Have You Tripled Your HRO Business?

Linda Merritt, HRO Research Analyst, NelsonHall

TriNet has tripled its PEO and HR services business in five years with major acquisitions and organic growth under CEO Burton Goldfield.Most PEO’s are small businesses serving the local small business market. TriNet started out that way as well in 1988 in San Leandro, CA. Over time, it acquired other PEO’s and began expanding services to new localities. The first big acquisition was Gevity in 2009, helping the regional company to become a national player.

Acquiring Growth

In 2012, TriNet went on a buying spree with three acquisitions fueled by low interest rates, easy access to capital, and its own cash:

• Accord HR, a small PEO for additional geographic coverage
• ExpenseCloud, which added expense reporting as a service line
• Strategic Sourcing, Inc. (SOI), a larger PEO for additional scale and expertise.

ExpenseCloud and SOI will each maintain their name, brand, products, and services and operate as TriNet business units.

With the addition of SOI, the company almost doubled in size from 750 employees to 1,400, and it has gone from one office as a start-up to thirty-five in many areas of the country.

Growing Organically

Before and during growth by acquisition, the company was growing organically. It has been recognized by Inc. and included in the Inc. Hall of Fame for five years of rapid growth.  With the combination of both strategies, the company is now the largest privately held PEO in the U.S. and revenues have nearly tripled in the last five years.

Cloud-based, On Demand, and Mobile

Just this week, TriNet released it latest HRP Mobile app for Android and iOS:

• My Paycheck: access to payroll data and compare payroll statements
• My Time: information about planned time-off, accruals and balances, and submit and manage time-off requests
• My Benefits: view of key health benefits details
• About Me: update employee information
• Company Directory: find and call work contacts; also includes an organization chart search option
• Contact TriNet: contact employee solution center via email or phone.

PEOs like TriNet and its customers are benefiting from the evolution of affordable SaaS and cloud-based platform services and advances in mobile any-device access. Now even small local start-ups and mid-sized regional businesses have access to full HR suites and services.

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Managing Your Footprint – Welcome to the New Summer Time HRO Dance

Many HR outsourcing providers today are looking for ways to carefully manage their service footprint.  Under economic pressure, and with limited tolerance for capital investments, they are seeking cost-effective and risk-managed ways to leverage their service strengths and geographic coverage. As a result, we are seeing a new round of provider dance partners making selective divestitures, partnerships and acquisitions.

The Back Step: In a few cases, providers are back-stepping from some services and countries to focus on core strengths and growth geographies.

•  For example, in Europe, Randstad continues to sell parts of its salary administration and payroll services in the Netherlands while planning to carry on delivering these services in other countries where it has better growth prospects.

Two to Tango: In more cases we are seeing partnerships and alliances to leverage complementary service delivery strengths with an overall expanded geographic footprint.

•  In May, General Physics and Baker Communications entered into an agreement to increase their partnering in offering global corporate training and learning services.

•  Alexander Mann Solutions (AMS) has been leading the alliance dance this summer. It and Xchanging just announced their strategic alliance to deliver end-to-end HR services. And just two week ago, AMS and The RightThing announced their partnership to cover and expand multinational RPO services.

Take the Lead: Swinging across the dance floor from alliances and strategic partnerships and moving on to joint ventures can culminate in acquisitions.

•  Hewitt Associates has acquired the remaining interest in BodeHewitt AG & Co KG – a German pensions and benefits specialist – from its joint venture partner Bayerische Hypo- und Vereinsbank AG (HVB), with the business becoming Hewitt’s German Retirement and Financial Management (RFM) consulting practice.

•  Trinet just completed its acquisition of Gevity, further expanding its PEO geographic footprint and ability cover both the small business and midmarket.

Thank Your Partner: A good turn around the dance floor can lead to more business opportunity.

•  Adding to its dance card, Alexander Mann Solutions has signed a five year agreement to use new HRO partner Xchanging’s procurement outsourcing services.

The HR service provider partnering activity we are seeing looks like positive strategic moves for providers and buyers alike. But actually making partnerships of any nature work requires a lot of nurturing over a long period of time. We’ll see which of the summer time dance partnerships lead to long-term relationships.

Linda Merritt, Research Director, HRO, NelsonHall