants and Scot Marcotte, Managing Director, Talent & HR Solutions, Buck Consultants.

Whether your company has outsourced or continues to do everything internally, there are bound to be several sessions where you can learn how to improve HR in your organization and be a better business partner. When I was on the buy-side prior to joining NelsonHall, I would attend such HR conferences to:

  • Learn about the broader industry
  • Think about how our HR outsourcing contract compared to others
  • Get ideas on improvements we could make.

Technology Exhibits: Since technology is changing so rapidly, it is often difficult to keep up with new applications that are available. The conference is a great way to get exposed to a broad-range of recent innovations. You can stop by any booth and see a demo. There is no pressure and vendors are excited about their new products and services and are happy to show you more.

So here is your chance to make a difference at your organization; you might stumble onto a better, more user-friendly technology for example. Even if you are not the decision-maker, you can always tell your organization about it when you return and request a customized demo. Alternatively, if you are already outsourcing, you might see something that you don’t have and can bring it to your provider’s attention.

Network: The conference provides an opportunity to expand your network with others, including HR practitioners, buyers, providers and analysts, etc. In addition to the daytime events, there are evening socials too. HR deserves to have fun!

As a reader of my blog you are entitled to a discount. Just use the Promo Code HRO13 (all caps) when you register online at: http://www.HRTechConference.com/register.html to get $500 off the rack rate of $1,895. The discount does not expire until the conference ends on October 9, 2013.

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NGA’s Broadening Offerings

July 24, 2013
Liz Rennie, HRO Research Analyst, NelsonHall

Liz Rennie, HRO Research Analyst, NelsonHall

Last week we attended the Advisor & Analyst Summit with NGA where CEO Adel Al-Saleh presented the highlights for FY2013 (up to 30 April 2013) and described the company as an “IP-led HR services company.” Focus was given to the company’s ability to support global payrolls, whatever the HRIS platform, as NGA supports multiple platforms such as Workday, SuccessFactors, PeopleSoft, Oracle and SAP. Further, NGA announced that BPO agreements are in place with all the above-mentioned technology companies.

NGA serves all size companies and is particularly focused on global enterprise clients. Multi-country BPO HR/payroll is where NGA sees growth. Over the last year NGA experienced flat revenues, the downturn in the consulting was cited as the main reason; however, EBITDA was up by 8.6% to $157m. Workforce administration and global payroll were cited as areas which were experiencing growth. A “sweet-spot” client would be a client who wants its IT to be managed and requires service components for HR administration and/or payroll.

New wins and renewals for FY 2013 were cited as Aer Lingus (Irish HRO client based on ResourceLink), Textron (PeopleSoft renewal), Pirelli (40 countries in scope), State of Texas, McGraw-Hill and Orica.

FY 2014 priorities

  • Evolve the client-centric coverage. This means to increase the reporting and visibility of customer satisfaction to drive this higher
  • Drive the maturity of global delivery capabilities
  • Evolve the transformation consulting services
  • Invest and launch key IP platforms, including:
    – Global payroll
    – Service center tools & utilities
    – euHReka – Preceda – ResourceLink – Moorepay
  • Increase traction of key partnerships:
    – Workday
    – SuccessFactors-SAP
    – Oracle.

NGA already has more than 8 clients utilizing the Workday platform.

NGA presented its Global Delivery Model, which demonstrates the maturity and scale of NGA’s global delivery, including approximately 1.2k employees in Manila, 1k in Kochi, 100 in Dalian, China, 150 in Katowice, Poland, 500 in Granada, Spain and 200 in Buenos Aires, Argentina. These centers have been undergoing a center standardization based on Six Sigma to improve alignment.

NGA’s depth of knowledge is evident in the 8 IP components presented, including its NGA Service Catalogue, Global Statutory Center, ePIM Implementation Methodology, SunEXo (to track payroll status), ScopeHR (to configure scope), Online Reference Guide (for processes and instructions), Global Standard Training and Global Process Framework.

Being an IP-led HR services company, NGA has to clearly articulate the value of the IP to the client and then ensure that the IP roadmap is closely following its client’s needs. Furthermore, increasing technology capability with a broader partner ecosystem could bring further challenges, such as:

  • Finding the right technical solution for a client without confusing them; especially where they are simply asking for a service
  • When the IP becomes less technology centric, NGA could lose some of the depth of knowledge that is already built into the IP.

NGA continues to be a company that is flexible to the needs of its clients. In this current climate companies need agility in HR solutions, services, prices and (now more than ever) technology. NGA offers a global delivery network that is experienced and always hungry for more business.

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Talent2’s Competitive Edge

July 8, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

The NelsonHall HRO team recently spoke with Mary-Sue Rogers, Talent2’s global general manager for HR managed services, for an update on the major Asia-Pacific, pan-regional HRO service provider with ~2.6k clients across 30 countries. Its client base includes companies of all sizes in both the private and public sectors. The company had a busy fiscal Q4 2013 winning more than 60 contract awards across its service lines, including payroll, RPO, learning and HR advisory services.

