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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