NGA’s Broadening Offerings

Liz Rennie, HRO Research Analyst, NelsonHall

Last week we attended the Advisor & Analyst Summit with NGA where CEO Adel Al-Saleh presented the highlights for FY2013 (up to 30 April 2013) and described the company as an “IP-led HR services company.” Focus was given to the company’s ability to support global payrolls, whatever the HRIS platform, as NGA supports multiple platforms such as Workday, SuccessFactors, PeopleSoft, Oracle and SAP. Further, NGA announced that BPO agreements are in place with all the above-mentioned technology companies.

NGA serves all size companies and is particularly focused on global enterprise clients. Multi-country BPO HR/payroll is where NGA sees growth. Over the last year NGA experienced flat revenues, the downturn in the consulting was cited as the main reason; however, EBITDA was up by 8.6% to $157m. Workforce administration and global payroll were cited as areas which were experiencing growth. A “sweet-spot” client would be a client who wants its IT to be managed and requires service components for HR administration and/or payroll.

New wins and renewals for FY 2013 were cited as Aer Lingus (Irish HRO client based on ResourceLink), Textron (PeopleSoft renewal), Pirelli (40 countries in scope), State of Texas, McGraw-Hill and Orica.

FY 2014 priorities

• Evolve the client-centric coverage. This means to increase the reporting and visibility of customer satisfaction to drive this higher
• Drive the maturity of global delivery capabilities
• Evolve the transformation consulting services
• Invest and launch key IP platforms, including:
  – Global payroll
  – Service center tools & utilities
  – euHReka – Preceda – ResourceLink – Moorepay
• Increase traction of key partnerships:
  – Workday
  – SuccessFactors-SAP
  – Oracle.

NGA already has more than 8 clients utilizing the Workday platform.

NGA presented its Global Delivery Model, which demonstrates the maturity and scale of NGA’s global delivery, including approximately 1.2k employees in Manila, 1k in Kochi, 100 in Dalian, China, 150 in Katowice, Poland, 500 in Granada, Spain and 200 in Buenos Aires, Argentina. These centers have been undergoing a center standardization based on Six Sigma to improve alignment.

NGA’s depth of knowledge is evident in the 8 IP components presented, including its NGA Service Catalogue, Global Statutory Center, ePIM Implementation Methodology, SunEXo (to track payroll status), ScopeHR (to configure scope), Online Reference Guide (for processes and instructions), Global Standard Training and Global Process Framework.

Being an IP-led HR services company, NGA has to clearly articulate the value of the IP to the client and then ensure that the IP roadmap is closely following its client’s needs. Furthermore, increasing technology capability with a broader partner ecosystem could bring further challenges, such as:

• Finding the right technical solution for a client without confusing them; especially where they are simply asking for a service
• When the IP becomes less technology centric, NGA could lose some of the depth of knowledge that is already built into the IP.

NGA continues to be a company that is flexible to the needs of its clients. In this current climate companies need agility in HR solutions, services, prices and (now more than ever) technology. NGA offers a global delivery network that is experienced and always hungry for more business.

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HRO: Are you Violently Good at the Talent Process?

In following up on my recent talent management (TM) blog, Building HRO Business Value, I spoke with Marianne Langlois, Global Process Executive with NorthgateArinso (NGA).  Marianne agreed that TM has been on the back burner for many companies, but now she sees growing interest. It may even be that TM is one of several paths to climbing out of crisis.

With several lost years, simmering issues of an aging skilled workforce and new generations entering the workforce are heating up. Surveys show that succession planning has become a critical concern of senior business leaders. Creating succession plans is fine, but there is too often a cycle of identifying and/or hiring top talent and then losing them within two years.  If this is happening, then whether the tools and processes are home grown or “best of breed” doesn’t matter because they are not adding full value to the business.

We do not need to make the case here for the value of a holistic and integrated talent management system and process supported along with, as Marianne says, HR partners who are “violently good at the talent process.” We do need to discuss how to get there from where many companies are now: scattered with underutilized tools, disconnected processes, islands of related data, as well as what roll HRO plays.

For NGA, the underlying HR system is key because it helps bring all of the data together to monitor and manage talent and workforces across the enterprise. Core HRIS and payroll is a necessary part of the whole, and the sooner the base is considered, the faster and more direct the value added TM services can be built. With today’s many HR system options, TM can be added now or later as a module, hung off the side as a specialty system, or even connected via a cloud-based SaaS application.