The Asia-Pacific HRO Market is Competitive

Asia-Pacific is a huge and diverse region with many of the individual nations still considered “emerging markets,” with opportunities for long-term growth. Talent2’s in-region competitors are largely global HRO providers, some span all service lines and others go head-to-head-on a single service like RPO.

So how does a ten-year-young company compete with many of the biggest names in HRO? Its competitors also have in-region locations but find it hard to match Talent2’s 40+ HRO-dedicated locations supporting 31 languages in 16 Asia-Pacific countries, including parts of the Middle East. In May 2013, Talent2 further expanded its operations in support of the Asia-Pacific region by opening a service delivery center in the Philippines.

Succeed With a HRO Competitive Edge

It is a core part of providing multi-country services to offer local subject-matter expertise on employment rules, regulations, taxation and compliance reporting, and all of the competitors can provide such services directly or through vetted local partners.

Talent2 demonstrates deep knowledge of local regulations as well as cultural and business environments. It knows the nuances that others may miss, which can help develop a service offer that is right on the mark for design and cost. For example, in the first instance, Talent2 addresses the following questions:

  • What style of payroll service center support is preferred by employees in different areas of its region?
  • What are the differences in an MNC headquartered in the West versus one headquartered in the target region?

As a result, 50% of its clients use multi-country services led by payroll and followed by RPO. Some start with one targeted country and add more over time.

Quality services and competitive pricing, along with its deep knowledge, provides a winning combination for Talent2, achieving a NelsonHall estimated ~10% growth in FY 2013.

Then Change to Remain Competitive

Talent2, which became a private company in 2012, is working its way through its stated development roadmap. The multi-pronged plan is focused on upgrading and rationalizing its technology platform to meet current and future client needs and going environmentally green to control internal costs and lower the total cost of ownership for its clients.

HR services are changing rapidly all over the world, as are client needs and interests, and no service provider can long rest on its laurels. Therefore, the question arises: does your HRO service provider’s competitive edge match your needs today, and will it tomorrow?

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Catching Up with ADP

June 20, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

The recent passing of long-term U.S. Senator Frank Lautenberg reminds us of his early role in the formation of what became ADP, a founding member of HR outsourcing. In the early 1950s he was engaged in selling insurance and sold a policy to two young New Jersey businessmen, Henry and Joseph Taub. The Taub’s were pioneering a then new concept; payroll outsourcing. The brothers knew payroll processing and Lautenberg knew sales and marketing. Lautenberg took a risk and joined the Taub brothers and together they created a new industry.

Establish Operating Principles

By the time the company incorporated in 1961 the three leaders established principles that still guide the company some 60 years later. Following are a few of the principles they put in place.

Focus on Business Markets that Offer Significant Growth Opportunities

ADP has always pursued growth through new market opportunities, both by expanding it service lines and by entering new geographies. Much of the early growth was through acquisitions, as well as organic growth. Lautenberg retired as CEO from ADP in 1982 having made over 100 acquisitions!

Over time, ADP became a global player. An early acquisition was GSI, a large payroll and HR services company in Europe. The latest 2013 acquisition is Payroll S.A. to expand LATAM payroll capabilities to Chile, Argentina, and Peru. In the last few years major acquisitions included Workscape (benefits), The RightThing (RPO) and SHPS (benefits).

Embrace Technological Change to Enhance Product and Service Offerings

By the early 1960s ADP had moved from manual operations to the pre-computer punch cards and on to leasing its first computer: an IBM 1401 mainframe. That willingness to continue to embrace the new is seen in ADP’s successful launch of a series of cloud-based SaaS HR technology and BPO service platforms, including Workforce Now (1k-20K employees), Vantage HCM (50-3k employees), and GlobalView for multi-nationals. Together, the three services support more than 40k clients.

The company has also launched extensive mobility options, including RUN powered by ADP for small business mobile payroll and ADP Mobile Solutions for access to a broad range of information and transactions spanning time and attendance to benefits and pay cards.

Attract and Retain Motivated and Talented People

ADP has grown into a $10bn global outsourcing business with one of only four remaining AAA credit ratings in the U.S. With ~570k clients across 125 countries, we know customers support its line-up of services and proprietary developed technologies. What about people? A few recent awards tell the story:

  • Ranked second on Fortune’s 2012 list of America’s Most Admired Companies in Financial Data Service
  • Ranked in the Top 50 on IDG’s Computerworld 2012 list of the 100 Best Places to Work in Information Technology (IT)
  • Named to the 2012 Working Mother 100 Best Companies, for the third time.

We therefore need to ask the question of prospective purchasers: does your prospective or current HRO service provider have long-term guiding principles and can you see evidence of them in action? Because ADP does.

