NGA’s Broadening Offerings

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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HRO and Innovation – a Changing Dynamic

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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Upside Surprise of MPHRO Contract Activity

Since the beginning of the second quarter, multi-process HR outsourcing (MPHRO) activity has heated up.  Over the last year, announced MPHRO deals have been far and few in between.  That’s not to say that MPHRO contracts haven’t been happening behind the scenes, but providers weren’t publicly disclosing this activity like they have been in the past several months.  Let’s take a closer look at some of these recent deals.

ADP has made three MPHRO announcements, the most by any single provider.  All three deals were for mid-market organizations with 2,000 or less employees. Two of the contracts were for organizations in the healthcare sector: Leon Medical Center and University of Miami Hospital. Its other deal was with a local government in Colorado (Laimer County).  Another provider capturing a mid-market win was Netherlands-based Raet with Alliade, another company in the healthcare industry.

Turning now to large market MPHRO deals, Logica was awarded a nine year MPHRO contract by Ahold for 100,000 employees in the Netherlands, Slovakia, and the Czech Republic.  This is a significant win for Logica whose MPHRO client portfolio consisted of U.K. and Netherlands-based organizations. Through this contract, Logica will have a history of serving MNCs.

Another large market MPHRO announcement came from Genpact who recently expanded its relationship with Nissan.  Genpact began providing HRO services to Nissan in 2003 for administrative activities.  Now, Genpact will provide Nissan and its affiliates the full spectrum of HRO services within payroll, benefits, recruitment, and learning.  In addition, Genpact has acquired Nissan’s HR shared service center in Yokohama, Japan and has renamed it Genpact Japan Service Co., Ltd.  The center will serve Nissan, its affiliates, and other Genpact clients, including one that has already transitioned over.

NorthgateArinso (NGA) was also in on some of the action.  It renewed its contract with Fifth Third Bank, a legacy Convergys client, for another seven years and will be implementing its euHReka platform.  This renewal is important in demonstrating that NGA can provide a high level of satisfaction that Convergys clients were accustomed to prior to the acquisition.

Other MPHRO activity came from Aon Hewitt with a financial services company and Capgemini with Brazilian conglomerate, Algar, which is part of a larger multi-tower BPO deal.

NelsonHall’s 2011 MPHRO report specified the following verticals as those that will emerge strongly: manufacturing, healthcare, government, and retail.  All of the recently announced activity fell into one of these verticals.  In terms of geography, the above contracts spanned all regions of the world including North America, South America, Europe, and Asia Pacific.  But, to learn NelsonHall’s estimated CAAGR for these regions, you will have to review the full MPHRO report available for purchase at www.nelson-hall.com.

Amy Gurchensky, Research Analyst, HRO, NelsonHall

HRO – How the Garden Grows

Everything seems pretty moderate and modest in the garden of HRO so far this year. After the abundance in 2010, perhaps that is not so bad. Reasonably steady business gives service providers a breather and a chance to attend to growth opportunities by leveraging current capacities while cultivating new capabilities selectively.

In benefits outsourcing, the contract levels were good with some key wins and renewals. Fidelity continues its blossoming growth with major 5 year renewals for total retirement outsourcing contracts with HP and BP, and a new defined contributions contract with the University of Oklahoma. In the U.K., Mercer was awarded a 7 year defined benefits renewal by Saint-Gobain and it won a new pensions administration client, Loomis UK.

RPO saw a smaller crop of new awards, but is still growing, especially in North America and the U.K.  My colleague, Gary Bragar, will be heading off soon to the RPO Summit as a presenter and I look forward to hearing the latest views.

Smaller M&A and partnership activity remains perennial, continuing the pattern of growing footprints in terms of geography and specialized services. GP was the most active with the acquisitions of Ultra Training in the U.K.; RWD Technologies with offices in the U.S., U.K., and Colombia; and Communications Consulting in China. Manpower Group acquired Web Development Company in India to add to its IT recruiting in Asia Pacific. Finally, Raytheon Professional Services partnered with Baptist Health to increase training in healthcare systems.

