H1 2012 HRO: Who Did What in the Large Market?

Linda Merritt, HRO Research Analyst, NelsonHall

There was a good amount of announced HRO contract awards of many sizes and services in the first half of 2012, especially in the large market. A nice volume of new work coming online will provide future revenue support for HRO service providers, where earnings have recently been lower than in 2011.

Learning: finally announced some major deals including:

• Capita Workplace Services: awarded a competitive win for a £250m contract by the Cabinet Office to manage civil service training services in the U.K.
• Serco: won awards with the Army in both the U.K. and the U.S.; it won a scope extension valued at $38m by the U.S. Army and a £55m training contract by the British Army
• Genpact: won  a learning services contract by Johnson Controls, extending its record of recent learning wins; last year, it won a 7 year MPHRO contract with Nissan that included learning and it also won a 5 year content development contract by JobSkills in India.

MPHRO: activity was spread around nicely with ADP, Aon Hewitt, NorthgateArinso, and Logica all bringing in MPHRO contracts. One notable deal was IBM’s multi-tower BPO and IT deal with Cemex valued at $1bn; it includes finance and accounting BPO, HR BPO, IT infrastructure management, application development, and maintenance.

RPO:  continued to see a high volume of new contracts spread across many vendors. There were also two of the largest awards ever in RPO:

• ManpowerGroup: awarded a $400m five year contract extension with the Australian Defense Force, continuing a relationship that started in 2003
• Capita: won a £440m 10 year recruiting partnership contract by the British Army; it will also deliver supporting technology for the Royal Navy and the Royal Air Force, partnering with advertising agency JWT for recruitment marketing and with Kenexa for assessment and recruitment technology.

Benefits administration: contract awards were announced by Aon Hewitt, Empyrean, HP, and Xafinity Paymaster. Fidelity Investments reported the highest volume with DC contracts adding 522k new participants to its base of over 15m participants served. It also made major renewals and brought in new competitive wins. This is Fidelity’s strongest first half sales period in the last five years.

Payroll: deals in the U.K. led the way with awards going to Ceridian, Equiniti ICS, Liberata, and Mouchel. ADP won a multi-country contract from HP and will implement its GlobalView for payroll and Enterprise eTIME system for time and labor management for ~130,000 employees across 40 countries in Asia Pacific (excluding India), Europe, and the Americas (excluding U.S.) over the next five years.

With pipelines still healthy, the second half of 2012 should bring in a year of solid HRO growth and results. Congratulations to all!

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ManpowerGroup Solutions Analyst Day – It’s All About Talent

On June 8, 2011, ManpowerGroup Solutions held its first analyst day where it talked about multiple services, including its RPO business, which is currently providing recruitment services in ~35 countries, including for eight global clients, which range in scope from two to ten countries. ManpowerGroup Solutions has a center of excellence in the U.S. to share best practices so it provides a consistent experience and doesn’t reinvent the wheel for each implementation. It is smart enough, however, to recognize that the greatest satisfaction for the hiring manager comes when services are delivered locally. Thus playing to its strength of having the ability to deliver RPO locally, with a total company presence in ~82 countries.

In Q1 2011, it closed 37 RPO deals: 8 in APAC, 9 in EMEA, 2 in LA, and 18 in the U.S. For the next eighteen months, it’s focus includes driving consistency of operation and customer experience and improving the client’s employment value proposition via improved employer branding and candidate experience.

ManpowerGroup Solutions still has the largest RPO deal to date in the industry, a $200m contract with the Australian Defense Force to provide full end-to-end services from sourcing through onboarding for 8,500 – 10,000 new hires annually. Approximately 300 personnel are employed onsite to support the contract which includes a marketing team of 22 people providing services that include social media and employment branding. There is also an 80 seat call center to proactively manage relationships with candidates and 90 I/O psychologists.

Other highlights of the day included a presentation on ManpowerGroup Solution’s Tapfin business, a MSP that handles over $3.3bn in managed services spend and administers 221 MSP programs globally.  This was followed by a demo of Workforce Scan, a consulting process to help model future scenarios of emerging supply and demand gaps in the availability of talent needed by taking a 5, 10, 15, or 20 year timeframe view.

There was also an announcement of a new contact center offering to help existing client centers increase productivity, improve customer service, and retain talent through a set of services including: talent sourcing; program and process management; best practice and benchmarking consulting; and talent-based outsourcing for center-based and distributed workforces such as virtual / work-from-home models. NelsonHall will cover more on this recent announcement in our tracking service and next HRO Industry Insight Newsletter.

According to its new Workforce Strategy Survey, almost a quarter of employers across 36 nations admit their workforce strategy does not support their business strategy or have any idea if it does. More than half of this group is doing nothing about it, which sounds like more opportunity for RPO providers to help employers with workforce planning.  I’ll share more on this topic next time!

Gary Bragar, Lead HRO Analyst, NelsonHall