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HRO and Innovation – Getting Practical

May 31, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Innovation in multi-process HRO (MPHRO) has been a topic of discussion, and some contention, since the early mega-deals that created the modern MPHRO market more than ten years ago.

Even in the early days there was a desire for innovation, but there was also a lack of common definitions and mutual understanding, along with difficulty in articulating innovation in contract language.

There was an even greater barrier – systems spaghetti. Early MPHRO clients had highly-customized ERP infrastructure, aging legacy systems, and third-party applications, much of which may have been non-centralized and non-integrated. Each major customer was in their own bubble of services and systems. It quickly became apparent that it would be hard to add new and different innovations within the constraints of the contracts and the technologies.

Platforms for Innovation

Major MPHRO service providers now have global multi-client service delivery and data centers with sophisticated workflow processes. Early clients have been moved bit-by-bit into the common support infrastructure, even if they remain on their own, licensed ERP systems.

Many HRO clients are ready for increased standardization and multi-client platforms to reduce cost and to improve performance. Innovative cloud-based SaaS and services platforms are opening up new services to the mid-market and parts of the large client market:

  • Clients on a shared service platform benefit from ongoing incremental improvements
  • Clients benefit from access to new products and services without paying a significant portion of the R&D needed for a one-off innovation.

Some tension between continuous improvement and innovation is natural, as the line between an “included enhancement” and what is “new and different to be added as an extra charge” looks very different depending on whether you are a buyer or a supplier.

Collaborative Innovation

Client user groups support both HRO improvement and innovation. Vendors were originally reluctant to let clients communicate with each other (partially because the clients might “gang-up” on the vendor – and sometimes they did!).

Companies like IBM and Xerox were leaders in developing client advisory boards. These interactive groups provide feedback on the services, give input into common needs, and even offer guidance on parts of the vendor’s development roadmap. They are not just “the voice of the customer”; they are also a built-in base of beta testers. Willingness to put some skin into the game is also a great way to test market viability and further strengthen relationships.

Infrastructure of Innovation

Buyers can develop their processes for HRO innovation in the following ways:

  • Assess vendors for innovation capabilities as part of the selection process
  • Develop the language and mutual expectations for measurable innovation upfront and include in the terms of contract. Include who pays, and when, determine if there will be vendor incentives, and clarify the client’s role
  • Use the governance process to jointly monitor, manage, and measure improvements and innovations over the course of the relationship.

The good news is that we are beginning to build the HRO infrastructure for future innovation; common language, standardized multi-client platforms, and client user groups.

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HRO and Innovation – a Changing Dynamic

May 14, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Last week the Human Resources Outsourcing Association’s (HROA) Publications & Practices Committee held a webinar on collaborative innovation in HRO with industry experts Lisa Johnson, director of recruiting, North America at Gate Gourmet, Rolf Kleiner, senior vice president and chief innovation officer at Kelly Services, Inc. and Dr. Greg McLaughlin, senior vice president of research & development for Global Targeting, Inc.

Understanding Innovation

Innovation has been a conundrum for years for HRO buyers and suppliers. There are many ways to define the word ‘innovation’ and that makes it hard to be sure each party is speaking the same language. All three experts agreed that open discussions between clients and service providers are needed to develop a mutual understanding of what innovation means in the context of the relationship and contract.

Greg walked us through aspects of innovation range from the conceptual “innovation is an experience”, to the practical “innovation begins with a need and ends with an outcome that creates a competitive advantage.”

Lisa looks for HRO suppliers with the spirit of innovation – backed by experience. Rolf looks for employees who “rise above the white noise” to work on special innovation projects that also support talent management.

Innovation and Continuous Improvement

The HROA Buyers Group’s survey on innovation and continuous improvement showed there is a commonality in basic definition and understanding developing across the community of buyers, service providers, and advisors. From the words of HRO community members:

  • Continuous improvement is an enhancement of a product, service or process that already exists:
    • Increased operational efficiency, improved user experience, ongoing, incremental, and step changes
    • Efficiency and effectiveness gains that “keep pace with the market”
  • Innovation is something new and different:
    • Cutting edge, transformational, precedent setting, competitive advantage, disruptive, and dramatic
    • A significant and often transformational change that, once introduced, “you wonder how you ever lived without it.”

The HRO community is in agreement that continuous improvement and innovation should be a collaborative effort between the HRO service provider and the client:

  • 92% of respondents agree that this collaborative effort is what should be happening between service provider and client, but only 59% see that as true now, with 40% of buyers and only 22% of providers agreeing that collaboration is actually happening in the marketplace right now
  • 77% agreed that innovation should be a collaborative effort among the parties, with agreement from 100% of advisors, 60% of HR practitioners, and 83% of providers.

 The Innovation Gaps

Significant gaps – and therefore opportunities – remain:

  • 75% of respondents said that continuous improvement is in the HRO contract
  • Only 42% agreed that innovation is included in the HRO contract.

In the next blog I will be getting practical about innovation in HRO.

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