Archive for the ‘offshore hro’ category

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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Insourcing American Jobs – The Risk and Opportunity for HRO

January 19, 2012

Offshoring is once again under the harsh glare of the polarized political spotlight in a presidential election year. As my NelsonHall HRO colleague Gary Bragar commented in his blog, President Obama is increasing focus on job creation including encouraging employers to insource jobs back to the U.S. This may cast a shadow of negative publicity on outsourcing that includes offshoring, but I predict the issue poses only minimal direct threat to HRO. In fact, I see increased opportunity for savvy HRO service leaders.

In listening to the President’s remarks and reading the insourcing and investment fact sheet issued by the White House, it is clear that manufacturing jobs are the primary target.

The U.S. lost millions of manufacturing jobs and in some cases almost entire industries, as companies pursued ways to remain competitive with lower-priced global competitors. Lower wages and benefits were a key part of the equation, but there were other factors including regulations, taxation policies, and the low cost of transportation in what was still a bountiful world of low-cost oil.

Offshoring dynamics are changing, especially for manufacturing. The time delay inherent in moving products around the world now creates challenges in meeting the rapidly changing market preferences and shortened product lifecycles of a connected world. With increased competition for limited energy supplies from the emerging economies, the cost of transportation has become a significant factor. Add in moderately decreasing wage gaps and we can see why companies will be able to insource some jobs. Others will be able to create more jobs in the U.S., much like Honda, Toyota, and Mercedes Benz have been doing for years.

HRO as an industry is already a blend of onshore, nearshore, and offshore technologies and workforces. A mix of right-shoring talent and technology helps vendors meet client needs for cost, service, and value. With time and transportation being minor factors in HRO or other BPO, talent remains a primary driver.

Access to pools of affordable skilled talent is an increasingly important element in the growth of all businesses, whether small or large, local or multinational. Who has access to comprehensive data on workforces around the world including costs, turnover, and availability? Who can see trends emerging on skilled labor capabilities and capacity shortages? Who has direct experience in building and maintaining global workforces both for clients and for themselves? HRO service providers!

Think about it, in our HRO community are the likes of Accenture and IBM, growing globalists like ADP and NorthgateArinso, modern tech heavyweights like Infosys and TCS, global research and analysis specialists like Aon Hewitt and Mercer, and RPO leaders such as Alexander Mann, Hays, and Manpower, we even have learning leaders that can handle rocket science like Raytheon RPS.

We need to have a large enough vision for what we can become as an HRO community. There is so much already that we can leverage. Be confident in our value and let our light shine bright!

Linda Merritt, Research Analyst, HRO, NelsonHall

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HRO Staffing – A Balancing Act

March 30, 2011

Fast and flexible scaling is one of the major benefits of HRO. Scaling up is a lot more fun than scaling down, but both are important, take time, and consume resources. One of the toughest challenges in HRO is maintaining staffing and margins at the same time through the ups and downs of client demand and the overall economy.

Recent times required painful and expensive downscaling as HRO client demand and employment levels dropped, reducing volumes and overall spend. Significant expenses were allocated for staff severance and consolidation of real estate. Even in periods of growth, merger and acquisition “savings” targets are based largely on staff downsizing to reduce overlap, followed by real estate consolidation. Whether a service provider is growing organically or via acquisition, or responding to reduced demand, maintaining appropriate staffing capability, capacity, and expense is critical.

HRO is slowly recovering with RPO leading the way while some areas are still waiting for their upturn including learning and MPHRO. New deals are occurring, renewals are going well, and existing clients are once again increasing scale and scope, at least at a modest level. All good and welcome news!

HRO service providers are confident enough to prepare for a return to growth and make select expansions. At the same time, they know they need to add client load with a minimum of new hiring as pricing pressure is still intense. And this is not even mentioning the need for maintaining an experienced and qualified staff to satisfy client employees and other end-users in the ever changing world of HR.

On the upside, clients are growing in sophistication and understanding of HR outsourcing options. While onshore delivery still leads, especially for voice, acceptance of offshoring has reached the expectation that HRO vendors should offer multi-shore delivery options. Nearshore options and the use of non-voice channels like chat allow leveraging more work to selected centers, increasing the need for and the value of a truly global service delivery network.

Recent HRO service provider expansions include:

  • TriNet – Added three new U.S. offices
  • CPH – Opened a new office in Sydney
  • Futurestep – Added a global recruitment operations center in Houston
  • NorthgateArinso – Invested in a new global HR delivery center in Hyderabad, India; opened offices in Russia, the Czech Republic, and Istanbul; partnering with ICAP Group in Greece
  • Edvantage Group – New e-learning production center in Denmark.

Expanding the coverage of service locations helps avoid the war for talent and damaging attrition rates in the hottest spots as well as providing increased options for clients.

Buyers, do more than look for an SLA on turnover. Ask about the vendor’s current and future plans for managing staffing and service flexible coverage. Does your service provider show that they are at least as, or more, sophisticated as you are in workforce planning and management? They should be.

Linda Merritt, Research Director, HRO, NelsonHall

“The American” is Not an American HRO Story

September 7, 2010

This weekend I saw the George Clooney movie, “The American.” I was not too sure what it was about, but then, it starred George Clooney. Title aside, I knew within the first few minutes it was not an American movie, or an American story. It takes more than speaking in English to tell an American story, and to provide culturally compatible HRO employee care call center support.

It is not that the movie was poorly made or the story poorly told, it just was not American. Nor was it an action movie. It was moody and slow, seemed to start in the middle and then little happened, little was said, and even less was explained. And the end, well, the less said the better. 

The experience reminded me of another movie, “The Devil’s Own,” with Brad Pitt and Harrison Ford (1997.) Brad Pitt is in the U.S. and brings his Irish “troubles” with him. He tells Ford, “Don’t look for a happy ending. It’s not an American story. It’s an Irish one.” Once again, same language, but with different cultural expectations.

For a movie that is quintessentially American, see the original “The Karate Kid,” (1984) starring Ralph Macchio and Pat Morita. For many years it has been a shared cultural referent; “wax on, wax off.” Movies, television and music are great sources of cultural touch points for any modern culture, and especially so for Americans. By the way, The Karate Kid also reflects the American cultural imprint for quality, which is a bit different from the Japanese or Australian imprints. (Seriously, there were studies.)

All of this is not to say that HRO employee care cannot be provided from outside of any one country to another. HRO care can, and is, being provided from a growing list of locations around the globe. Still, most voice-based employee support remains onshore, followed by nearshore delivery. Cultural understanding is one of many elements that impacts successful call center support. It is less important for basic transactional questions and answers. But as the service moves more into consultative areas that require interpretation, tone and manner become just about as important as important as technically correct answers.

I look forward to seeing how live chat will impact multi-shored employee care support. With chat, the use of pre-scripted stock phrases will not be judged on tone and manner, and chat is expected to be more focused on direct and brief exchanges.

HRO buyers and providers, help build the cultural bridge for farshore employee care center staff.  One simple example; share information on major current events, holidays and client-specific business news. And remember, during times of great stress and uncertainty voice calls will increase, even when other modes would be more efficient. No matter the country, company or culture, we all need and want helpful and understanding human contact.

Linda Merritt, Research Director, HRO, NelsonHall

The Next Shore for HRO – Finding Cultural Compatibility

September 1, 2010

HRO clients have become more open to multishoring to gain cost, scalability and flexibility advantages. And as the major HRO vendors have globalized their service delivery capabilities, some portion of the work is increasingly likely to be done offshore in order for their clients to benefit from optimized services. 

Voice services have been the most challenging area to find culturally compatible locations with a scalable English speaking talent base. According to the new NelsonHall market research report, “BPO Delivery from the Philippines,” the Philippines is a growing location for both voice-based and back-office BPO services, with more than 386,000 personnel across a growing number of service providers. The largest segment by far is customer management services for the U.S., with F&A, especially order to cash outsourcing, as the next largest.  Major BPO vendors, including Convergys, IBM, Infosys, Logica, NorthgateArinso and Wipro, are already there.