With the blooming of HRO platform managed services, we have two trends. First is the belief that the time for HRO mid-market is finally here. Vendors are confident enough to invest in and launch new platform service offerings specifically for the mid-market. The second is growth into new fields beyond the base of payroll and HR administration systems. Examples of both trends:

• Payroll – NorthgateArinso launched agoHRa for companies with up to 500 ee’s per country
• Learning – IBM launched the mid-market Smart Business Learning Services and has launched Smart Business Learning Content Services
• RPO – Mid-market grew from c. 20% of total revenue in 2008 to c. 33% in 2010
• RPO – SourceRight Solutions launched RPO One for organizations with 100 – 5,000 employees, providing a dedicated service team, pre-configured ATS, and reporting and analytics.

Contract activity adds evidence that customers agree these services are desirable options. NorthgateArinso was awarded a 5 year managed payroll services and HR software contract by Historic Scotland utilizing ResourceLink Aurora. Historic Scotland is responsible for data entry, while NorthgateArinso will handle processing, pay runs, and produce electronic payslips. Edvantage Group won a 3 year managed learning services contract with Rieber & Son in Norway, which included Learning Gateway, Edvantage Group’s SaaS LMS, and e-learning courses. Edvantage Group also recently announced two contacts for its SaaS LMS. 

Learning has been slower to recover. Hopefully, 2011 will be the year for its bountiful harvest.

Linda Merritt, Research Director, HRO, NelsonHall

Where the Action is At in HRO

As a follow-up to my colleague Linda Merritt’s blog last week titled “HRO is Settling in for a Good 2011,” I thought I’d write about where the most action is at thus far. If you were thinking recruitment, good guess, but it is actually benefits administration leading the way in the number of announced contracts in 2011.

In addition to Mercer being awarded a pensions administration contract by Loomis UK Ltd., which Linda also wrote about Mercer in her February 23rd blog, a number of providers have announced important contract awards, including:

Fidelity Investments, after two big five-year contract awards in Q4 2010 by AT&T and Office Depot, in January Fidelity was awarded a five-year contract renewal for total retirement outsourcing (TRO) services by BP America, Inc., a subsidiary of BP. Fidelity will continue to provide administration and recordkeeping for BP America’s 95,000 DB and 48,000 DC and nonqualified deferred compensation plans for U.S. employees. Later in the same month, Fidelity was awarded another five-year contract renewal for TRO services by HP in North America. Under this deal, Fidelity will service all of HP’s retirement plan participants, adding 162,500 participants from EDS who were previously serviced by other providers. In total, Fidelity will serve more than 135,000 DC participants and more than 192,000 DB participants for HP.

Aon Hewitt, in February announced it had gone live with eight new benefits administration clients since the beginning of the year. Across these clients, Aon Hewitt has implemented 12 services including DB, DC, and H&W and has added more than 325,000 participants and retirees to its base of 22 million participants.

Capita, in February was appointed as a preferred supplier for the administration of the Teachers’ Pension Scheme (TPS) by the U.K. Department of Education. This is a seven-year, £80m contract renewal that starts in October 2011 and includes an additional three-year option. A week later, on a smaller scale, Capita won a three-year occupational health services contract by Technip. Capita will provide its Wellness Assessment Surveillance Portal, which gives centralized visibility of health surveillance records to Technip’s 3,000 personnel in Aberdeen and offshore locations.

So will benefits administration continue to be hot this year? I believe it will, though it might be hard-pressed to exceed RPO for the full year in terms of number of contract awards.  As evidenced in the examples above, there are huge volumes of benefit plan participants that are serviced and in today’s economy, clients cannot afford internal resources to manage these programs, nor do they have the expertise and most up-to-date technology. Handling benefits administration is vitally important to employees and retirees, whether it’s the ease of an annual online enrollment or the knowledge of a service center professional in answering DB and DC questions. And it’s not just large companies that need this expertise.  As I wrote in my February 25th blog, mid-market HRO is rapidly growing as well.

A final thought about what will continue to drive contract awards in benefits administration is that buyers are increasingly looking to consolidate their outsourcing services under one provider, as evidenced by Fidelity’s contract with Office Depot. This is a trend I believe will continue and from an employee and retiree perspective is a good thing. I was fortunate enough to leave my long-term employer four years ago with H&W benefits, DB & DC plans, and voluntary benefits, of which all four were provided by four different vendors. Sounds like I should play the number four!

