Highlights and Trends in the HRO Market for H1 2013: Part 2

Amy L. Gurchensky, HRO Research Analyst, NelsonHall

Last week, I zeroed in on specific market activity within the payroll, learning and RPO service lines. This week, I’ll take a closer look at H1 2013 activity within benefits administration and MPHRO as well as provide some insights on what to expect in H2 2013 based on NelsonHall’s recent HRO Confidence Index.

Benefits Administration

Contract signings aside, there has been a plethora of activity within benefits administration in H1 2013, including:

• New offerings:
  • Mercer launched a private benefits exchange, Mercer Marketplace
  • Buck Consultants launched an automatic enrollment offering in the U.K.
  • Secova launched a Coordination of Benefits (COB) audit offering to coordinate benefits with insurance carriers
• Acquisitions: Wageworks acquired Crosby Benefit Systems and Benefit Concepts to strengthen its H&W administration offering, including reimbursement account and COBRA administration
• Partnerships:
  • Fidelity partnered with Extend Health, a Towers Watson company, to provide retiree healthcare services
  • JLT Employee Benefits partnered with Vielife for health and wellbeing services in the U.K.
• New technologies:
  • Xerox launched an account-based benefits portal, BenefitWallet, to assist with managing multiple health accounts on one platform, including HSAs, HRAs, FSAs, HIAs (health/wellness incentive accounts) and other specialized services
  • Aon Hewitt launched an absence management tool, 360 Absence Solutions, to help clients manage absence-related costs, compliance risks, the administrative burden and lost productivity
• Educational resources:
  • Mercer and ADP both launched websites to provide information on healthcare reform
  • Ceridian launched an auto-enrollment knowledge center in the U.K.

MPHRO

In recent years, the MPHRO market has been relatively quiet in terms of contract announcements and H1 2013 was no exception. However, my last MPHRO research study, published in February 2013, revealed that the market is very much alive with new wins and contract renewals from all the major vendors, including IBM and Accenture. In fact, IBM recently won a new seven-year, multi-country MPHRO contract, which was bundled with F&A outsourcing services. Other wins include ADP and Marriott Vacations Worldwide for core HR, payroll, time & labor management and talent management covering ~9.2k employees.

Many vendors have been focused on their strategies for expansion, including Aon Hewitt with its acquisition of OmniPoint Workday Services. Although still early, NelsonHall expects ADP to make inroads in LATAM with its MPHRO services since it added RPO capabilities in this region from its acquisition of The RightThing and now expands its payroll footprint from the Payroll S.A. acquisition.

H2 2013

So what does the rest of the year have in store? NelsonHall’s recent HRO Confidence Index survey finds that overall expectations for HRO revenue growth remain at the same level as those reported for the last five quarters; with payroll leading followed by RPO. Top industry sectors for HRO services include healthcare, pharmaceuticals and high-tech. By geography, vendors have reported increased confidence for revenue growth in Central and Eastern Europe and Central and Latin America.

Needless to say, it will be interesting to see how the rest of the year unfolds for HRO.

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Moorepay’s Roadmap to Success is in the Cloud

Linda Merritt, HRO Research Analyst, NelsonHall

Moorepay is a payroll and employment service provider in the U.K. with over 10,000 clients and it is a part of NorthgateArinso (NGA). Earlier this year I blogged about the launch of its new HR and payroll platform service for the small employer market in the U.K. This week, I spoke with Ann Fitzpatrick, Moorepay managing director, for an update.

In a brief recap, MoorepayHR is a cloud-based SaaS and BPO service built on NGA’s Preceda SaaS platform that is customized for the U.K. market and combined with Moorepay’s payroll and HR services such as employment law and health and safety advisory.

Cloud Opens the Small Employer Market

Most major HRO vendors do not attempt to reach the small employer market, which is just what Moorepay serves. Certainly small employers want professional and modern services, but until the rise of streamlined HRO platforms in the cloud, the costs were unaffordable for both clients and vendors. In the U.S., ADP has had such great success with Workforce Now, it launched a larger version called Vantage HCM. Now, employers in the U.K. can have the same level of service as larger companies at very affordable price points.

The Roadmap to Success

There are three levels of service, each with its own pricing openly displayed right on the company’s website. Payroll is available as an option with each of the service levels.  Approximately 40% of clients are currently adding payroll. In a bit of a nice surprise, ~80% of customers are choosing the highest level that comes with client services, making it a real BPO offering.

A 1Q 2013 launch is planned for the highest level of service, HR Advanced, which will add modules for talent management, recruiting, and remuneration. That will make the service more valuable for employers in the 100-400 range with more complex HR needs.

With its large base of payroll clients, Moorepay will later market the new system and services to its existing clients to allow conversion to the new system and added services.

Finally, Moorepay is receiving good support from the NGA Preceda team and they will work together to ensure the technology development roadmap is completed in the near future, including mobile and tablet access.

The Proof is in the Pudding

The new system has just reached its three-hundredth customer and all of these customers are new to Moorepay. The company now has a solid base of wins and users to move forward with its multi-stage approach to growth.

The small employer market is clearly hungry for such a service. Even before launch, there were hundreds of inquiries, and the number of inbound leads has rapidly increased. You know something is going well when customers are lining up at your door!

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