Archive for the ‘outsourced learning’ category

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

October 5, 2010

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

Don’t Rain on My HRO Parade

September 21, 2010

The HRO community deserves a break, and the latest NelsonHall HR Outsourcing Confidence Index is here to deliver with lots of good news. Strike up the band and let’s have a virtual HRO parade!

To gauge HRO confidence, we use a scale in which 100 equals no change and 200 means all participants are highly confident. Compared to the dearth of optimism at 115 in Q2 2009, the 3Q 2010 HRO Confidence Index is at a high of 168. HRO vendors stating they are much more confident in their HR outsourcing business increased from a dismal 10 percent to a buoyant 41 percent.

We have been reporting for some time that pipelines are filling and looking better, and that continues. And yet, providers’ financial results have not yet shown a logjam break in frozen decision-making and willingness to commit in many HRO service lines.

On the other hand, this quarter we finally see an upswing in contract value growth. In fact, we have a triple play of good news underway! HRO service providers are reporting increases in:

  1. New contract activity
  2. Scope expansion with existing clients
  3. Volume in existing contracts

New contract activity is now outpacing increasing scope with existing clients. New deals signed, given the lag time before revenues flow, will take a while to show up in results. Volumes beginning to pick-up with existing clients will show up sooner in results, especially if vendors can gear up to increasing activity levels quickly and efficiently.

RPO and payroll continue to lead the parade to revenue growth recovery, with multi-process HRO also improving. While learning has been slow, its current 3.5 ranking in NelsonHall’s 3Q 2010 HRO Confidence Index indicates a much brighter outlook as compared to its score of 2.8 in Q4 2009.(Note that we use a scale of 1 – 5, with 5 being a strong increase.) 

Benefits administration outsourcing revenue growth expectations have been stable for several quarters around 3.5, but the outlook for pipeline growth is lower for benefits administration outsourcing than other HRO areas. Expected increases in health and welfare consulting should lead longer term to opportunities, but vendors are not seeing it yet. There may be short term distraction caused by the spate of mergers and alliances this year. ADP recently reported the successful acquisition of Workscape, now an ADP company, and Aon announced the leadership slate for the soon to be Aon Hewitt team.

Global delivery remains a factor in HRO growth in two ways. First, multi-country contracts, at 34 percent of deals, continue as organizations seek to standardize payroll and other HR processes. Also, acceptance of multi-shoring HRO continues. Onshore HRO delivery is still in the lead at 71 percent, but nearshore and offshore delivery are now 29 percent of HRO contract values.

People have parades for many reasons including celebration, commemoration and optimism. Our virtual parade is for optimism with a tad of celebration thrown in. Let’s save the full celebration parade for when the earnings results match the current high level of optimism.  Hmm, when and where do you think we should have a real HRO community parade?

Linda Merritt, Research Director, HRO, NelsonHall

Learning 2.0 Portals – From Buzz to Abundant Value to Increasing Innovation

September 16, 2010

In blogs earlier this year, I wrote about “The Buzz About Learning 2.0 Portals” and “The Abundant Value of Learning 2.0 Portals.” We’re now seeing providers building increasingly innovative components and capabilities into their learning portals, which can exponentially increase their value and usage.

For example, just yesterday Expertus announced it was recently awarded a virtual instructor-led training (ILT) contract by a large global software provider. Expertus will develop a virtual ILT program to train the client’s sales force on new products, and to educate technical sales architects. Delivered over the ExpertusOne social learning platform, components of the program include hosted live events around the world, live chat with international subject matter experts, hands-on labs, virtual classrooms, online proctors and technical support. And the client’s anticipated cost savings – through elimination of worldwide travel and events expenses – is up to $5 million. While these types of portals of course require a financial investment, such potential hefty cost savings provide justification.