Gary Bragar, Lead HRO Analyst, NelsonHall

Benefits Administration Outsourcing — Mercer has an Ace in the Hole

Mercer held its cards during the 2010 benefits administration merger poker marathon while others drew cards to fill in service lines, add scale, and expand geographically. Satisfied with its service mix and global coverage, Mercer decided to play its own hand with a benefits portfolio of consulting, outsourcing, and investment management to leverage growth.

Revenues for Q4 2010 were $910m, up 5% in constant currency and outsourcing was up 5% to $180m. Full year revenues came in at $3,478m, up 2% and outsourcing was up 3% to $671m. The U.S. led with the largest share of growth and Canada, U.K., Latin America and Asia Pacific also showed gains.

Mercer’s hand is stronger than it may appear from the 2010 results. While the first half of the year was slow, Q3 and Q4 showed accelerated recovery from the recession. Health and benefits consulting revenues increased 8% for the second quarter in a row. Rewards, talent, and communications consulting was up 15% for Q4, compared to only 2% for the year. The recent positive trends indicate that employers are ready to address employee benefits issues.

Mercer was awarded 25 new outsourcing contracts in 2010, which crossed the full service line-up of DC, DB, and health and welfare. One deal was for TRO (DB + DC) and four were for TBO (DB/DC and H&W). FOX Entertainment and Halliburton will be new global services clients. In 2009, Mercer also signed 25 new contracts. The key difference between the past two years is the number of participants added. In 2009, it was ~400k and in 2010 it doubled to ~800k. In addition, renewals are exceeding expectations, which together with the new clients should up the ante on outsourcing revenue growth for 2011. This is all good, but the real magic in having a balanced portfolio of services is if you can cross leverage each component to strengthen the whole.

The added advantage for Mercer, its ace in the hole, may be its capability to coordinate and collaborate across service lines on behalf of its clients. For example, it is seeing an uptick with bundling consulting and outsourcing services because of the close relationship. Escalating health care costs and compliance complexity (even with the U.S. health care reform wild card) continue to attract joint consulting and service opportunities, especially for the mid-market where the new business pipeline is filling nicely. Areas under cost pressure that can bring hard dollar savings, like total absence management and wellness initiatives, should also be places to double down for growth.

Mercer’s clients have a single relationship manager, no matter how many services and locations supported, who is measured on client satisfaction, not revenues. The same set of consistent performance elements and satisfaction with all areas touching the client are rolled up at the account level.

Mercer’s client focus is more than business strategy, it is cultural and structural. What’s your HRO ace in the hole?

Linda Merritt, Research Director, HRO, NelsonHall

HRO Themes at the HR Tech Conference: Portals, Platforms and Self-Service

If you’ve never attended the HR Tech conference – which was in Chicago last week – I highly recommend finding a way to do so next year (and not just because the venue is changing to Las Vegas.) It’s always a top-notch conference with a superior speaker line-up, and a great forum for meeting with HRO buyers, providers and pundits.

With my eyes and ears focused, of course, on all things HRO, the key themes I witnessed – during both public sessions and private meetings with providers – were portals, platforms and self-service, all geared toward improving the customer experience and getting work done as quickly and easily as possible. By-the-drink-pricing and quick solution implementation were also key focuses. Some examples:

• Caliber Point’s recently launched multi-tenant HRO service, called Republic. For mid-market organizations with between 2,000 and 15,000 employees, it’s a SaaS solution based on Oracle and includes software hosted and maintained by Caliber Point covering payroll, recruiting, performance management, compensation, employee benefits, time and attendance and reporting. Pricing is per employee per month by country, which covers both software licensing and BPO services, and implemetation can be completed in as quick as six – eight weeks.
• ADP’s new portal and mobile developments, to be launched by early 2011. I must admit that increased mobile access to HR information, anytime, any place, didn’t wow me until ADP used the example of getting a listing of your in-network benefits and providers on your mobile phone. Think about it…you’re out of town on holiday – without your laptop – and you cut your foot on a piece of glass on the beach or sprain your ankle while skiing. You could pull your insurance card from your wallet or purse and call the 800# to find a local in-network provider. But, with instant access to the information on your mobile phone, why wouldn’t you take the quick route?
•  Mercer’s integrated rewards and talent management offering, called Human Capital Connect. The technology platform includes performance management, succession planning, compensation and incentives. While a third-party provider can’t replace an in-house manager’s performance management responsibilities, Mercer provides not only the technology but also consulting for implementation, training, change management and execution, and a dedicated client team to ensure success. 
• IBM’s transformation of its HRO client Kraft’s employee portal, with enhanced self-service, phone-based call center support and live chats with call center specialists. During its session at the HR Tech conference, Kraft stated IBM’s recently established Manila HR Services Center is getting high marks for customer satisfaction and intuitive and user-friendly employee self-service. And we can anticipate this contract, which will further roll out into 2011, will continue to support Kraft’s approximately 140,000 employees, per its acquisition of Cadbury, with the same improved employee experience, including further enhancements to live chats.

