Posted tagged ‘Edvantage Group’

HRO Focuses on the Future

February 1, 2012

HRO buyers want service providers that meet today’s needs. Sophisticated buyers also want partners who can help manage changes over time as new service needs and technologies emerge. In a rapidly changing industry, it is not enough to know what customers are buying and what their competitors are currently doing today, each vendor must also invest in the future.

Here are three different ways service providers are focusing on the future:

  • Ÿ   Kelly Services recently opened an Office of Innovation and appointed a Senior Vice President and Chief Innovation Officer to define the next generation of workforce solutions for its global customer base. To meet the rapid rate of workplace changes, Kelly intends to accelerate the process of creating and launching new services. Kelly Services was one of the founders of the temporary services market and has evolved into providing a full suite of services including outsourcing and consulting. Given the company’s history of innovation, it makes sense for Kelly Services to see added strategic focus and investment in order to continue as a market-leading innovator of HRO services.
  • Ÿ   Infosys opened a new ‘Alternative Delivery Model’ HR-shared service center in a Tier 4 town in India. The company considers this as an important strategic move to differentiate its services and benefit clients by providing additional flexibility and competitiveness. Infosys is partnering with local suppliers, like Desicrew, to set up centers in Tier 3 and Tier 4 communities, creating a more sustainable model to access talent and provide long-term career opportunities in other areas of India. My NelsonHall HRO colleague, Gary Bragar, commented that by opening up a center in a Tier 4 city, Infosys can offer clients a reduced offshore price point, with the added promise of greater staff loyalty and lower attrition rates.
  • Ÿ   Lumesse, a provider of integrated talent management applications and services, completed its acquisition of SaaS-based learning provider Edvantage Group last October to add a full suite of learning services including learning management, content development and management, online content delivery, and custom course development. The combined business will have over 1,900 customers in 70 countries worldwide and around 2 million active users of its technology.

Just like buyers and vendors, in following news of the HRO community, we tend to focus more on the current activities and news of the day. Stopping periodically to review HRO business news over a several month period reveals trends and provides clues on service provider strategies for growth and the future.

Lumesse made a big acquisition to quickly add a major new service line. Infosys is adding cost-competitive capabilities for clients and the company should benefit from the reduced operating costs due to lower turnover in the outlying centers. Kelly Services is continuing its heritage of innovation to internally develop and speed to market new capabilities.

There is no single approach to preparing for the future, there are many ways to buy, build, or partner your way forward in HRO.

Linda Merritt, Research Analyst, HRO, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

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NorthgateArinso Getting SaaS-y Starting with e-Learning Content

September 28, 2011

NorthgateArinso (NGA) has just announced its euHReka Inclusion Framework to provide transparent access to third party providers, HR professionals, and associated resources.  The euHReka platform includes payroll and talent management SaaS for learning, recruitment, performance management, compensation management, and succession planning.  It serves 80 clients and 800,000 employees, and is available in 100 countries and 32 languages.

Although NGA has been providing learning BPO (LBPO) since its acquisition of Convergys’ HR Management business in March 2010, and since learning is already a part of its euHReka platform, the company is aware of the heightened demand for e-learning content in the market.  Consequently, NGA’s first partnership on the new framework is with SkillSoft to add e-learning content to euHReka.  Subsequent content and applications will include:

  • Compensation data
  • Benefits programs
  • Job boards
  • Professional social networking sites.

NGA is wise to begin with e-learning.  In NelsonHall’s LBPO market analysis, published Q4 2010, traditional instructor-led classroom training (ILT) is expected to be reduced from ~50% of the market in terms of revenue to 40% by 2012 due to the explosion of e-learning.  As a result, content development is also rapidly growing.  NelsonHall’s LBPO report ranks content development second behind learning administration in terms of LBPO revenue and ahead of delivery, technology, and consulting. 

Some examples of e-learning contracts this year include:

  • Accenture with HSBC
  • Genpact with JobSkills in India for a 5-year content development contract (note: approximately 85% of Genpact’s courses are provided via e-learning)
  • Edvantage Group with Yara International for safety e-learning (note: Edvantage Group’s H1 2011 financial results showed a 31% increase in sales and double-digit revenue growth y-o-y with EBITA increasing 168% to 5.9m NOK, compared to 2.2m NOK in H1 2010).

