Archive for the ‘HRO Vendors’ category

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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Benefits Outsourcing is Blooming

May 9, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Benefits administration is producing a bountiful crop of new and expanding services. Recent contract award announcements included ADP, Aon Hewitt, Ceridian, Equiniti, Fidelity, Mass Mutual and Merrill Lynch. A wide range of industry segments were represented: banking; food; education; non-profits; hi-tech; pharmaceuticals; and travel. This week, I have taken a look at some of the newer benefit outsourcing “crops” that are starting to grow nicely.

Managed Retirement Accounts

Fidelity’s relatively new managed retirement account offering – Fidelity Portfolio Advisory Service at Work – was designed to address the low rate of adequate preparation for retirement by many employees by combining Fidelity Investments plan sponsor customized portfolio active management services with auto enrollment and available advisory services to help bridge the gap in achieving retirement goals from a defined contribution plan. The service grew in both participants and assets by 50% in 2012. Already in 2013, another 135 new clients have been added, bringing the total to more than 1,800 plan sponsors.

  • Fidelity awarded a contract for Portfolio Advisory Service at Work by ADM.

Health and Wellness

ADP’s Vitality wellness solution supports employers with between 50 and 1,000 employees manage rising healthcare costs and also reduce employee absenteeism. Vitality’s incentive-based program includes an interactive wellness portal, health risk assessments, biometric screenings and personalized wellness plans with recommended goals and activities. It integrates with social networking sites, mobile applications and fitness technologies; and when employees achieve planned goals, they earn points towards lowering their health plan contributions. The service is also integrated with ADP’s payroll services.

  • ADP awarded a contract by Jackson Companies for ADP Vitality services.

Benefits Bouquet Bundles

HRO buyers want multiple related services from one vendor under one contract; and health and wellness lends itself to packaging separate services into bundles. Ceridian’s LifeWorks.com combines EAP, work-life, and wellness services into one program with its own portal and mobile access. Also available is Health Coaching – a program for high-risk employees that provides access to comprehensive health assessments and personalized guidance programs – and Client Value Dashboard – included for employers to monitor reports usage data and ROI information.

  • Ball State University chooses Ceridian’s LifeWorks.com

Private Employer Exchanges

Mercer’s Marketplace allows employers to improve management of their benefits spending and administrative responsibilities for active employees. Employers determine how much to contribute toward the cost of their benefits program and can select from a range of insured and self-funded products and providers. The platform includes full benefits outsourcing and provides employees with call center and online decision support.

  • Mercer recently announced names of 10 of its 20 national, regional and state carriers that have joined Mercer Marketplace for providing core medical and voluntary benefits.

A good garden has a variety of plants. Some base crops are evergreen like benefits enrollment and management services, while others are changed out to meet growing market demand. Benefits HRO: how does your garden grow? Very well thank you.

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TCS HRO Delivers Certainty

August 30, 2012

Linda Merritt, HRO Research Analyst, NelsonHall

 NelsonHall’s HRO team really enjoys service provider briefings and we recently had one with Tata Consulting Services (TCS).  It was great to have a conversation with the TCS HRO team about their plans and activities. There was a lot to catch up on as they have been very active growing, adding clients, and expanding their global footprint for HRO services and delivery.

TSC offers the following HRO services:

  • Workforce administration
  • Payroll
  • Talent management
  • Resourcing
  • Benefits
  • Employee service center services.

The company is growing its set of global service centers which includes India, China, U.S., U.K., Hungry, Brazil, and Uruguay, its newest center. Supporting a total of ~500,000 employees in 27 languages, it offers options for onshore, nearshore, and offshore service delivery.

TSC HRO clients are spread globally with its largest client base in the U.S., followed by Asia Pacific, EMEA, and Latin America. Currently, the majority of its clients are large market with embedded ERPs to support, and like most MPHRO service providers, TSC supports multiple client ERPs including SAP and PeopleSoft/Oracle. It also supports regional ERPs like Adam and Revolution in Latin America and Chris 21 in Australia. TCS has added its own SAP-based global HR platform for SaaS and SaaS with BPO services.  The SaaS HCM option will support its fastest growing middle market segment, as well as be an option for larger clients ready to consolidate and change outdated systems “lock, stock, and barrel.” For example, for a market research company, TCS consolidated 50+ various HR systems onto its global HR platform across 48 countries in less than a year.  

I frequently comment on the need for buyers to align HRO use with a strategic HR plan that outlines what is needed for what you are doing today, as well what is needed to achieve your long-term objectives. TCS has a client maturity model for its services; it works with potential new clients to assess their current state and helps clients find the “fit and affordability” roadmap that is right for them. The process has been so successful that TCS is retrofitting the tool and assessment for existing clients as well.

A briefing is about the numbers, and it is also an opportunity to learn more about what makes a vendor distinctive and what its approach is to the HRO marketplace. For TCS, a global IT company based in India, one would expect to see an emphasis on technology solutions, IT-support, quality, process standardization, etc. and all that is there. In addition, however, TCS HRO has a focus on “delivering certainty,” not just correct transactions, but improved performance that builds long-term client relationships with the flexibility to meet changing business needs. Having established a solid base of services and customers from which to grow, we look forward to covering the next chapter in TCS’ success.

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H1 2012 HRO: Who Did What in the Large Market?

August 15, 2012

Linda Merritt, HRO Research Analyst, NelsonHall

There was a good amount of announced HRO contract awards of many sizes and services in the first half of 2012, especially in the large market. A nice volume of new work coming online will provide future revenue support for HRO service providers, where earnings have recently been lower than in 2011.

Learning: finally announced some major deals including:

  • Capita Workplace Services: awarded a competitive win for a £250m contract by the Cabinet Office to manage civil service training services in the U.K.
  • Serco: won awards with the Army in both the U.K. and the U.S.; it won a scope extension valued at $38m by the U.S. Army and a £55m training contract by the British Army
  • Genpact: won  a learning services contract by Johnson Controls, extending its record of recent learning wins; last year, it won a 7 year MPHRO contract with Nissan that included learning and it also won a 5 year content development contract by JobSkills in India.

MPHRO: activity was spread around nicely with ADP, Aon Hewitt, NorthgateArinso, and Logica all bringing in MPHRO contracts. One notable deal was IBM’s multi-tower BPO and IT deal with Cemex valued at $1bn; it includes finance and accounting BPO, HR BPO, IT infrastructure management, application development, and maintenance.

RPO:  continued to see a high volume of new contracts spread across many vendors. There were also two of the largest awards ever in RPO:

  • ManpowerGroup: awarded a $400m five year contract extension with the Australian Defense Force, continuing a relationship that started in 2003
  • Capita: won a £440m 10 year recruiting partnership contract by the British Army; it will also deliver supporting technology for the Royal Navy and the Royal Air Force, partnering with advertising agency JWT for recruitment marketing and with Kenexa for assessment and recruitment technology.

Benefits administration: contract awards were announced by Aon Hewitt, Empyrean, HP, and Xafinity Paymaster. Fidelity Investments reported the highest volume with DC contracts adding 522k new participants to its base of over 15m participants served. It also made major renewals and brought in new competitive wins. This is Fidelity’s strongest first half sales period in the last five years.

Payroll: deals in the U.K. led the way with awards going to Ceridian, Equiniti ICS, Liberata, and Mouchel. ADP won a multi-country contract from HP and will implement its GlobalView for payroll and Enterprise eTIME system for time and labor management for ~130,000 employees across 40 countries in Asia Pacific (excluding India), Europe, and the Americas (excluding U.S.) over the next five years.

With pipelines still healthy, the second half of 2012 should bring in a year of solid HRO growth and results. Congratulations to all!

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NorthgateArinso’s Secrets of HRO Success in the U.K.

December 19, 2011

NorthgateArinso (NGA) has had a string of recent competitive HRO contract wins in the U.K. First in November was a seven year contract with the Church of England (16,000 participants), followed by a five year award by Gatwick Airport (3,500 participants). In early December the London School of Hygiene and Tropical Medicine (LSHTM) with 3000 participants awarded NGA a five year contract. Each award was for Resource Link Aurora HR and Payroll services, adding to the more than 500 clients already using the service in the U.K.

I had a conversation with NorthgateArinso’s  Jonathan Legdon, Sales Director, and Nick Carlson, Strategic Marketing Director for the U.K. and Ireland to learn more about what is driving success. The answer is not one secret to success, but many that are working together.

NGA is one of the HRO market leaders in the U.K. with reference clients across many verticals in the private and public sectors. Still, there were other worthy competitors bidding for the services, so I wanted to know what else is setting NGA apart.

One secret of success is the sales team structure and environment. (For those of us who go way back in HRO, sales teams were not always the friend of forming client service provider partnerships based on more than price, met expectations and were profitable for the vendor.) The sales team includes a mix of sales and operations personnel and the integrated team can realistically represent NGAs services and strengths and demonstrate the expertise and commitment to client services. Also, NGA uses a unique approach to sales team compensation to incent and reward building client relationships that deliver value for clients and needed margins for NGA.

A reputation for HR expertise and innovative technologies and services that produce results is also important. Gatwick Airport is at the beginning of a ten year transformation plan and it selected NGA as a partner committed to delivering exceptional staff services. Gatwick is also looking to NGA for RPO services that will help attract and engage the highest caliber employees.  The Church of England is planning to use the Resource Link Aurora talent management capabilities to improve the efficiency of the selection and training of clergy. LSHTM wants to eliminate bureaucracy with web-based self-serve that will meet the changing needs of a complex workforce.

Clients recognize that the NGA sales teams take the time to listen and understand their needs.  LSHTM said NGA was the most intuitive bidder and understood the needs of the public sector. Gatwick cited the match of corporate cultures and values. The Church of England selection team said that NorthgateArinso, through its thorough engagement with the team, had demonstrated a very clear understanding of the Church’s requirements.

Focusing on HRO success is a good way to wrap up the year. Happy Holidays on behalf of the NelsonHall HRO Insight team, Gary Bragar, Amy Gurchensky, and Linda Merritt.

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

A Look at Automatic Enrollment in the U.S. to Predict the Success in the U.K. and Potential Opportunities for HRO Service Providers

December 8, 2011

There is currently a global crisis of people failing to save enough funds for their retirement. This reality is faced by those nearing retirement, and it’s affecting millions more. Reasons for this range from a lack of an employer plan to it being too confusing to simply just not getting around to it. In an effort to manage the crisis, legislation has been enacted to facilitate the ease of saving.

 

In the U.K., the primary answer lies in the automatic enrollment (AE) requirement of the Pensions Act of 2008. The AE requirement compels employers to automatically enroll their employees into qualifying pension schemes and to contribute to the pension as well. AE will commence in October 2012 and will be rolled out in stages based on employer size until September 2016 with large organizations (i.e., those with more than 120,000 employees) starting first.

 

Trying to predict the success that AE will have in the U.K. is difficult, but perhaps the Pension Protection Act of 2006 (PPA) in the U.S. can provide some guidance.

 

Recently, Fidelity highlighted the positive impact that the PPA has had on participation rates among other things. Fidelity’s plans that offer AE have increased to 21%, up from 2% in 2006. Furthermore, the AE feature is a part of 63% of plans with more than 50,000 participants, and Fidelity has seen participation increasing as a result of AE.

 

The average participation rate for plans without AE is 55%; but with AE, the participation rate is 82%. More interesting is the effect that AE is having on younger employees, who are typically not too concerned with saving for retirement. For employees between ages 20 and 24 years old, the participation rate for plans with AE is 76% and only 20% for plans without AE.

 

While the PPA in the U.S. does not require AE by all employers, it is proving to be an effective way to encourage participation to actively save for retirement, and it can also provide further opportunities for HRO service providers.

 

In the U.K., for example, Capita has already won business related to the AE requirement of the Pensions Act of 2008. It was awarded a 7 year £105m contract by the U.K. Pension Regulator to support direct communications and transactional processes with employers for AE that began in October 2011. Capita’s responsibilities include:

  • Communicating campaign messages to employers
  • Communicating AE duty dates to employers
  • Ensuring employers register with the regulator
  • Operating a customer contact center
  • Some enforcement activities such as administering compliance notices and penalties for non-compliance.

 

Shortly after Capita’s contract award, Xafinity became the first pension administration provider to launch an AE offering that:

  • Identifies who to automatically enroll and when to enroll them
  • Sets a course of action for all stakeholders
  • Runs financial analysis on different scenarios and take-up rates based on employee data, and selects a strategy that supports corporate objectives
  • Provides AE administrative services including member communications; employee identification; auto-enrolling, opting out, and re-enrolling employees; and reporting.

 

Expect to see more HRO service providers based in the U.K. and others doing business there to launch an AE offering. Some may be late to the game though since the first staging date is less than a year away and compliance can take ~18 months to achieve. It is an area with lots of potential and service providers like Capita and Xafinity are well-poised to gain the first-mover advantage.

 

Amy L. Gurchensky, Research Analyst, HRO, NelsonHall

 

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