Yes folks, today and into the future, we’ll see rapid developments in portals, platforms and self-service. But these technological developments won’t remove the “human” element from HRO. Rather, they’ll increasingly support the way humans need, want and expect to accomplish their tasks and jobs, at an increasingly attractive price point.

Gary Bragar, Lead HRO Analyst, NelsonHall

Recapping the Not-so-Dog-Days of HRO’s 2010 Summer

One of the biggest HRO stories of 2010 will be the flurry of big and small acquisitions in the benefits administration space. The three big acquisitions – ACS and ExcellerateHRO, ADP and Workscape, and Aon and Hewitt – have recently closed.

As acquisition mania played out, many HRO deals were getting done, and this week, as the weather has finally, thankfully, started to cool, I’m taking a look at some of the deal activity over the long hot summer.

There were not a lot of announced deals in benefits administration, but a Hewitt summary indicates plenty of activity was still quietly going on. Hewitt won new awards across the span of benefits administration in the large and mid-market, including several in defined benefits and defined contributions. But the greatest activity was in health and welfare, and for point solutions like dependant audits and flex spend accounts.

While not necessarily matching North America in total contract value, the U.K. and Europe were also quite active in HRO. Logica was awarded a £10m payroll and pensions HRO contract extention by U.K’s Metropolitan Police, with new scope this time around including increases in employee and manager self services and electronic pay slips. And Midland HR won a deal for its iTrent HR platform including HR administration, employee and manager self-service, payroll, talent management and workforce planning.

In RPO, CPH won a contract with Opal Telephone, and Alexander Mann was awarded  a contract for recruitment and contingent labor by Cobhan. On the continent, HRO activity included HR administration and payroll deals by Reat and HR Access in the mid-market.

ADP parlayed existing payroll services for KAO, a Japan-based consumer products manafacturer, into extended HR administration and payroll services across Asia Pacific including China, Hong Kong, Indonesia, Malaysia, Philippines, Singapore, Taiwan, Thailand, Vietnam and Japan. In addition, ADP won a global managed payroll services contract with BT that will cover more than 40 countries in North America, Europe and Asia Pacific when fully implemented.

It was refreshing to see a spate of learning contract awards won by Expertus, General Physics, Intrepid and The Learning Associates. However, as most of the learning outsourcing activity was in the public sector, we still need to see more of an uptick in the private sector before we can say learning is fully on the road to recovery.

RPO maintained its lead position as the most active single service area, with the greatest increase in revenues and new contracts. RPO activity was highest in the U.S., followed by the U.K., and was spread nicely across providers including Alexander Mann, CPH, Kelly Services, Manpower, PeopleScout and SourceRight. Several of the awards were for contingent labor or combined RPO, with the contingent labor focuses indicating that employers are still cautious about a full return to permanent hires.

There were no announcements of the HRO mega-deals of yore, but it was very nice to see the increased activity levels across many HRO service lines and service providers. Now that the cooler weather of fall is here, we’ll  hopefully see an even more serious return to getting business done before the end of the year!

Linda Merritt, Research Director, HRO, NelsonHall

Bang the HRO Drum Slowly

In my blog last week, Don’t Rain on my HRO Parade, it was fun accentuating the positive signs of health returning to the HRO market. This week I’m taking another look at the latest NelsonHall HR Outsourcing Confidence Index, this time with a moderating eye.  

Total contract values are starting to rise as scope slightly increases, but remain far below historic levels. HRO contracts are still smaller in scale and scope, and there are fewer $100,000+ deals. Further, more deals are occurring in the mid-market, and platform HRO is making inroads, both of which will also lower the average total contract value. All these factors look to become part of the new normal, at least for the foreseeable future.

