Archive for the ‘public sector HRO’ category

From Public to Private – RPO Can Help – Part 1

May 20, 2011

According to data from the Office for National Statistics in the U.K., in 2010, public sector employment fell by 132,000 jobs with local government accounting for the largest proportion at 66,000.  In Q4 2010 alone, 45,000 public sector jobs were lost, including 24,000 in local government, 9,000 in central government, and 8,000 in Civil Service.

It is estimated that an additional 330,000 jobs will be lost in the public sector over the next four years.  While this is, of course, not good news, especially for those workers directly impacted, employment in the private sector increased by 77,000 jobs in Q4 2010.  Thus, the article last week by Hays is timely in that more needs to be done to support workers who are transitioning from the public sector to the private sector.

Hays and the London Chamber of Commerce and Industry (LCCI) partnered to publish a report called “The challenges of transition: from public to private.” Public and private sector employers were interviewed and in the report the LCCI and Hays identified six important steps to ensure successful transition including:

  1. Encourage better understanding – Coaching, mentoring, and peer-support schemes for public sector workers prior to, during, and after transition to the private sector should be encouraged. These would increase the retention of new employees and also enable the private sector to identify the skills available in the public sector.
  2. Incentivize the private sector – The government should subsidize recruitment and training costs for private sector employers who hire public sector employees. One option would be to adapt the Redundancy Action Scheme in Wales, which gives employers a contribution to salaries and training if they hire someone who has been made redundant.
  3. Identify regional skill gaps – Local enterprise partnerships and recruiters should work with trade associations and professional membership bodies to identify the skill shortages that will be created by future job vacancies and look at how former public employees can fill those gaps.
  4. Review on-boarding procedures – Private sector employers should review their onboarding (induction programs for new employees) in anticipation of recruiting people from the public sector to ensure successful transitions.
  5. Enhance existing support programs – Public sector employers should be more proactive in their support for workers facing the prospect of redundancy with practical job-seeking and career planning programs specifically designed to equip them for the private sector.
  6. Promote self-reliance and resourcefulness – Public sector workers should be encouraged to work with recruiting experts who understand both the private and public sector and can provide free advice on CVs, job applications, and interviews.

Public sector employees have many skills that are needed in the private sector.  However, to shift such a large proportion of workers will require specialist help.  That is where RPO providers come in. Although the loss of jobs in the public sector is more of a current U.K. phenomenon, RPO providers can help in several ways in all regions.  In NelsonHall’s recently published RPO market analysis report, the following trends are occurring:

  • Clients are seeking vendors that can help with their talent strategy and workforce planning. For example, vendors such as Hays provide workforce planning as part of their service offering and have seen an increase in the use of this service during the economic recovery.  Other vendors in the U.K. providing this are Ochre House in its contract with SAS and Carlisle Managed Solutions in its contract with Luton Borough Council.  In the U.S., Adecco’s recent RPO contract with SI includes employment branding, research, and talent market mapping.
  • Clients are looking for vendors that can provide consulting services around workforce planning, such as Fosters did in its contract with Futurestep, which includes hiring for positions in the U.K.  Part of the vendor selection criteria included the ability to provide value-added services beyond recruitment, including workforce planning.

But, there’s more to the story than just identifying skill gaps.  Take the weekend to think about it and we’ll pick this up again.

To be continued.

Gary Bragar, Lead HRO 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

The Public Sector – an HRO Opportunity, One Way or the Other

January 12, 2010

The public sector is a dual factor in HRO. The first factor is government’s role in legislation and regulations that impact commercial sector client needs. The greater the uncertainty, changes and compliance focuses, the greater the opportunity for HRO providers to emphasize their subject matter expertise and risk mitigation partnership capabilities as added value incentives beyond the traditional cost savings and administration benefits.

The second is that the public sector is a major market for services for those providers with the stamina and fortitude to persevere in the long wave sales cycle public arena, the skin thick enough to survive the public commentary of creating change in organizations with often polarizing interest groups, and the management and technology wizardry to make margins at the same time as operating under more restrictions than with commercial clients.

The January 2010 NelsonHall BPO Index showed that 2009 global public sector BPO awards outpaced the private sector, led by Europe where government BPO spend was a whopping 74 percent of total contract value.

We can see the impact on HRO with some examples of 2009 public sector awards and renewals:

• RPO ended 2009 on an up note with Manpower being awarded a $200 million contract by the Australian Defence Force, as well as public sector RPO awards won by Carlisle Managed Solutions in the U.K. and Kelly Government Solutions in the U.S.

• CSS, General Physics and Raytheon each won major new and renewal military and defense learning contracts

• Health and welfare did very well, with Ceridian being awarded a $477 million contract for additional Military OneSource services and with Hewitt winning a flexible benefits contract by the State of Georgia

• European municipalities awarded contracts and renewals for Pensions, Payroll and HR administration services that included Logica in Sweden, KMD in Denmark, and Capita Hartshead and Mouchel in the U.K.

• Convergys stayed the course and received a two-year renewal by the Texas Health and Human Services Commission and a five-year and $185 million extension by the State of Florida

Jamie Liddell points out in his Shared Services & Outsourcing Network (SSON) article on Public Sector Outsourcing After the Recession that economic pressures are continuing to grow on revenue-strapped public sector organizations in the U.S. and Europe, driving increased interest in outsourcing options. Jamie says that, “the U.K. is widely viewed as a ‘world leader’ in public sector outsourcing,” and that outsourcing already accounts for about thirteen percent of government spending. The U.S. has not yet seen a similar surge in outsourcing, but economic pressures will encourage both public sector agencies and HRO providers to address and overcome barriers to increased outsourcing. As we see from the U.S. awards in a down year like 2009, it can be done and we will see more in 2010.

There is no way around it. The public sector will continue to be a major opportunity in 2010, both as a regulatory driver and as a major HRO buyer.

Linda Merritt, Research Director, HRO, NelsonHall