Posted tagged ‘Hays’

HRO Total Contract Value Jumps 38 Percent in 1H10 – Where are the Gains Coming From?

July 15, 2010

During our Quarterly BPO Index webinar last week, NelsonHall CEO John Willmott reported that HRO total contract value (TCV) revenue increased 38 percent in 1H10 in a year-over-year comparison to 1H09. While HRO’s gains weren’t as great billions of dollars-wise as other BPO segments such as multi-process or industry-specific BPO, it is good to see the start of an upturn.

So where are these gains coming from? Forty-five percent of the contracts were signed with North American organizations, 43 percent were awarded to European enterprises (of which two-thirds were based in U.K.), and organizations in Asia Pacific accounted for the remaining 10 percent. And by service type:

• Recruiting – 32 percent of deals – including contract wins by Hays, Manpower, Kenexa, OchreHouse, Pinstripe, CPH Consulting, Alexander Mann Solutions, The RightThing, KellyOCG and PeopleScout

• Payroll – 22 percent of deals – including contract wins by Capita, MidlandHR, Raet, NorthgateArinso, ADP, TDS and Ceridian

• Benefits Administration – 20 percent of deals – including contract wins by Workscape, Aon, Secova, Mercer, Convergys and Xafinity

• Multi-process HRO (MPHRO) – 14 percent of deals – including contract wins by Accenture, Ceridian, ADP, Xchanging and Hewitt

• Learning – Eight percent of deals – including contract wins by Edvantage Group and General Physics

• Other HR – Four percent of deals – including talent management-related contract wins by Kenexa

Overall, I was not surpised with the above breakdowns as they were very consistent with the predictions in our June 2010 quarterly HRO Confidence Index.

Digressing a bit here to add to the buzz about Aon’s acquisition of Hewitt…while much written and water-cooler discussed has been about benefits administration, a sizeable amount of Hewitt’s revenue comes from MPHRO. A good example of this is Hewitt’s five-year contract renewal with International Paper, announced in April 2010.The renewal will support 40,000 International Paper employees with payroll, workforce administration, health and welfare administration, recruiting support, SAP application support and help desk, call center and HR manager support, learning administration and flex staffing management services. Given the amount of revenue coming from Hewitt’s MPHRO client base, I believe Aon will not only happily want to continue to support these existing clients, but also want to continue to grow the MPHRO business.

Although most new MPHRO contacts will likely not be the mega deals of yesteryear, reducing the number of suppliers in the outsourcing portfolio continues to grow in appeal among buyers. If buyers are satisfied with their MPHRO deals, they will continue, albeit in smaller fashion, to benefit both buyers and providers.

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

Geographical HRO Growth: The NelsonHall HRO Confidence Index Says…

June 11, 2010

Earlier this week my colleague Linda Merritt wrote about the over-arching tune and tone of optimism and anticipated growth in the HRO industry, per the results of NelsonHall’s just-released HRO Confidence Index.  Today, let’s talk about geographical growth.

When asked about expected changes in 2010 HRO revenues by geography, year-on-year relative to 2009, the HRO providers that participated in this most recent HRO Confidence Index see increased growth in both mature and emerging economies in Asia Pacific and Latin America, expect maintenance of the growth experienced at the end of 2009 in the U.S. and U.K., and anticipate higher growth in major continental economies including France, Germany, Benelux and the Nordics.

Specifically – on a scale of 1 to 5, with 5 meaning a strong increase and 1 meaning a strong decrease – the geographical ratings were: 

Focusing specifically on the Asia Pacific market here (as it’s an emerging market for HRO) – and especially relative to RPO growth – data points made by Dr. Chris Chan (Chairman of the MBA Program at Hong Kong University), at the recent HRO Summit in Singapore support our HRO Confidence Index findings. For example, Dr. Chan stated:

• At 11.9 percent sustained year-over-year growth, China and Hong Kong have the world’s fastest growing economy

• The Indian economy has grown from $32 billion in the 1980’s to more than $1 trillion today

• 64 percent of Chinese, 50 percent of Hong Kong-based and 54 percent of Singaporean businesses expect to increase hiring in 2010

And it is clear that RPO activity is actually taking place and not just being talked about in Asia Pacific in 2010, with recent contracts being won by Hays, Kenexa, Manpower and Accenture.

However, hiring increase requirements in Asia Pacific come with a significant challenge, as noted on June 7, 2010 by Manpower Chairman Jeff Joerres at the World Economic Forum on East Asia summit in Vietnam. According to Mr. Joerres, talent shortages in Asia Pacific are 10 percent higher than the global average, led by Japan with 76 percent of companies struggling to source talent, attributable to an aging workforce and lack of immigration. On the one hand – as pointed out by Mr. Joerres – young people need to be encouraged to learn in-demand skills for jobs including technicians, engineers and skilled trades. On the other hand, this represents an opportunity for learning outsourcing providers to help re-train existing workers, and an opportunity for RPO providers to help source requisite talent via their rich local job banks and talent pools in other geographies, as well as develop innovative sourcing strategies. 

One thing I find very interesting is that the talent shortage problems currently faced by Asia Pacific organizations will soon need to be addressed in the U.S. and parts of Europe. Four or five years ago there was great fear that the boomers retiring and leaving the workforce would result in a severe talent dearth. While the recession has stemmed that fear, when the economy picks up and net worth restores, that exodus will begin and the talent shortage will become a reality. How should companies address this challenge? You know my answer.

In my next blog, a focus on industry growth per the most recent NelsonHall HRO Confidence Index.

Gary Bragar, Lead HRO Analyst, NelsonHall

An RPO and MSP Combo: The Best of Both Worlds

April 16, 2010

As I read through HRO Today magazine’s recently published Baker’s Dozen Top Managed Service Program (MSP) providers, it struck me positively to see many companies such as Manpower Business Solutions, Hays, Allegis Group Services, SourceRight Solutions and Adecco on the list. That’s because those providers are also recruitment process outsourcing (RPO) providers.

In different mixes and offerings, the MSP solutions include contingent workforce management, program and vendor management, temporary staffing, employee process management and other services.

There are two primary reasons why provision of both RPO and MSP solutions from the same vendor is valuable to the marketplace.

Flexible Staffing Solutions from a Single Vendor

As NelsonHall and many others have written about quite a bit lately, permanent recruiting has largely been on hold due to the recession, replaced with utilization of temporary hires and contingent workforces. As we’ve also written about numerous times, HRO buyers are increasingly opting for service delivery consolidated under the aegis of a single provider. Thus, the ability to tailor multiple recruiting solutions to meet client’s evolving needs results in a win-win for both providers and buyers.

Employee Attrition

Per a Manpower study released earlier this week, 80 percent of 2,000 North American hiring managers surveyed believe less than five percent of their employees will voluntarily leave the company in 2010. But a survey from Manpower subsidiary Right Management revealed 60 percent of employees intend to pursue new jobs if there is improvement in the economy this year. This huge delta aside for a moment…while it’s not feasible that more than half of employees will leave their current jobs, what if it is more than the five percent employers expect? A contingent workforce must be leveraged simply to keep the business running.   

The bottom line is that vendors and buyers both gain value from a workforce solution that meets clients’ dynamically changing needs, whether it be for temporary or contingent employees through an MSP offering or permanent employees via RPO. Buy-side HR executives, are you ready to meet your company’s current and future workforce needs?

Gary Bragar, Lead HRO Analyst, NelsonHall

Conflicting Job Growth/Job Loss Reports – What are HR and HRO to Do?

April 1, 2010

As reported in the March 31, 2010 edition of USA Today, a just-released ADP report said employers slashed 23,000 private sector jobs in March 2010, while the median of estimates from 35 economists surveyed by Reuters for the ADP report was for a rise of 40,000 private sector jobs during the month. Economists expect The Labor Department’s closely watched month employment report, due out on April 2, to show employers added 190,000 jobs in March.

While the ADP report only covers private sector jobs and the Labor Department numbers could be somewhat inflated as many temporary workers were hired to conduct the 2010 census, this is still a huge delta. Did we lose jobs in March? Did we gain jobs in March? What will happen in Q2, Q3 and Q4 2010 in terms of hiring? The answer is…there doesn’t appear to be much more than murky answers.

What is clear, however, is that we all know job growth is coming, even if we’re not certain when it will really begin and then stabilize. And apologies for this focus in another of my blog postings, but it is so important to the health of the economy, the job market and indeed the survival of many organizations…astute companies know they will need to begin hiring again to meet demand as consumers start spending more. But really smart organizations, particularly mid- and large-sized companies, are starting to prepare now by seeking the help of external recruiting process outsourcing providers that can build a ready talent bank to fill jobs when requisitions are approved. These forward-thinking companies know one of the keys to competitive advantage is an ongoing search for top quartile talent to tap when they are ready.

Evidence of this proactive and front-loaded talent search is demonstrated in The RightThing’s March 29 announcement of seven new RPO contracts Q1 2010 with companies including Homesite, Nationwide and CUNA Mutual. And there indeed has already been hiring in some pre-Q1 2010-signed contracts. For example, The RightThing hired 500 employees in North America, South America and the U.K. for five existing pharmaceutical clients during Q1, and 2,100 new hires in Q1 for seven clients expanding call center operations.

And additional recruitment contracts were awarded during the last quarter to companies including Hays, Kenexa, Manpower, OchreHouse, PeopleScout, Pinstripe, CPH Consulting, Capita and Kelly Government Solutions.

So while there are conflicting reports on job growth or job loss today and into the near future, we know the growth will come. As a buyer, are you ready now?

Gary Bragar, Lead HRO Analyst, NelsonHall

Can RPO Help Ease Chinese and Japanese Employees’ “I Can’t Get No Satisfaction” Woes?

March 25, 2010

What can employers in China and Japan learn from those in Denmark, Norway and Canada? Seems quite a bit, according to the results of staffing and recruiting provider Randstad’s new global Workmonitor survey released earlier this month. The online survey, administered by a third-party among minimum 400 full-time employees per country, found that only six percent of Chinese employees and seven percent of Japanese employees are “very satisfied” with their current employer, compared to more than 35 percent for those in Denmark, Norway and Canada. (FYI – The “very satisfied” levels for U.K., Australia and the U.S. were 20 percent, 24 percent and 31 percent, respectively.)

While Asia Pacific has been slower than other world regions to embrace HRO, NelsonHall research forecasts the Asia Pacific region to have the highest growth rate of HRO adoption over the next five years. Given the sobering results from the Randstad survey, China- and Japan-based employers may be well served by considering recruitment process outsourcing (RPO) services sooner than later, especially when the contracts include talent management, employee development and retention solution components. Although RPO itself is not an end-all solution to improving employee satisfaction, if it includes the aforementioned services, it will go a long way toward helping to improve it!

We’ve already seen some evidence of RPO activity in China including the Talent2/VivaKi China contract signed in November 2009, and the April 2009-announced partnership between Kenexa and R&J Management Consultants, which resulted in the creation of Shanghai Kenexa. And a variety of other RPO providers, including Manpower, Hays, Futurestep, Adecco, Hudson and Alexander Mann, are stepping up their delivery capabilities and reach into the Asia Pacific market.

My advice to RPO providers servicing (or considering doing so) the Asia Pacific region, especially China and Japan: present your local market knowledge and delivery capabilities, not only in recruiting but also in retention-related activities such as expanded on-boarding processes with linkage to learning, reaching out to new hires at periodic intervals, conducting regular employee satisfaction surveys, conducting exit interviews to find out why people are leaving and then feeding those results with recommendations to senior leaders for action, etc.

My advice to China- and Japan-based employers: with the delicate state of your workforces’ satisfaction levels, robust on-boarding, performance management, talent management, employee development and other retention solutions are very important – as they are for employers around the world. It could be highly advantageous to leverage the expertise of an RPO provider to support you in these areas.

Gary Bragar, Lead HRO Analyst, NelsonHall