HRO services are there as well. HRO is a small, but growing, portion of the service base in the Philippines. The top HRO services supported are employee care and payroll.  With HRO service providers using sophisticated workflow technology and processes, portions of service lines can be handled from just about any location. In the Philippines, initial screenings for RPO, and enrollment and inquiries for learning BPO are supported, as are employee data management, benefits administration and mobility services.

Right now services from the Philippines are highly centered on the U.S., followed by Canada and the U.K. Future growth is expected from English-speaking Asia Pacific countries like Australia and New Zealand. In addition to organic growth for the services already located there, healthcare from both the payer and provider sides is seen as a good opportunity for expanded services.

Latin America is also growing as a BPO region. I recently spoke with country representatives from Chile and Jamaica, and both countries would like to add HRO to the other BPO service lines already migrating to Latin America as it grows as a near shore region and as its own market.

The HRO community can look forward to a wide range of shoring options and cost points. The HRO back-office location will increasingly be by vendor choice, and less and less visible to clients. HRO voice services will remain a client decision to balance cultural compatibility, scalability, flexibility and cost.

Linda Merritt, HRO Research Director, NelsonHall

Cautious HRO Optimism from HR Week in New York City

April 14, 2010

Contrary to my headline, I should say cautious optimism from the New York Hilton as I did not actually attend the conference yesterday. This the first year there was no HRO World component to the event. But the HR Executive Forum agenda included some top HR leaders and senior HRO vendor executives, and the HR Expo for exhibitors was there so it was still a pretty good place to meet with others in the HRO community. My colleague Gary Bragar and I were all over the Hilton for planned meetings, and it was fun waving at others we knew on our way to meetings in the lobby bar, the side bar, the café, the Starbucks, and in conference rooms and suites.

Signs of the still-not-quite-here recovery were pretty abundant. One vendor did have a hotel room in which to meet, and another big name vendor did have an actual conference room and refreshments; coffee, tea and cookies. That was as lavish as it got.

On the more positive side, we had a number of meetings with RPO vendors, and they are experiencing something of an upturn. A few companies are establishing contractual relationships with RPOs to be ready for greater hiring volumes without rebuilding internal recruiting staffs. And it isn’t just the U.S. getting ready to return to hiring. One RPO vendor showed us a list of new first quarter 2010 clients in China, India, France and Mexico. Congratulations.

One of the running themes was choices for clients. There are more entry points into HRO than ever. Want support for your on premises ERP? You got it. Want to move to a hosted or SaaS ERP? It’s there. Plan to blend the two options? Go right ahead. Want full BPO for a set of core services and basic system functionality for your HR staff to use in other areas? No problem. Have a couple of long standing vendors you want to incorporate? It’s done. Onshore, nearshore, offshore or multishore, you can get it your way.

However, all this choice comes with a price for buyers, literally and figuratively.  It is easier to navigate choice when you are working within a long-term plan for your HR service delivery needs. So be sure the choices you make today will not limit your options for tomorrow.

Are today’s HRO vendors really excited about signing limited deals that only cover a portion of your entire service delivery system? Well, pretty much yes. In this not-quite-yet-a-recovery period, business is business.  But over time, your HRO vendor partners will each be hoping you will expand the relationship and win more of your business.  Make sure your selected providers – especially the primary HRO vendor for your HRIS system, and data and foundational employee and manager services – have the current and future planned capabilities and capacities to be your partner in what will ultimately be HR transformation.

But, a word of caution. I did hear there are some buyers still shopping for rock bottom prices. A smaller competitively priced deal? Yes, those are out there. Buying for price only, and assuming a vendor will take a loss to win your business, is a lose-lose proposition. From what I heard yesterday, the major players have learned that lesson.

Overall, the general mood was one of cautious optimism. A couple of vendors said they have signed some nice sized deals, and announcements should be released soon. Good news is always welcome, and we look forward to covering the news in our NelsonHall Tracking Service!

Linda Merritt, Research Director, HRO, NelsonHall