While the grand plan for multinationals may still be to go global, deal patterns indicate organizations are starting with a more regional approach with fewer countries in the initial roll out. Fewer service lines are also now typical, with payroll and basic HR administrative processes remaining strong as the entry point for companies looking to standardize processes across the enterprise.

 This continues to make it look like the era of multi-process HRO is over. And yet, part of what has traditionally buoyed HRO service providers is follow-on contract expansions of scale and scope, including new services. That approach will only grow more important, putting greater emphasis than ever on making sure the initial client experience is as smooth and positive as possible to build the base for attracting more share of the HRO wallet. With buyers demonstrating willingness to go with multiple vendors and multiple stand-alone services, the role and value proposition of a primary vendor needs to be refocused and honed to meet today’s reality.

Frozen decision-making is finally thawing, albeit very slowly. Service providers report that about 20 percent of buy-side organizations remain iced up on sourcing decisions, down only three percent from the previous quarter. Other inhibitors are reducing in impact, but do remember that given continued economic uncertainty, getting senior management’s attention on making a decision for a major change and financial commitment like HRO will still be difficult.

Expect buyers to continue wanting HRO solutions that do not require large upfront investments and provide robust technology at a transparent price. HRO vendors are increasingly emphasizing the business value in their propositions, which is important to build a bridge for the future. At the same time, buyers are increasingly looking for proof points of real business results before they are willing to commit to crossing the bridge with a service provider. 

The news is moderately good for HRO, but bang the heralding drum a bit slowly, as the celebration parade is not here yet.

Linda Merritt, Research Director, HRO, NelsonHall

HRO SaaS Uptake – What, How Much and Where?

As a follow-on to my July 7 blog titled, “SaaS More Than Just Catching On,” let’s today look at what types of HRO SaaS clients are buying, the size of awarded contracts and the industries in which HRO SaaS has had the greatest penetration to date.

The What

By rank order of the most commonly purchased software applications/modules:

• Payroll

• HR administration

• Benefits administration, including benefits planning, health and safety, claims submission, absence management and occupational health

• Employee and manager self-service

• Talent management, including recruiting and learning

• Workforce planning

• Compensation/salary administration

• Employee development for career pathing

• Travel  

The reasons behind the rankings, especially at the top of the list, are pretty self-evident. Payroll leads as it is the most visible and frequently used (and arguably, the most important) service. And HR administration really ties into employee and manager self-service, as one of the primary drivers of SaaS implementation is self-service for cost reduction and employee satisfaction.

The Size

As I noted in my July 7 blog, the mid-market is proving to be the ripest for HRO SaaS. Using Netherlands-based HRO provider Raet as an example – and a good one at that, as it in the past six weeks inked seven new SaaS contracts and one renewal – client company size is ranging from 250 to 12,000 employees. This uptake in the mid-market makes perfect sense, particularly on the lower end, as companies in this space need access to HR technology to enhance their operational efficiency but frequently lack the budget to invest their own capital in purchasing it. In terms of contract sizes, we’re seeing a length range from four to seven years, with an average of five years.

The Industries

In looking across all HRO SaaS contracts awarded thus far in 2010, education is the top industry, followed equally by local government and retail. I don’t necessarily believe there’s any secret sauce as to why these are the top three ranking industries, as organizations in virtually all – including healthcare, media, manufacturing and financial services – may be challenged with a preponderance of multiple divisions and locations, and often have several disparate systems for HR and payroll that do not communicate with each other, causing extra administrative work and duplication of effort, etc. Thus, the driver for most existing and upcoming HRO SaaS contracts is the ability to have one singular system for HR and payroll in order to achieve standardization, data accuracy, cost savings, self-service, timely processing and data, and employee satisfaction.

Due to all the inherent advantages, I believe we will continue to see a growing number of HRO SaaS contracts in the mid-market, across all industries. In addition, but to a lesser extent, I believe we will continue to see combined SaaS and outsourcing contracts such as the one announced on August 10 between MidlandHR and Swan Housing Group. Under this contract, Swan Housing will internally host MidlandHR’s iTrent software – which provides a single platform for HR, payroll, talent management and workforce planning. Swan Housing will simply provide the payroll data via iTrent, and MidlandHR will do everything else, from the structuring of pay and deduction calculations, through to payslip printing and distribution. The advantage of these hybrid-type contracts? Economies of SaaS scale coupled with outsourcing of processes for which internal resources and/or knowledge may be lacking.

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall