Posted tagged ‘General Physics Corp.’

Learning Services Acquisition Frenzy

March 17, 2011

Last year, we wrote quite a bit about all of the M&A activity in benefits administration including:

  • Towers Perrin and Watson Wyatt completing its merger to become Towers Watson
  • ACS, a Xerox Company acquiring ExcellerateHRO
  • ADP acquiring Workscape
  • Aon acquiring Hewitt to become Aon Hewitt
  • Other acquisitions made by vendors including Mercer, Xafinity, and Capita.

Will learning be the next HR service area abundant in acquisitions?  Although we have seen learning services acquisitions in the past, including ACS acquiring Intellinex in 2006, and will likely continue to see more in the future, I don’t believe we will see any in learning that are equivalent in scale to the large benefits acquisitions.  However, if there was an award for the number of acquisitions in a short period of time, it would have to go to General Physics Corporation (GP). On March 10th, GP acquired RWD Technologies for $28m, its 8th acquisition in the past 18 months.  RWD is based in the U.S. near GP in Baltimore and has three additional U.S. locations as well as offices in the U.K. and Colombia.

GP got RWD at a bargain since RWD’s consulting revenues were $65m in 2010.  RWD was hit hard by the recession and GP came along at the right time with cash on hand.  As a result of the acquisition, GP inherits RWD’s IT learning expertise, where it had little prior experience.  The acquisition also strengthens GP in the petroleum, manufacturing, and automotive sectors.

Last month, GP acquired Communication Consulting to expand delivery of its training services in China.  GP’s other acquisitions were made in the U.S. and U.K. between September 2009 and December 2010.

GP’s 2010 revenues were $259.9m, an increase of 18.6% compared to 2009.  Growth was attributed to increased volumes from existing clients, new contract awards, and its acquisitions, which had the greatest impact.

Moving forward, what will happen?  Well for one thing, don’t count GP out from making future acquisitions.  GP still has ~$35m in revolving credit after the RWD deal and has stated that they will continue to seek acquisitions to grow globally.  However, with so many acquisitions, GP now faces the challenge of creating an integrated client experience and cross-selling into the strengths of these acquired companies to continue its rapid pace of growth.

It will be interesting to watch as things unfold this year.  In the meantime, we can finally put to rest the question “what’s happening with RWD”.

Gary Bragar, Lead HRO Analyst, NelsonHall

Indicators of an HRO Industry Rebound? Oh Yes!

December 3, 2009

Although the overall HRO industry has been in a downward spiral for quite some time, we are now beginning to see indicators of a rebound.

Let’s look at some facts from recent NelsonHall research:

•  Seasonally adjusted BPO total contract values (TCVs) were up 25 percent in 3Q09. This is in sharp contrast to 1Q09 and 2Q09, when TCVs were down 40 percent and 15 percent, respectively

•  48 percent of BPO buyers in North America, Europe and Asia Pacific reported that in 4Q09 and 2010 they are/will be preparing RFPs for new opportunities and 37 percent are planning to award new contracts, compared to 15 percent preparing and 8 percent awarding between 4Q08 and 3Q09

•  Our 3Q09 HRO Confidence Index – published in October – found that 44 percent of HRO providers were much more confident of their HRO business prospects, as compared to 10 percent in 2Q09

Recent contract award announcements – especially in learning and recruiting, which I view as early indicator process areas as outsourcing of more core processes such as payroll has remained relatively constant – also support the beginnings of a rebound. For example, General Physics Corp. last week announced an expansion of its HRO contract with a leading software corporation to include learning delivery and administration. And in recruiting, The RightThing reported eleven new contacts in 3Q09, including with NCR and Good Year Tire and Rubber Company, and a 30 percent increase in new client prospects. And our 3Q09 HRO Confidence Index determined a growth trend in learning services and RPO in both revenue and sales pipeline.

It is clear that corporations are now feeling a bit more comfortable with making HR-related investments, and this bodes well for the outsourcing industry when we use learning and recruiting outsourcing as an early indicator litmus test. The key to making the right HR-related investments in a still shaky economy goes back to the old adage, “People don’t plan to fail, they fail to plan.”  Not so for smart HRO buyers who are addressing their upcoming growth needs now.

Gary Bragar, Lead HRO Analyst, NelsonHall