Other examples:

• OCLC, a nonprofit, membership-based computer library service and research organization needed to bring together library staff and organizations around the world, and provide a venue that would allow them to engage in discussions, participate in groups, share content and engage in collaborative learning development. The solution it selected was Plateau’s Talent Gateway platform, which integrates social tools, content management, Plateau learning management, customer management and virtual meeting spaces. It’s enabling OCLC members to connect with colleagues across the library community using social tools, create custom content, join in conversations, create ad-hoc communities and learn relevant skills.

• Liberty Mutual is using Cornerstone OnDemand’s Cornerstone Connect to facilitate informal learning as part of the company’s front line management training program. Participants take part in an in-person, weeklong program, supported by supplemental online courses via Cornerstone’s learning management system. Using Cornerstone Connect, Liberty Mutual’s team has created a management community to maximize and extend the benefits of the training program. Components of the Cornerstone Connect platform include rich user profiles, status updates, live feed views, communities of practice, discussion boards, blogs, wikis, podcasts, rating and sharing of content, knowledge management, tag clouds and RSS feeds.

One of the common, and critical, capabilities across all these platforms – as well as those already offered or under development by other providers – is engagement. In an isolated e-learning environment, it’s all too easy for the mind to wander (“Did I remember to send that memo?” “Hum, I wonder if there’s any cake in the break room?”) and equally challenging to feel a sense of connection (“Is anyone else unclear about that point the instructor just made?” “Who can I ask, other than my boss?”) Social media capabilities such as discussion boards and live chats with peers and subject matter experts can significantly enhance engagement in, and the resulting value of, e-learning.

Expect to see an increase in uptake of Learning 2.0 portals that enable engagement via social media capabilities. The rapid deployment, learning enhancement and cost savings value prop is über compelling.

Gary Bragar, Lead HRO Analyst, NelsonHall

Employee Satisfaction is Tanking…Can HRO Help?

August 26, 2010

Per the results of the most recent Spherion Staffing Services Snapshot survey, released yesterday, employee satisfaction in the U.S. is bleak. In fact, the subhead of the press release stated only five percent of those surveyed – a sample of 896 full-time and part-time working adults aged 20 and older – enjoy what they’re doing and wouldn’t consider another job. More sobering survey stats:

• 62 percent feel less secure about their job compared to a year ago

• 56 percent did not take a vacation in the past year, and of the 44 percent who did, one-third indicated they did not completely disconnect from their job responsibilities

• 30 percent worked from home the last time they called in sick

• 57 percent said their company does not help/support their effort to have a good work/life balance

• 95 percent would consider looking for a new job in the future or are actively looking, regardless of whether or not they enjoy their job

• 53 percent have had to assume additional responsibilities or workload during the recession due to co-worker layoffs, and 93 percent of those who had to assume additional responsibilities did not receive additional compensation

• 57 percent who have taken on additional responsibilities feel burdened and overworked, and another 53 percent said their job or workload affects their health in a negative manner

With this, borrowing the famous and oh-so understated line, “Houston, we have a problem” from the movie Apollo 13, seems appropriate. In this case, “Houston” is employers, senior managers and first line supervisors. And the problem – as I’ve written about and as we all know – is that lacking an engaged, committed, compensated, rewarded, respected and energized workforce, morale decreases, productivity plummets and highly talented employees jump ship. This is all too obviously a losing proposition for companies.

So what should employers do, and how can outsourcing help? While there are many process areas to cite, I’ll touch on just two here.

First, I’m currently working on a learning BPO study, and was pleased to hear from several companies I’ve interviewed thus far that they are providing performance management training to managers and senior leaders to develop, reward and retain employees.

Second, the results of a Mercer study released yesterday found that 30 percent of the respondents – headquarters representatives of 114 multinational organizations from a wide range of industries – are increasing employee involvement in design of their organizations’ benefits plans. It’s a big move in the right direction – even though only 30 percent of respondents are currently doing so – to include employees in benefits-related decisions and options, whether for health insurance, health-related assistance options, defined benefits plans, defined contribution plans, etc.

Benefits outsourcing providers are not only able to help senior leaders determine the most advantageous benefits plans for their company and their employees, with eyes on both cost-effective options and employee retention, but also evaluate and administer the decided-upon plans.

My call to senior HR executives? Don’t wait…engage your employees! And if you’re outsourcing or considering doing so, engage your provider in helping make the right decisions for your employees. I still believe that employee satisfaction = customer satisfaction = profitability.

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

Online Chat Usage Increasing in HR Outsourcing

August 12, 2010

Picture this: You need to ask your bank a question. After navigating through its website unable to find the needed information and then trying to determine what you think is the correct toll-free phone number to dial, the fear sets in. Will I get lost forever in an IVR queue? Will I be on hold for an interminable period of time? Will I finally reach a live person only to be transferred and put on hold…again and again? We’ve all faced this, and it’s not pretty. But recently, after spending way too much time searching for the information I needed from my bank, I had a great experience getting an actual answer – yes, it’s true! – via its live online chat feature. After I clicked the button, the online agent greeted me in less than a minute, and within three minutes I had the information I needed, including follow up questions I had.

Granted, a key component of HRO providers’ core expertise is top-notch customer service via both websites and call centers. But what if there was another, alternative method for gaining desired information? Enter a Mercer news release issued earlier this week which carried the headline, “Mercer reports significant increase in online chat usage.” The announcement stated that use of its online chat capabilities has increased 55 percent since it piloted the offering with two clients in the beginning of 2009. 11 clients are now making the service available to their employees, and a number of clients plan to roll out the capability later this year. And usage by employees of the two pilot clients has upticked by 48 percent and 10 percent, respectively, in usage volume between 1H09 and 1H10.

Such a large increase in number of online chat sessions clearly indicates desire and demand for this type of communication – whether it be for questions on defined contribution plans, defined benefits plans or virtually any outsourced HR process. One of the reasons we’re seeing this surge is that live chat marries online ease and personal touch.

My advice to HRO providers considering adding live chat capabilities to their offerings portfolios – and I know of several that are currently evaluating the possibility – is that customer support must be absolutely world-class, employee satisfaction-focused. Within seconds responses, kept-to promises of when the answer will be delivered to the employee if it’s not immediately available, highly knowledgeable and skilled reps – not only in policies and programs, but also in quelling concerns…all of these are critical to ensuring the success of online chat. Fail in any of these areas and you’ll not only have an unsuccessful offering, you’ll have those who experienced a poor interaction blogging and tweeting about it. They will…you can be certain of it. These are tech-comfortable individuals who will have no qualms – or technological challenges – in doing so. Be prepared, start with a pilot, learn from the pilot and you may have a winning service offering for you, your clients and their employees.

Care to share your online chat experience?

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

SaaS-based HRO is More than Catching On

July 7, 2010

The current economic environment is increasingly leading buy-side organizations to up-step their usage of SaaS-based, vendor-hosted applications to underpin outsourced HR services, with the adoption of new HR technology becoming an important enabler of improved HR process cost-effectiveness. NelsonHall’s recently published HRO buyer report, “HR Issues and Outsourcing Intentions,” found that 72 percent of the HR executives who participated in the study cited increased likelihood of using SaaS applications for new outsourced services. And HRO service providers responding to NelsonHall’s 1Q10 HRO Confidence survey cited that 44 percent of client prospects are seriously considering platform-based HRO. Gasp! Can you recall the last time buyers’ anticipated uptake of – well, name it – outpaced the providers’ predictions?

To properly frame HR departments’ increased utilization or consideration of SaaS, it’s important to remember HR is typically the process area in which there is greatest organizational acceptance of use of vendor technology, driven by the traditional low priority given to HR in terms of HR investment. But this historically minimal investment is exactly the point – and much of the upside – to leveraging SaaS-based HR applications. Buyers don’t need to make a capital investment in, but have access to, the most up-to-date technology without worrying about upgrades. Add to the benefits mix the elimination of multiple – and oftentimes outdated – HR and payroll systems many medium and large companies around the world still have in force, with the resulting reduced redundancy and further savings costs.

The services provided using hosted HR applications are these days largely singular in nature. For example, the HRO services enabled by supplier-hosted SAP human capital management (HCM) services are typically restricted to payroll services and employee care. There is also an increase in the use of supplier-hosted applications that support single services including learning, recruitment process outsourcing (RPO), and HR administration. For example, earlier this year MidlandHR was awarded an HR and payroll software contract by Kent County Council utilizing its iTrent software to provide several modules including learning and recruitment. And NorthgateArinso was awarded a six year contract for payroll and employee administration software by Garlands Call Centres. NorthgateArinso’s ResourceLink Aurora system will be used to support administartion of employees’ personal details and employment records, process hires and leavers, and run the payroll process for 1,500 employees.

Based on contracts I’ve seen and research I’ve conducted, I believe we will continue to see an increasingly high number of platform- and SaaS-based contracts, particularly in the mid-market. There will also be more platform- and SaaS-based HRO contracts in the large market, but they will be supported by more comprehensive BPO in terms of outsourcing of people (e.g., recruiters in BPO) in addition to technology to perform service delivery, as buyers look to maximize quality in delivery of services and further reduce headcount and costs. 

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

NelsonHall HRO Confidence Index finds Banking, Healthcare, Pharma and Manufacturing Industries to Experience Strongest Growth

June 17, 2010

My blog last week focused on geographical HRO growth per the findings of NelsonHall’s most recent HRO Confidence Index. Today, the focus is growth by industry sector. When asked about expected changes in 2010 HRO revenues by industry sector, year-on-year relative to 2009, the HRO providers that participated in our most recent Index responded similarly to the prior quarter, with strong growth continuing to be expected in the banking (3.9 on a 1 – 5 scale), healthcare, pharmaceutical and manufacturing (all 3.8 on a 1 – 5 scale) industries.

On the opposite end of the spectrum, expectations from the state and local government sectors declined during the quarter. Addressing this drop first (always nice to end on a more upbeat note!), although a few state and local government contract renewals and new wins created some optimism in the second half of 2009, frozen decision making remains as many states struggle to pass budgets. State and local government HRO contracts are few and far between, and have an extremely long sales cycle. In today’s environment, as jobs are hard to come by and the recovery is taking longer than most of us thought or hoped, state talk of outsourcing, even without job reduction, will be hard to pass muster.

Now on to the positive. Supporting high growth in the pharmaceutical industry, RPO provider The RightThing issued a press release on June 1, 2010 stating that as hiring freezes across the U.S. begin to lift, there has been a major trend in pharmaceutical client hiring as organizations begin to rebuild their employee base. Over the last four months, The RightThing has assisted in major expansions (to the tune of 2,300 total positions) with five North American pharmaceutical companies including Boehringer Ingelheim.

And the NelsonHall contract database provides evidence of HRO’s growth in the banking and manufacturing industries. A hefty number of the most recently signed HRO contracts include Xafinity with BAE (pension administration), Kenexa with MphasiS (a 360-degree survey program), Xchanging with Insyte (multi-process HRO), Alexander Mann with Premier Foods (contingent workforce), Liberata with the U.K. Ministry of Justice (a portion of which is for payroll outsourcing), Hewitt with International Paper (multi-process HRO) and Manpower with Techcombank (RPO and staffing).

The continued growth in the banking industry is due to a number of factors. Hit exceptionally hard by the recession with downsizing in HR departments/across the board and in a current state of reorganization, banks are now trying to be more efficient and, in doing so, no longer want to assume the risk of investing in technology and HR staffs when they may be required to downsize again. And there are common roots to continued growth in the healthcare, pharma and manufacturing industries. In addition to reducing risk and becoming more efficient (obviously requisites for any private or public sector organization), it’s also about being able to quickly scale up and down. For example, if the U.S. Food and Drug Administration approves a new drug to prevent or cure a life threatening disease, manufacturers will need to rapidly hire staff to meet demand. Swift hiring of large numbers of employees, which has implications for payroll, benefits and learning, is often difficult for a company to do internally. HRO providers with much more abundant resources can more quickly deploy resources to meet this new demand.

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall