Posted tagged ‘ACS’

HRO is Never Static or Still

October 12, 2010

During every stage of the economic lifecycle, HRO service providers are doing something to either anticipate or react to changes in the marketplace and client needs while simultaneously striving to achieve strategic goals. This week I wrap-up NelsonHall’s review of 3Q 2010 HRO activity with a look at what’s new in offerings, partnerships and acquisitions.

One way to quickly expand a service line or fill-in gaps is to partner with a provider that is already offering the service or operating in the target geography. Last quarter was most active for RPO. Those announcing new RPO-related partnerships included Alexander Mann Solutions (AMS), Kelly Services, Kenexa, Pinstripe and The RightThing. Notably, two of the partnerships were to continue to expand RPO services internationally in the Asia Pacific region, with AMS adding reach into India and Kelly in Vietnam.

A more committed path to rounding out or adding new services is to buy it. Making small to large acquisitions is another constant in the world of HRO as players define and redefine their portfolios. In addition to the close of the three game changing major acquisitions in the benefits community (ADP/Workscape, ACS/ExcellerateHRO, and Aon/Hewitt), other folks were also making deals. For example, Mercer acquired IPA and ORC, and Xafinity bought PwC’s pension consulting and administration business in the U.K. Further, Randstad continued its acquisitive ways, this time outside of Europe, with its planned acquisition of FujiStaff in Japan.

Health and welfare (H&W) outsourcing used to be limited to the U.S., and that will remain the major market. But no matter how health insurance and care is funded, H&W concerns are growing globally. In the U.S., Fidelity is partnering with RedBrick Health to offer its clients wellness services, and in the U.K., Capita is acquiring FirstAssist Services to add to its health service offerings.

Finally, if you cannot find what you want in the marketplace, you can build or expand it yourself. Ceridian wants to truly offer a new line of BPO services and has announced it is ready to consult, build and manage the health insurance exchanges that some states will need in a couple of years as part of the U.S. health care reform program. 

Most announcements of “new offerings” are incremental additions. For example, Hewitt is adding Micromedex medical reference information to its advocacy service offering. You can also simply package what you have and call it new. Aditro has done that with a standardized set of payroll services that include preset services levels and implementation process to make a lower cost bundled option.

Yet another variation blends supply chain partnerships with building it yourself to make a new service offering. Take a SaaS HR service from Oracle or Sap and wrap in value added enhancements and services additions and, voila, you have a new HRO service platform. Mercer introduced its Human Capital Direct that uses PeopleClick Authoria’s talent management suite as the core, surrounded by Mercer’s consulting, tools and methodologies such as decision support, competency models and analytics.

In HRO, somebody is always doing something. What have you done lately?

Linda Merritt, Research Director, HRO, NelsonHall

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

HRO Providers’ Quality Programs – Where’s the Beef?

June 22, 2010

Just last week a NelsonHall client asked me about HRO service providers’ quality programs. A bit surprisingly, my mini-research found a scattershot representation of available information. While I know more complete details would have been available had I done a full research analysis, and that vendors can present their capabilities for RFP responses, I was little taken aback at the limited data available on the providers’ web sites and in many marketing and briefing packages.

There was quite a bit of information on certifications such as SAS70, CMMI levels and various ISO certifications. Some providers, including ACS, Ceridian, IBM, Logica and Wipro, specifically mentioned use of Six Sigma and Lean programs. One vendor listed the vague, “other quality assurance programs and tools.” Yes, technical certifications are valuable, and use of named quality programs like Six Sigma is good, but these may or may not indicate that quality is integrated across the business and reaches well beyond the IT and data centers.

Earlier in my career I was in Quality for many years, doing everything from facilitating quality teams to developing and delivering training and helping design and implement quality programs. I had big fun during the early days of the U.S. Baldrige Awards system for business, becoming an internal examiner for my company’s (AT&T) internal awards program, as well for preparation before official Baldrige Award examiner visits. So I know what an integrated quality system can do for customer satisfaction, employee engagement, and the bottom line business results that please shareholders.

The days of high promoting of quality programs has passed, and while information on quality does not need to lead in marketing materials, it should be available and easy to find. Clients and prospective buyers want to know the provider has a current record of meeting its SLA obligations and cares about customer satisfaction. Since HRO vendor decisions tend to be longer term commitments with substantial barriers to changing, buyers also want assurance the vendor will be able to deliver in the future.

Clients do not pay for vendor quality programs, even when certified and award-winning. Clients pay for business performance achieved through quality programs. Excellence in quality is an indicator that a service provider can reliably deliver on service, operational and compliance promises.

A comprehensive quality program has competitive advantages for both clients and the service provider – ensuring performance for clients and achieving performance objectives for the business – and should be driven by the service provider’s strategy and business objectives.

Today, major HRO providers have distributed service delivery networks, many global and often including a complex array of suppliers. The more the services and workflow is segmented, the more important quality becomes. Quality should have an equal focus on the internal business efficiency needed to achieve profitability and the ability to fuel future growth.

HRO vendors, let’s see more complete, easy to find quality program information. And please support the information with more than a list of programs and certifications; “beef” it up with  at least some lean protein tidbits which provide evidence that your programs are widespread and effective. Even more importantly, make sure your quality system is robust and is serving both your clients and your business as the fight continues to maintain and increase your margins to sustainable levels while retaining and adding satisfied clients.

Linda Merritt, Research Director, HRO, NelsonHall

Anatomy of the Deal – Managing the HRO Service Provider Portfolio

June 3, 2010

A sign of economic recovery is preparation for the future and a return to investing in growth and expansion over cost cutting and containment. A purchase may be the fastest way to growth for HRO service providers, if the price is right and the risks manageable. And the first half of 2010 has been busier with large and small mergers and acquisitions in the HRO universe than with major new client deals. 

Today let’s take a look at the similar strategic criteria I see that cross several recent HRO acquisitions: footprint, portfolio, profile, talent and technology.

Footprint – expand into new geographies by buying an established “local” player. NorthgateArinso just closed on its purchase of Convergys, greatly expanding its footprint in the U.S., the world’s largest HRO market. It also purchased Neller, an Australian-based payroll provider to increase its global payroll coverage in the Asia Pacific region.

Portfolio – what services should you offer? Acquisition for portfolio management is seen as part of the ACS purchase of ExcellerateHRO (EHRO) from Hewlett Packard. According to ACS Managing Director Rohail Kahn, ACS intends to be a top industry leader in each of its lines of businesses. ACS will add to its heft as a benefits administrative player with the addition of EHRO, which was a strong benefits admin provider going back to its start with Towers Perrin.

Rounding out a service line is also a reason cited in recent acquisitions. Hewitt’s purchase of HRAdvance adds strength to its growing dependant audit services as part of its point solution offerings within its larger benefits admin portfolio.

Profile –marquee “logos” and major clients adds scale and is a common reason for M&A activity, but it is one that requires a clear head and due diligence. Last year Empyrean Benefits announced it was going to acquire the benefits unit of ING. A few months later the deal fell apart when it became clear to Empyrean that several major clients were already on the way out the door. The closing of the Convergys deal is a sign that NorthgateArinso felt a good sense of security that enough of the major clients will stay and give NorthgateArinso a chance. ACS also mentioned a stable client base as one of the advantages of the EHRO deal.

Talent and Technology – both can be an important consideration in purchase decisions. Praise for the leadership and talent base of the acquired company is practically a requirement in the M&A communications handbook. It is another thing to determine if it is true in action as well as words. Another common reason for M&A’s is synergy, i.e., reducing operating expenses by eliminating duplication and overlaps.

Technology can be the point of, or a problem rather than a benefit, in some M&A’s. In the case of Hewitt, it will adopt HRAdvance’s technology platform, which was a criteria it was seeking in an acquisition. 

More often, that which cannot be profitably and practically integrated must be separately maintained or clients migrated. Either way, the time, cost and effort must be factored into the financials and risk management of the deal.

2010’s HRO service provider deals have good bones and clear intentions, may they all grow hale and hearty for themselves and their clients!

Linda Merritt, Research Director, HRO, NelsonHall

It’s a Pac-Man World in HRO – ACS Buys ExcellerateHRO from HP

May 26, 2010

Google celebrated the thirtieth anniversary of the release of Pac-Man, one of the most successful and long lasting video arcade games, by putting the game on its home page. Created by Namco in Japan, the license to Pac-Man was bought by Atari, the biggest name in early gaming. And Atari hit big time with Pac-Man, selling a then outstanding seven million games. Unfortunately, it manufactured twelve million copies of the game. Success in the early stages of an emerging market is not always the path to long term success.

ACS, a Xerox Company, just announced it is acquiring ExcellerateHRO (EHRO) from HP, ending the rampant industry speculations, including those from NelsonHall, on who might want EHRO.  Almost from the start there was conjecture that EHRO was not a strategic fit with HP, which maintains focus on computing and IT-related services. (Try finding any references to EHRO services on the HP website.)

EDS acquired EHRO for around $400 million. Now being sold for an estimated $125 million in cash, EHRO now joins Exult – which was purchased by Hewitt in 2004 – and Convergys – which is in the process of being acquired by NorthgateArinso for ~$85 million –  as early HRO providers chomped by industry consolidation. 

Exult flew the highest first, literally helping birth the comprehensive HRO industry. Exult rapidly won a large book of large clients in the first generation of lift and shift deals that took over management of clients’ HR processes in place of complex ERP and legacy systems. But once the exhilaration of creation and big deal fever passed, it turned out to be a hard way to make money. Hewitt quickly learned this after its acquisition of Exult. In fact, given the major money lost by the early players year after year, it is amazing that the game is still alive and being played by a stronger, albeit smaller, field of service providers.

A shakeout and consolidation is not unusual in the early stages of industry development, especially when tempting bargains are there to be found. Just as the HRO industry was finding its way through the maze to a new level of services fueled by newer technologies and lower cost service delivery networks, the worldwide recession gobbled up growth and cornered hard won margins, leading to the availability of several of the early leaders at discount prices.

The question was, who was hungry enough to bite? NorthgateArinso wanted into the U.S. market in a bigger way and it is snapping up Convergys to do so. ACS is also hungry in its own way. Already a first tier player, it wants to be even bigger in segments such as benefits administration.

ACS has already spent more than $20 million on upgrading and enhancing its services and platform for benefits, and has been on an aggressive campaign to win share in benefits administration. And what could be even more enhancing than a shiny new acquisition? With the support of Xerox and the addition of EHRO’s assets, ACS will be significantly increasing its market share in corporate relocation services and benefits administration, especially in pension administration and health and welfare outsourcing.

Pac-Man survives thirty years. Long live Pac-Man. Long live HRO.

Linda Merritt, Research Director, HRO, NelsonHall

Health Care Reform – Who’s Got Your (HRO) Back?

March 23, 2010

There are HRO service providers that can do a wonderful job in a stable environment, efficient and effective. But who can do the job in an uncertain financial and regulatory environment? Which vendor partner/s has your back in times of change?

Today I watched as President Obama signed the historic health care reform bill. If you’re an employer, are you prepared for what the recently changed regulations will do to your business and how they will impact your employees? Are you comfortable that all of your employee and delivery systems are ready for compliance – across internal and, potentially, multiple third-party vendor systems?

As recently as February, Mercer found that seventy-one percent of U.S. employers have done nothing to prepare in advance. This is reasonable since no one was assured what new regulations, if any, would be passed. But prepared or not, some elements will go into effect in 2010, and every impacted employer and their HRO partners are going to need to scramble. 

At the end of the day, compliance is an employer’s responsibility, and wholesale benefit policy and plan reviews require big “C” consulting. However, an experienced HRO vendor partner with top-notch subject matter expertise can advise on changes that are required to keep your information and systems in compliance. And a primary multi-process provider can help work across the often myriad of systems, programs and interfaces that will need to be updated.

 I just took a quick scan of some of the HRO service provider websites. As you would expect, major benefits administration vendors like Hewitt, Mercer and Towers Watson have been long active on the topic; research, web info, bulletins, podcasts and webcasts. And today, Hewitt is hosting one of its bi-weekly healthcare reform webcasts, and Mercer is hosting one on the recent changes to mental health parity and addiction equity regulations.

ACS, via its consulting arm Buck Consulting, has prominent health care reform information available. ADP also has an easy to find section with weekly updates, and is already listing when some health care reform regulations are going into effect over the next few years. And Aon has a website area with weekly briefings and access to health care reform information.

If you are a current HRO client of benefits health and welfare administration, payroll, employee self services, or recruiting – who has kept you informed along the way? Who has called you today?

Linda Merritt, Research Director, HRO, NelsonHall

Up in the Air with Outplacement Outsourcing

February 2, 2010

The Oscar nominated movie “Up in the Air”, with George Clooney as a high-end outplacement counselor, is a movie worth seeing. I certainly saw the cultural relevance in these days of extensive downsizing, but as a movie it left me, well, a bit up in the air.

Outplacement is a $4 billion market, and participant services typically include an assigned counselor, resume critiques, a variety of courses and workshops, self-assessment tools, access to job search resources and some level of one-on-one coaching. Actual job search assistance is usually not provided in basic packages. In major cities outplacement firms may still offer office space for classes, in-person coaching and even workspace and clerical assistance. Onsite services are also available for added fees. Although some companies do bring in outsiders – as is key to the movie – in my experience most companies have their own managers notify impacted employees and then route them to outplacement services.

I helped manage outplacement services when I was with AT&T and our in-house program transitioned to an outsourced service. We originally had several locations that included workspaces with phones and computers for job-seekers, classrooms, a resource library, onsite counselors, and group sessions for networking and peer support. And there was a time, not so long ago, when that level of support was needed. Now most people have Internet access and the amount of free online job search resources is astounding. In a Net savvy world, outsourcing needs to evolve to keep pace with changing needs.

Outplacements services have been migrating to the Web to reduce costs and allow more employers to continue to offer three to six months of support services for employees leaving under severance programs. A June 2009 study by the Institute for Corporate Productivity and the American Management Association showed that employers spent an average of $5,000 per participant, with a range from $7,518 for executives to $1,472 for hourly employees.

With unemployment still around 10 percent, there will be continued strong demand for effective and affordable outplacement services. And indeed outsourcing revenues have increased, with Right Management, a unit of Manpower Inc., up by 36 percent and Lee Hecht Harrison had up to a 57 percent increase in a recent quarter. Jumping in, ACS has just added an offering called ACS Transition Services – Powered by RiseSmart, to provide outplacement services.

The question is whether today’s outplacement services leave participants up in the air. Some participants complain about simplistic canned workshops, obvious advice and services that have not kept pace with the times. Others question whether the services are really more for assuaging employer guilt and avoiding lawsuits than for increasing and speeding placements for laid-off employees.  While there may well be room to improve, I personally saw how helpful outplacement services can be on an individual basis in terms of providing focus, structure and support during an uncertain time. We had many success stories at AT&T, both in seeing people refocus and find their way forward, and with those who found new jobs.

Realistically, no outplacement service can guarantee participants will quickly find a position equivalent to the one just lost, but there should be data that shows the services are effective and valued by participants to be worth any price point.

HRO providers that offer employers a cost effective outplacement service with high user satisfaction and evidence of job placement effectiveness will continue to find high demand and growth opportunities – and they won’t leave participants up in the air.

Linda Merritt, Research Director, HRO, NelsonHall

Take Care to Show You Care – of Humanity and HRO

January 19, 2010

If you are in the business of caring for people, you have to show you care about people.

In the HRO community we all are in the business of caring for people, as employees, as managers and as retirees. We provide products and services that help people at every stage of working life and beyond. Much of that care is administrative, automated and drives to self-service and efficiency, as well it should. Sometimes we get to show employee care in a more direct manner, such as calls with live agents to understand the variety of benefit actions and options needed to wend through a major life event, or use of a caring tone when helping process an unexpected leave of absence during a personal or family crisis.

There are other ways to show you care in this professional space we have chosen to serve, such as corporate social responsibility activities and philanthropic initiatives.

HRO service provider examples include: 

• ACS Government Healthcare Solutions has a dental outreach program for disadvantaged children which has expanded from one to ten states

• Convergys highlights its Social Responsibility Community focus with examples of worldwide projects, including many teacher training and education programs

• Accenture uses its consulting and IT expertise in its Skills to Succeed effort to build skills that will enable people all over the world to participate in and contribute to the economy

• IBM, befitting its size and global reach, sponsors many varieties of programs. One that caught my eye is Kid Smart for early learning development that has reached 60 countries and has won IBM accolades from the highest levels in some countries

Then there are the times of crisis like a hurricane, a tsunami and now the earthquake in Haiti. How do we in the HRO community lend our skills and capabilities when natural disasters strike?

Many companies, which also happen to be HRO clients, excel in business-aligned philanthropy. For example, as it relates to the catastrophic earthquake in Haiti last week, GlaxoSmithKline donated cash and medicine worth $1.8 million, mostly urgently needed oral and topical antibiotics, and has promised further commitments as local infrastructure is repaired. AT&T immediately gave $50,000 to help bring emergency telecommunications to Haiti, supports the American Red Cross’ text donation program (in the U.S. text the word Haiti to 90999 and a one time charge of $10 will be added to your cell phone bill), and has pledged $200,000 to the Red Cross this year alone for disaster relief. And the State of Florida called upon its citizens to donate money to its “Neighbors to the Rescue” program through the Florida Disaster Recovery Fund.

Ceridian is making sure its Life Works customers know that services are available for employees concerned about friends and family in Haiti, and it has also listed some contact and resource information for the general public on its website, including several in Creole.

Hewitt posted a Red Cross press release for Thursday’s CHICAGO HELPS HAITI telethon in which 1,500 employees will volunteer their time staffing the phone banks from its Lincolnshire headquarters and three other centers.  The press release also mentions, “The last time the Red Cross partnered with Chicago media and Hewitt was in 2004 for a one-day telethon to aid victims of the Asian tsunami. The result of that effort was extraordinary.” This is a very good example of using the skills and caring of the company and its employee during a crisis, as well as getting positive media coverage for the significant contribution.

The human impact of major disasters lasts for years, long after the media leaves. That will be the time to consider using ongoing corporate responsibility programs in both nearby communities and markets in which it is most needed. How are you showing you care?

Linda Merritt, Research Director, HRO, NelsonHall

Getting HRO Deals Done Today – Start Yesterday

October 13, 2009

This week ACS announced a five year deal with Ford Motor Company to provide Total Benefits Outsourcing (TBO). While financial details were not released, it is a major contract that will provide all three benefits administration services – defined benefit, defined contribution and health and welfare – to more than 400,000 U.S. Ford employees and retirees.

What allows a major deal to get done in this still tough economic environment, especially in the automotive sector? If a deal can get done there, a deal can get done anywhere.

Ford is the only U.S.-based auto company that has not sought special government financial assistance. Alan Mulally, Ford’s CEO since the fall of 2006, has driven a focus on Ford’s cars and trucks. Bill Ford Jr., Chairman and family representative, selected the industry outsider from Boeing because he saw the need for the same type of business and cultural turn-around Mulally led at Boeing. Under Mulally, Ford has sold off non-core brands like Land Rover and Jaguar, and invested in not just needed model refreshes to core brands like Ford and Lincoln, but in new technologies and means of manufacturing to lower the cost of production and support faster responses to changes in the global marketplace.

Continuing focus on the core and cost pressures has brought new, open-minded thinking to what can be outsourced, breaking the mental barriers on what must be internally managed. That opened the door for Ford to outsource TBO for the first time.  Throughout the competitive vendor selection process, Ford had several clear objectives including a partner with a record of quality and progressive thought-driven innovation and investment, and one who would offer an “evergreening” of technology. Of course cost was also an issue, and Ford considered both long-term cost avoidance – what it would need to invest to continue to offer current state services in-house – and short-term cost savings – reductions in current spend.