I believe we will continue to see significant increased demand for e-learning content for years to come, which will be further magnified by mobile learning (i.e., m-learning), especially for accessing content for self-paced e-learning when out of the office.  However, e-learning will not replace the uptick expected for virtual instructor-led training (VLT) because of the need to actively participate and focus on the learning task at hand in VLT.  I’ll write more about contracts for VLT and web 2.0 learning portals at a later date.  In the meantime, further analysis on the useage of e-learning by region and other associated information is available from NelsonHall.

Gary Bragar, HR Outsourcing Research Director, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.comwith “HRO Insight” as the subject.

Let’s Not Forget About Learning

August 30, 2011

According to a survey by KnowledgePool, a U.K.-based managed learning services provider, 70% of internal client learning and development (L&D) organizations are too busy doing daily fire-fighting to focus on strategic talent and learning issues in their company. Out of 104 L&D managers, 69% say their training department does not have enough resources and 42% say that training receives inadequate support from senior managers. Yet 80% of L&D managers said they could improve their organization’s training ROI; 77% think new opportunities for improvement could be identified through rigorous analysis of their training spend and evaluation data; and 75% say improvements could be made by using more informal and on-the-job learning methods.

Sound like an opportunity for outsourcing? You bet!  The good news from NelsonHall’s most recent quarterly HR Outsourcing Confidence Index is that learning services, which has been the last of the HR outsourcing service lines to recover, is expected to continue to strengthen as the year progresses. Following several strong quarters of growth within RPO, the need is now shifting toward implementing and optimizing learning programs. Good news in learning since the beginning of Q2 includes:

  • Genpact winning a content development contract by JobSkills in India
  • Raytheon Professional Services winning a contract to develop an e-training program for NATO
  • CIBER’s Federal division winning a 5-year training development contract with a potential value of $30.7m by the Center for Strategic Leadership, an institute of the U.S. Army War College
  • Accenture winning an e-learning contract with a major bank that may later add classroom ILT
  • General Physics winning $3m in 5 new contracts from energy companies across Africa, the Middle East, South America, and Asia
  • Edvantage group winning a safety e-learning contract by Yara International, providing 7 interactive e-learning courses for 3,000 technicians, operators, engineers, and supervisors at 30 plants across 17 countries.

In NelsonHall’s last learning BPO report, top drivers of why companies are outsourcing learning, which support KnowledgePool’s findings, include:

1.        Lowering costs (average client savings of 26%)
2.        Increasing training effectiveness and ROI
3.        Improving the quality of learning for employees
4.        Accessing experts in the industry whose core competency is                       learning
5.        Flexible services, aligning learning with the customer’s                                 strategic objectives
6.        Focusing on strategic work, not transactional activities.

Look for increased learning outsourcing to continue the remainder of 2011, including by the likes of IBM who continue to see increased demand globally. In 2012, I think learning outsourcing will really soar. Although uncertainty in the economy continues to cause delayed decision-making, there is no doubt in my mind that we will see a boost in learning as companies unanimously agree talent management is more important than ever. To improve and engage talent, you have to invest in your people. There is only so long you can just say the words, eventually you have to walk the talk!

Gary Bragar,  HR Outsourcing Research Director, NelsonHall

HRO – How the Garden Grows

April 29, 2011

Everything seems pretty moderate and modest in the garden of HRO so far this year. After the abundance in 2010, perhaps that is not so bad. Reasonably steady business gives service providers a breather and a chance to attend to growth opportunities by leveraging current capacities while cultivating new capabilities selectively.

In benefits outsourcing, the contract levels were good with some key wins and renewals. Fidelity continues its blossoming growth with major 5 year renewals for total retirement outsourcing contracts with HP and BP, and a new defined contributions contract with the University of Oklahoma. In the U.K., Mercer was awarded a 7 year defined benefits renewal by Saint-Gobain and it won a new pensions administration client, Loomis UK.

RPO saw a smaller crop of new awards, but is still growing, especially in North America and the U.K.  My colleague, Gary Bragar, will be heading off soon to the RPO Summit as a presenter and I look forward to hearing the latest views.

Smaller M&A and partnership activity remains perennial, continuing the pattern of growing footprints in terms of geography and specialized services. GP was the most active with the acquisitions of Ultra Training in the U.K.; RWD Technologies with offices in the U.S., U.K., and Colombia; and Communications Consulting in China. Manpower Group acquired Web Development Company in India to add to its IT recruiting in Asia Pacific. Finally, Raytheon Professional Services partnered with Baptist Health to increase training in healthcare systems.

With the blooming of HRO platform managed services, we have two trends. First is the belief that the time for HRO mid-market is finally here. Vendors are confident enough to invest in and launch new platform service offerings specifically for the mid-market. The second is growth into new fields beyond the base of payroll and HR administration systems. Examples of both trends:

  • Payroll – NorthgateArinso launched agoHRa for companies with up to 500 ee’s per country
  • Learning – IBM launched the mid-market Smart Business Learning Services and has launched Smart Business Learning Content Services
  • RPO – Mid-market grew from c. 20% of total revenue in 2008 to c. 33% in 2010
  • RPO – SourceRight Solutions launched RPO One for organizations with 100 – 5,000 employees, providing a dedicated service team, pre-configured ATS, and reporting and analytics.

Contract activity adds evidence that customers agree these services are desirable options. NorthgateArinso was awarded a 5 year managed payroll services and HR software contract by Historic Scotland utilizing ResourceLink Aurora. Historic Scotland is responsible for data entry, while NorthgateArinso will handle processing, pay runs, and produce electronic payslips. Edvantage Group won a 3 year managed learning services contract with Rieber & Son in Norway, which included Learning Gateway, Edvantage Group’s SaaS LMS, and e-learning courses. Edvantage Group also recently announced two contacts for its SaaS LMS. 

Learning has been slower to recover. Hopefully, 2011 will be the year for its bountiful harvest.

Linda Merritt, Research Director, HRO, NelsonHall

HRO Staffing – A Balancing Act

March 30, 2011

Fast and flexible scaling is one of the major benefits of HRO. Scaling up is a lot more fun than scaling down, but both are important, take time, and consume resources. One of the toughest challenges in HRO is maintaining staffing and margins at the same time through the ups and downs of client demand and the overall economy.

Recent times required painful and expensive downscaling as HRO client demand and employment levels dropped, reducing volumes and overall spend. Significant expenses were allocated for staff severance and consolidation of real estate. Even in periods of growth, merger and acquisition “savings” targets are based largely on staff downsizing to reduce overlap, followed by real estate consolidation. Whether a service provider is growing organically or via acquisition, or responding to reduced demand, maintaining appropriate staffing capability, capacity, and expense is critical.

HRO is slowly recovering with RPO leading the way while some areas are still waiting for their upturn including learning and MPHRO. New deals are occurring, renewals are going well, and existing clients are once again increasing scale and scope, at least at a modest level. All good and welcome news!

HRO service providers are confident enough to prepare for a return to growth and make select expansions. At the same time, they know they need to add client load with a minimum of new hiring as pricing pressure is still intense. And this is not even mentioning the need for maintaining an experienced and qualified staff to satisfy client employees and other end-users in the ever changing world of HR.

On the upside, clients are growing in sophistication and understanding of HR outsourcing options. While onshore delivery still leads, especially for voice, acceptance of offshoring has reached the expectation that HRO vendors should offer multi-shore delivery options. Nearshore options and the use of non-voice channels like chat allow leveraging more work to selected centers, increasing the need for and the value of a truly global service delivery network.

Recent HRO service provider expansions include:

  • TriNet – Added three new U.S. offices
  • CPH – Opened a new office in Sydney
  • Futurestep – Added a global recruitment operations center in Houston
  • NorthgateArinso – Invested in a new global HR delivery center in Hyderabad, India; opened offices in Russia, the Czech Republic, and Istanbul; partnering with ICAP Group in Greece
  • Edvantage Group – New e-learning production center in Denmark.

Expanding the coverage of service locations helps avoid the war for talent and damaging attrition rates in the hottest spots as well as providing increased options for clients.

Buyers, do more than look for an SLA on turnover. Ask about the vendor’s current and future plans for managing staffing and service flexible coverage. Does your service provider show that they are at least as, or more, sophisticated as you are in workforce planning and management? They should be.

Linda Merritt, Research Director, HRO, NelsonHall

Learning BPO Market Morphing by M&As, Partnerships and Organics to Meet Evolving Client Needs

November 11, 2010

Per the findings from NelsonHall’s recently published “Targeting Learning BPO” report, we saw only a modest growth rate of 2.5 percent in this HRO segment in 2009 – 2010, but predict a global compound average annual growth rate of 8.4 percent through our 2014 forecast period. So what’s driving this growth from the buy-side, and how are providers responding?

Buyers’ top driver for learning BPO (LBPO) remains reducing the cost of the learning function, followed by increasing the effectiveness and improving the quality of learning for employees. Other drivers include gaining a better return on the learning investment, right-time/right-level access to specialist trainers, obtaining a well-defined process from a provider with the ability to deliver higher quality, aligning learning with strategic objectives, contract flexibility and utilizing cutting-edge technologies for learning services delivery.

To meet these buyer needs, providers must step up their game in a range of areas including the ability to manage a global network of delivery suppliers, and providing access to the technologies required to effectively deliver and manage all aspects of the learning function via learning management systems, Web 2.0., virtual instructor-led training, e-learning, m-learning, virtual world technologies, gaming and learning analytics. Providers also need to have global learning capabilities across all four learning towers: Learning Administration, Content Development, Learning Delivery and Technology.

LBPO providers are taking a variety of paths to address these evolving, and in cases daunting, buyer requirements. Some, including Raytheon Professional Services, Expertus, Edvantage Group and RWD, are growing organically, with new service offerings including new technology, content and geographic delivery capabilities. Acquisitions and partnerships are also occurring.

2010 acquisitions in the LBPO space include:

  • Kenexa’s acquisition of The Centre for High Performance Development to strengthen leadership develop and management training
  • Talent2’s purchase of Origin HR and Sugar International to expand vocational training capabilities
  • General Physics’ acquisition of Marton House to strengthen e-learning content development in the U.K., and its purchase of PerformTech to strengthen learning services for the U.S. government

 And 2010 LBPO partnerships include:

  • NIIT and SENA to provide learning services in Colombia
  • Edvantage Group and Mediapharm to offer a pharma online portal

Bottom line is, for the LBPO market to grow and prosper, it is all about meeting client’s learning needs: delivering what they need, where they need it, when they need it and how they need it. Organic is great, but not always feasible, and not necessarily always the best option for the involved parties. Thus, I beleive we will continue to see more acquisitions, and even more partnerships, in the LBPO space in the next 12 months.

Gary Bragar, Lead HRO Analyst, NelsonHall

HRO (and overall BPO) Total Contract Values up in Q1 – Q3 2010

October 14, 2010

During NelsonHall’s recent quarterly BPO Index Call, our CEO John Willmott stated overall BPO contract values were up for all BPO sectors, including HRO, both on a rolling twelve-month basis from 2009 – 2010 as compared to 2008 – 2009, and up year-to-date Q1 – Q3 2010 as compared to Q1 – Q3 2009. This is all good news, but not a surprise given that we are beginning to see some recovery from the recession.

Looking specifically at HRO, total contract value (which includes the value of the full term contract plus any renewals) in Q1 – Q3 2010 was up nine percent. The growth came primarily from North America, while Europe declined as it is coming out of the recession a bit slower and clients in that region continue to be more cautious about outsourcing their HR processes. Although its total contract values isn’t as large as in North America, contracts are still being awarded in Europe, e.g., wins in Q3 by Logica, Midland HR, HR Access, Raet and CPH Consulting, as recently cited by my colleague Linda.

HRO growth in Q3 2010 was particularly led by RPO, similar to numerous other points during these tumultuous times. But here, I’d like to take a quick look at why the learning services market is starting to recover (please see Linda’s October 5 blog entitled, “Recapping the Not-so-Dog-Days of HRO’s 2010 Summer” to see a few of the recent learning contract awards.)

In learning, providers are introducing new training offerings largely focused on certified training courses, primarily technical areas including IT. Training is coming back to life, and the initial emphasis is on strengthening direct job-related skills. Making sure IT professionals can keep up with professional certifications can also be a way to build engagement and head off turnover as the employment market improves. There was also some introduction of new leadership development courses, perhaps indicating a return to a focus on the future by investing in management skills development. Finally, social learning is continuing to make inroads, and Expertus introduced its new platform, ExpertusONE, which facilitates communities of practice, expert networks and mentoring, in addition to normal learning system functions. Other new learning offerings introduced in Q3 included those from Raytheon Professional Services, QA and Edvantage Group.

It will be interesting to see, at the end of Q4, which HRO processes, regions and industries are the leaders and laggards. But much, much more to cover before then, including my “Targeting Learning BPO Market Analysis” to be published later this month.

Gary Bragar, Lead HRO Analyst, NelsonHall