Archive for the ‘offshore providers’ category

HRO SaaS for the Small Business Employer

May 3, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

SaaS systems for HR administration and payroll have opened up the small business market to the benefits of web-based HR systems with self-service and easier implementations. The rapid uptake by clients is testimony that a ‘sweet spot’ has been reached in cost, ease and value.

MoorepayHR

I followed up with Anne Fitzpatrick, Moorepay managing director, for an update on how MoorepayHR, a cloud-based SaaS payroll and HR administration platform with BPO services, is doing one year after its launch in the U.K. small business market.

Moorepay, a NorthgateArinso (NGA) subsidiary, is already “large” in the U.K. small business market with >10,000 clients. However, past success does not guarantee future success. The company saw the need for an integrated HR and payroll platform and wanted to achieve this in its own way by combining new technology with its existing BPO managed payroll and HR services, including on-hand subject-matter experts for guidance on employee issues, into a business process as a service (BPaaS) service.

At first there was some concern if the market was ready for a SaaS multitenant cloud service. Moorepay quickly found that buyers understand the cloud based on their own experiences as consumers and were actually eager for the new service. By the end of April, MoorepayHR had signed its 1,000th customer, and this week the entire company is holding a company-wide celebration!

The client base is 80% new and 20% from existing clients.57% of clients add on payroll, and even more select one or more of the BPO options, led by compliance support for employment law and health and safety advisory.

Moorepay will be adding more offerings to the system, including a newly-released ‘lite’ version. Next for the company is the rolling-out of an advanced version that adds functionality for recruiting, performance management and learning. Targeted at businesses with up to 500 employees, MoorepayHR will be expanded to up to 1,000 employees in the near future.

RUN Powered by ADP

ADP first introduced its RUN system nationally in the U.S. in 2010 for the very small market (1-49 employees). More HR features and payroll functionality have been added to the SaaS cloud-based mobile platform on a regular basis. In addition to ease-of-use, RUN offers a 24×7 help desk with certified HR professionals and an online HR library. RUN added its 200,000th customer in April 2013.

Two Vendors, One Success Story

Both Moorepay and ADP understands that clients of any size have similar needs. As Anish Rajparia, president of ADP’s small business services division, commented: “Small business owners demand flexible tools and resources tailored for them to help manage the risks associated with running their business.”

There are already a variety of options in the market for the small business owner and I am sure we will see many more. One size never fits all, and I am pleased to see that this class of buyer now has HRO choice.

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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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The Places We Will Go to Grow HRO

November 12, 2009

The players in the multi-process HRO field have been changing. As we ready for economic recovery, will there be new entrants? Who is leaving? Who is for sale? And who is on the hunt for an acquisition?

As we have at least a few minutes before the recovery takes off, let’s have a little fun speculating.

Tidbits

I recently interviewed several of the new India-based HRO provider entrants. Each said that while they were not explicitly looking for acquisitions they would consider the “right opportunities.”

The United States remains the largest market for HRO, and there is more than one non-U.S. based player looking to grow business in the U.S.

The Economic Times reported this week that Infosys BPO CEO Amitabh Chaudhry talked to reporters on the sidelines of the World Economic Forum in New Delhi, India. While Infosys already has eight delivery centers around the globe, including in Mexico, it does not have one in the U.S. According to the press coverage, Infosys BPO is reportedly planning to set up a new delivery center in the U. S. before the end of this financial year. In addition, “Infosys also said it is eyeing acquisitions worth USD 50-200 million in areas where the company has a small presence. ‘The acquisitions will be funded through cash in areas we have a small presence,’ Chaudhry said.”

While the above reported comments are about Infosys’ broader BPO, it is a safe leap to assume the interest is there to further expand its HR business as well.

Is NorthgateArinso also looking to expand its share of business in the U.S.?  If the two most recent new experienced executive hires are any indication, the answer is yes.  In September, Trey Campbell was brought aboard as President of the Americas. And in October, Troy Workman joined as VP of Service Delivery in the Americas.  

Trends

We have been seeing acquisitions and partnerships to fill out service and coverage footprints to provide expanded services to multi-national companies, and that activity will continue.

Growth into emerging markets is regularly predicted and will happen in due time.

Given the anticipation of a slower recovery in Europe, combined with its less mature HRO market, it is not likely to lead the way in growth.

So the U.S. will remain a growth target magnet for HRO, in everything from applications to discrete processes to multi-process HRO.

Are you a small-to medium-size niche HRO provider with state-of-the-art technology, specialty services with deep subject matter expertise or coverage in a desirable geography? Be ready to answer the knock of opportunity.

And buyers, good news. There are providers who want to be where you are and where you are going, whether it is in North America or around the world.

Linda Merritt, Research Director, HRO, NelsonHall

Will Multi-Process HRO Survive, or Will the Baby Be Thrown Out With the Bath Water?

July 20, 2009

The large multi-process HRO (MPHRO) deals born in the last 10 years or so brought HRO to a new level of awareness and created something of a cottage industry to support it before anyone in the equation really knew what it was and what it could really do. The first few service providers and buyers begat advisors to guide buyers, lawyers to write deals, analysts to research and comment on the emerging market, and HR-specific and more mainstream media to cover the phenomenon. Dedicated magazines and professional associations like HRO Today, HRO Europe and the HR Outsourcing Association quickly formed, and conference promoters and general HR consultancies swarmed.

It all looked so much like fun at first. One-stop HR shopping with almost every HR services you could name from one end-to-end provider, wow! (One hand to shake, or one throat to choke, take your pick. And yes, newbies, that language was actually used.) Anchor client HR operations lifted and shifted with rebadged employees, and systems and processes moved to the new providers with plans to become the foundation for multi-client services. Marketing promos promising 20, 30 and even 40 percent or more in savings were pitched by sales teams to HR and C-suite executives. HR RFPs were big and vendor responses were bold. Vendor and buyer due diligence assessments? Not so much. Either parties tests for customer readiness? Non-existent. 

What Went Wrong – The Short Story

Then we all found out it was much harder than it looked. Take just two elements out of a very complex market dynamic. Transitions were longer, more complex and costly than embedded in the deal structures – something that would come back and haunt both service providers and buyers in the coming years. Transforming anchor clients or pre-existing technology platforms and processes into global multi-client capabilities with room for buyer discounts and customer satisfaction, while still leaving a reasonable profit margin, also turned out to be more problematic than anticipated.

In the meantime, the single process HRO field did not intend to be displaced or subsumed behind MPHRO vendors. Some joined the fray as new MPHRO vendors. Others dug in to defend, expand and promote their HR specialty point solution services in areas including benefits, payroll and learning. Today there are more standalone HRO options than ever. The struggles in MPHRO with some high-value, but complex, services even likely fueled the growth and expansion of services like RPO.

Will Multi-Process HRO Survive?

Yes, MPHRO is changing, but it is not about to go away any time soon. Granted a few deals did not survive, and some others have been less than 100 percent successful for either buyers or providers. Still, this a multi-billion dollar market segment with millions of employees served worldwide. MPHRO works for most buyers across many service lines, and many major contracts have already been updated, extended or renewed, although with little of the early fanfare.

Shakeouts are to be expected in any new market, perhaps even more so in a down economy.  Some are playing in the field of mergers and acquisitions, like ExcellerateHRO going to HP. Others, such as Hewitt and Fidelity, are choosing to refocus on core services. However, most of the major HRO providers like Accenture, Convergys and IBM are staying the course, and there are even still new entrants, including offshore providers such as Infosys and Wipro, ensuring the MPHRO marketplace will exist, continue to evolve and provide buyers with a wide range of competitive options.

A topical article in the June 2009 of HRO Today entitled, “In today’s changing market, who has the advantage: End-to end or point solution? Industry experts weigh in,” also sees room for both MPHRO and point solution options.

But exactly how is MPHRO changing and adapting today, and how does it plan to compete tomorrow? It is time to find out. My first major NelsonHall Market Analysis study, planned to be published in October, will be on MPHRO. The results will be very telling!

Linda Merritt, Research Director, HRO, NelsonHall

Infosys, Wipro, TCS and other Offshore Providers: How Strong an HRO Play Can They Make?

July 13, 2009

Against the backdrop of Infosys’ most recent quarter-end financials announcement – of which 6.1 percent of revenue was attributed to BPO, and five to 10 percent of that BPO revenue is estimated to have come from HRO – how viable can it and its Indian brethren be in the HRO space? Despite inherent challenges and both real and perceived buyer concerns about offshoring HR processes, offshore providers are making strong investments in and “upping the ante” of their HRO capabilities.

For example, Infosys within the last several months launched a new SaaS plus BPO platform offering which supports HR processes. And other Indian providers such as Wipro, Caliber Point, Secova, Modis and TCS are partnering, primarily with Oracle and SAP, for a technological BPO backbone which supports HRO processes, and then building more standardized BPO services around that technology.

Further, to address language and cultural barrier concerns of many buyers, India-based offshore providers are understandably touting their centers in locations such as Romania and Poland as HRO delivery sites.

Finally, price points are clearly lower in India and other low-cost locations such as the Philippines in which offshore providers have centers. In today’s economy, given that providers such as Hewitt and Convergys have been challenged to meet the cost-cutting requirements of their existing clients without themselves utilizing offshore resources, there are clearly some natural opportunities for offshore providers.

But the operative word above is “some” natural opportunities. Remember, there are many concrete and ostensible inhibitors to offshore HRO. So where are offshore providers making, and can they make, their play?

At least for the relative near-term, it’s in the low-cost transactional services and low- and mid-level analytics processes. For example:

•  In recruitment process outsourcing (RPO), CV/resume screening and, in some cases, candidate short-listing. But beyond these initial activities, most will require onshore hand-off

•  In learning business process outsourcing (LBPO), managing course scheduling and learner assistance around which courses are suitable, etc. But with language, cultural and proximity issues, the possibility of venue management, course development and learning delivery is null to void

•  In back-office processes, those which are non-voice-related, such as payroll reconciliations, accounting within pensions arrangements, fulfillment, etc., in benefits administration

•  In HRO analytics, low-end processes such as monthly and quarterly reporting on employees per business unit, geography or employee population diversity; cost per hire; hiring manager satisfaction; learner satisfaction and utilization rates for decision support tools. Mid-level analytics provided by offshore providers could include loyalty and attrition modeling

•  And of course the IT support around all of these HR processes

The bottom line is that offshore providers are viable contenders in the HRO space, but we believe buyers are still cautious about fully embracing offshore outsourcing, so are likely to engage only in the non-high-touch areas. If a buyer is seeking lower cost, transactional services, offshore HRO is certainly worth examining.

Helen Neale, Research Director, Human Resources Outsourcing, NelsonHall