TBO was already a big part of ACS’ Human Capital Management (HCM) Solutions services’ revenues. It is also a major growth focus under Rohail Khan, ACS’ Executive Managing Director Total Benefits Outsourcing. ACS has committed to investing $50 million through 2011 in upgrades to and expansions of its HCM offerings, technology and global customer service center network. According to Rohail, more than $20 million has already been invested in technology and capabilities that strengthen TBO. He considers the underlying technology design, which enables faster and lower cost changes and enhancements, as a key to strategic advantage and a means to protect profitability.

Having already made investments, enhancements and upgrades, ACS was test drive ready. Ford kicked the tires and selected ACS as the competitor who best demonstrated a match for its objectives.

However, to leverage its fast start off the line, ACS will need to address concerns about the Xerox acquisition. When the HCM unit becomes part of “ACS, a Xerox Company,” will it be considered a non-core unit like Jaguar at Ford, or will it be a strategic business line that is invested in and vitalized?

NelsonHall’s October BPO Index continues to show that buyers have revised strategies and budgets, as have providers. The Index further indicates buyers are on the path to getting deals done in 2010; they are identifying BPO opportunities (25 percent), expect to issue RFPs (48 percent) and make awards (37 percent). 

Competing for major deals starts way before the RFP arrives. Which services will be offered within a bundle and will be strong enough to stand alone against best-of-breed providers, and what investments will add both to competitive advantage and sustainable internal margins? Those best positioned to take advantage of the economic recovery and new growth opportunities will have already vetted strategic plans, made the investments, and now have shiny new cost competitive and compelling services offerings ready to roll off the lot.

The question is not just what you are doing today, but what did you do yesterday?

Linda Merritt, Research Director, HRO, NelsonHall

Who’s On First and What’s on Second in HRO? A Quick Look at the Xerox/ACS Marriage

September 29, 2009

The times and the players are a changing in the world of BPO and especially multi-process HRO (MPHRO). Much like the classic baseball comedy bit by Abbott and Costello, it’s hard to figure out who is on which base and who is leaving the field.

This week’s big BPO news is Xerox’s acquisition of ACS in a cash and stock transaction approved unanimously by the ACS board. The transaction is expected to close in Q1 2010, and it includes the ACS human capital management (HCM) and HRO service lines.

There are major plans for synergies, in terms of both internal cost reductions and go to market opportunities. Xerox is expecting significant new revenue growth through integration of its intellectual property with ACS’ services to create new solutions. Xerox also plans to leverage its global brand and client base to help scale ACS’ business in Europe, Asia and South America.

Yesterday’s announcement stated ACS will continue to operate as an independent organization, and that for an interim period, ACS will be called ACS, a Xerox Company. Hmmm…sounds a lot like the transitional ”EDS, an HP Company.” Initial branding aside, can the separation hold for long given the already announced intention to integrate and leverge capabilities and services across Xerox and ACS? Time will tell if they follow the EDS example of initial separation to establish stabilization and detailed plans, followed by full integration and disappearance of the ACS name.  

By NelsonHall estimates, the HCM business line will constitute almost 5 percent of the revenue of the combined $22 billion business. ACS is a major HRO player that has the bases covered anyway you look at it:

•  4th largest global Benefits Administration provider with almost 8 million participants

•  5th largest in terms of global MPHRO

•  7th largest in terms of global Learning revenue

With the acquisition of ACS, Xerox definitely joins the ranks of big league BPO players, and Xerox expects this deal to be a “game changer” to expand its business well beyond its roots in document management. But the HRO big league has been a pretty tough game for the early MPHRO entrants. Some have already left the MPHRO playing field, including Fidelity and ExcellerateHRO, which has been absorbed into HP. 

So there is room on the field, but not a lot of time to figure out the rules for the next generation of HRO. All the players, old and new, single and multi-process, are looking to bring their “A game” as we emerge from the recession. Strategies have changed, technologies have advanced, investments made, delivery capabilities fine-tuned and partnerships strengthened.

I hope ACS and Xerox stay in the game. We need enough strong teams to make a competitive league of providers that can play at all levels, from small, mid and large market to single country and multi-national HRO.

Let’s play ball!

Linda Merritt, Research Director, HRO, NelsonHall