In this environment, are organizations willing to do more than talk? Yes. For example, a major global pharmaceutical company is working with NGA to build the integrated TM platform it needs, including letting go of their earlier investments in TM systems that were not connected or fully used.

Renewals are a great opportunity for TM. NGA is working with major clients that came with the Convergys acquisition last year on plans for the future. Fifth Third Bank will be continuing with NGA for another seven years and it will also be moving to the next generation of HRO services based on SAP HCM and euHReka.

With clients looking for integrated and streamlined systems and data across the enterprise and around the world, vendor, product, and service selection need to keep glob-ability in mind. Can you get a unified view of your top talent and their compensation, appraisals, laterals and promotions, as well as development plans and activities?

Linda Merritt, Research Analyst, HRO, NelsonHall

HRO and the Total Cost of Ownership

A top question for buyers new to outsourcing is how much will we save?  A legitimate question and one that can be hard to answer. Many studies have been done over the years tracking the subject, often asking respondents to estimate the percent of savings. In other words, asking for their opinion. Not exactly what senior business leaders are looking for!

ADP sponsors PwC’s Total Cost of Ownership (TCO) Study and the 2011 results are in. The research covers the costs of payroll, workforce administration (HRIS), time and attendance, and health and welfare services and compares the cost of in-house managed services to clients that outsource to ADP. The 279 participants compiled a more complete picture of the following costs: systems (e.g., install, upgrade, and maintenance), direct and indirect labor, and direct non-labor (e.g., vendor fees, facilities, and other overheads), the cost of outsourcing was included for those using ADP.   

TCO for organizations managing the four services in-house, with no outsourcing, were $1,403 for larger employers (1k+ employees) and $1,953 for those with 100 to 1,000 employees.

Guess what? Outsourcing saves money. Average savings of outsourcing over in-house is 18%. Employers with more than 1,000 employees save more due to good old-fashioned economies of scale, up to 27%.

Outsourcing clients sometimes feel they do not reduce costs as much as pitched by the vendor or planned in the business case. The ADP-sponsored study also identifies success factors that help maximize TCO savings.

The findings put real data behind what we intuitively know:

• Adding self-service is basic to reducing cost for HR and time for employee users.
• Comprehensive process transformation is needed to realize full savings. It takes more than new technology; process redesign, governance, and standardization are also needed.

Another finding confirms what I have long suspected: using one vendor and one service platform (outsourced or even in-house) saves more than using multiple vendors and platforms. There is added cost to using multiple, even “best-of-breed” point solutions for payroll, workforce administration, and time and attendance.

• Average cost of outsourcing the three services to one vendor on a common platform was $910 per employee per year, compared to $1,020 (+18%) for managing in-house on a common platform and $1,202 (+32%) for managing in-house using multiple vendors and platforms.

To understand total costs look at the “seams,” places where interdependent processes and systems must be integrated, interfaced, up-dated, and even manually coordinated when using multiple platforms and vendors. The cost can be as high as $200 per employee per year.

HRO works and significantly reduces TCO, but it takes time and effort of both the vendor and the client to achieve maximum benefits. I’ll cover more on that topic next time.

Also, I have some good NelsonHall news. The 2011 Targeting MPHRO study has just been released by our HRO colleague Amy Gurchensky, see more information at www.nelson-hall.com.

Linda Merritt, Research Analyst, HRO, NelsonHall

Cautious HRO Optimism from HR Week in New York City

Contrary to my headline, I should say cautious optimism from the New York Hilton as I did not actually attend the conference yesterday. This the first year there was no HRO World component to the event. But the HR Executive Forum agenda included some top HR leaders and senior HRO vendor executives, and the HR Expo for exhibitors was there so it was still a pretty good place to meet with others in the HRO community. My colleague Gary Bragar and I were all over the Hilton for planned meetings, and it was fun waving at others we knew on our way to meetings in the lobby bar, the side bar, the café, the Starbucks, and in conference rooms and suites.

Signs of the still-not-quite-here recovery were pretty abundant. One vendor did have a hotel room in which to meet, and another big name vendor did have an actual conference room and refreshments; coffee, tea and cookies. That was as lavish as it got.

On the more positive side, we had a number of meetings with RPO vendors, and they are experiencing something of an upturn. A few companies are establishing contractual relationships with RPOs to be ready for greater hiring volumes without rebuilding internal recruiting staffs. And it isn’t just the U.S. getting ready to return to hiring. One RPO vendor showed us a list of new first quarter 2010 clients in China, India, France and Mexico. Congratulations.

One of the running themes was choices for clients. There are more entry points into HRO than ever. Want support for your on premises ERP? You got it. Want to move to a hosted or SaaS ERP? It’s there. Plan to blend the two options? Go right ahead. Want full BPO for a set of core services and basic system functionality for your HR staff to use in other areas? No problem. Have a couple of long standing vendors you want to incorporate? It’s done. Onshore, nearshore, offshore or multishore, you can get it your way.

However, all this choice comes with a price for buyers, literally and figuratively.  It is easier to navigate choice when you are working within a long-term plan for your HR service delivery needs. So be sure the choices you make today will not limit your options for tomorrow.

Are today’s HRO vendors really excited about signing limited deals that only cover a portion of your entire service delivery system? Well, pretty much yes. In this not-quite-yet-a-recovery period, business is business.  But over time, your HRO vendor partners will each be hoping you will expand the relationship and win more of your business.  Make sure your selected providers – especially the primary HRO vendor for your HRIS system, and data and foundational employee and manager services – have the current and future planned capabilities and capacities to be your partner in what will ultimately be HR transformation.

But, a word of caution. I did hear there are some buyers still shopping for rock bottom prices. A smaller competitively priced deal? Yes, those are out there. Buying for price only, and assuming a vendor will take a loss to win your business, is a lose-lose proposition. From what I heard yesterday, the major players have learned that lesson.

Overall, the general mood was one of cautious optimism. A couple of vendors said they have signed some nice sized deals, and announcements should be released soon. Good news is always welcome, and we look forward to covering the news in our NelsonHall Tracking Service!

Linda Merritt, Research Director, HRO, NelsonHall

Web 2.0 and HRO: A Marriage of Necessity

Google the phrase “define Web 2.0” and you’ll come up with nearly as many hits as Scottish singing sensation Susan Boyle’s YouTube views (okay, a little bit of an exaggeration, but you get the point.)

One very recent Webopedia definition I think nicely nails it: “Web 2.0 is the term given to describe a second generation of the World Wide Web that is focused on the ability for people to collaborate and share information online… includes open communication with an emphasis on Web-based communities and users, and more open sharing of information. Over time, Web 2.0 has been used more as a marketing term than a computer-science-based term. Blogs, wikis, and Web services are all seen as components of Web 2.0.”

So why am I talking about Web 2.0 in an HRO blog? Millennials in the workforce openly and adamantly “expect” Web 2.0-type capabilities in their working environment, as do their Gen X counterparts to a large extent. It’s simply an integral part of their lives. Further, it allows for enhanced connectivity and communication as workforces become increasingly global. And finally, employees and retirees alike desire more, better and easier access to information which directly impacts them and their decisions today and in the future.

The implications of Web 2.0 on HRO providers is clear…they must innovate to offer their clients’ employees Web 2.0-type services to enable the engagement and satisfy the information access requirements of today’s employers and workers. And there are a wide range of opportunities for doing so. For example:

•  Social networking sites can be incorporated into learning BPO (LBPO) arrangements to encourage collaboration and sharing of tacit knowledge across particular spheres of expertise, as can wikis for specific training needs

•  More interactive, information-rich and modeling technology-based HR portals can address the need for real-time, life event-based employee engagement in benefits administration decisions

•  Payroll processes can be “jazzed” up to enable employees to utilize mobile technology to view their payslips as soon as they are available

And let’s not forget the importance of Web 2.0-type services for HRO clients themselves. For example, executive sponsors expect better and easier access to information on their engagements’ SLAs and KPIs, increasingly via a dashboard environment; benefits administration plan sponsors are looking for enhanced, streamlined access to individual case tracking through plan sponsor-specific web portals; and wikis can potentially be utilized to develop understanding around specific issues within outsourcing contracts, leading to better client service.

We strongly believe Web 2.0 will continue to encourage – and increasingly demand – HRO suppliers to innovate around the technology offerings they provide to drive greater efficiency, effectiveness, satisfaction, information access, SLA/KPI analytics and, ultimately, cost savings into their delivered processes. Further, we believe the availability of robust Web 2.0-type services will lead to more HRO arrangements in which technology is a key driving factor not only in the initial outsourcing decision but also in the selection of the third-party provider.

Until next time, happy sourcing!                     

Helen Neale, Research Director, Human Resources Outsourcing, NelsonHall