TCS HRO Delivers Certainty

Linda Merritt, HRO Research Analyst, NelsonHall

 NelsonHall’s HRO team really enjoys service provider briefings and we recently had one with Tata Consulting Services (TCS).  It was great to have a conversation with the TCS HRO team about their plans and activities. There was a lot to catch up on as they have been very active growing, adding clients, and expanding their global footprint for HRO services and delivery.

TSC offers the following HRO services:

• Workforce administration
• Payroll
• Talent management
• Resourcing
• Benefits
• Employee service center services.

The company is growing its set of global service centers which includes India, China, U.S., U.K., Hungry, Brazil, and Uruguay, its newest center. Supporting a total of ~500,000 employees in 27 languages, it offers options for onshore, nearshore, and offshore service delivery.

TSC HRO clients are spread globally with its largest client base in the U.S., followed by Asia Pacific, EMEA, and Latin America. Currently, the majority of its clients are large market with embedded ERPs to support, and like most MPHRO service providers, TSC supports multiple client ERPs including SAP and PeopleSoft/Oracle. It also supports regional ERPs like Adam and Revolution in Latin America and Chris 21 in Australia. TCS has added its own SAP-based global HR platform for SaaS and SaaS with BPO services.  The SaaS HCM option will support its fastest growing middle market segment, as well as be an option for larger clients ready to consolidate and change outdated systems “lock, stock, and barrel.” For example, for a market research company, TCS consolidated 50+ various HR systems onto its global HR platform across 48 countries in less than a year.  

I frequently comment on the need for buyers to align HRO use with a strategic HR plan that outlines what is needed for what you are doing today, as well what is needed to achieve your long-term objectives. TCS has a client maturity model for its services; it works with potential new clients to assess their current state and helps clients find the “fit and affordability” roadmap that is right for them. The process has been so successful that TCS is retrofitting the tool and assessment for existing clients as well.

A briefing is about the numbers, and it is also an opportunity to learn more about what makes a vendor distinctive and what its approach is to the HRO marketplace. For TCS, a global IT company based in India, one would expect to see an emphasis on technology solutions, IT-support, quality, process standardization, etc. and all that is there. In addition, however, TCS HRO has a focus on “delivering certainty,” not just correct transactions, but improved performance that builds long-term client relationships with the flexibility to meet changing business needs. Having established a solid base of services and customers from which to grow, we look forward to covering the next chapter in TCS’ success.

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Asia Pacific, Talent2, and HRO

Asia Pacific is the emerging market of the most interest to HRO service providers, especially RPO vendors. Most of the big names in HRO/RPO are building or expanding scale there to take advantage of the higher than average growth rates. ADP and NorthgateArinso are well-established in the region, and Futurestep, GP, Kenexa, ManpowerGroup, Mercer, and Towers Watson have all made recent acquisitions in China, Hong Kong, India, and Australia as the fastest way to get more feet on the ground in this expanding market.

Still considered an emerging market, some Asia Pacific countries are already mature including Australia and Japan, while others are truly experiencing the first rush of growth. Each country has different needs and challenges and HRO service providers need to bring a lot of service line experience and local knowledge to the table. While one industry needs a high volume of entry-level employees to meet demand, another, a bit further on the maturity scale, needs management-level employees with the experience to manage and continue growth of a more complex enterprise.

Newer entrants should not forget that there are regional providers already on the ground; one of the largest is Talent2, which covers the entire area and a bit beyond. Talent2 has continued its solid pace of contract wins across the Asia Pacific region. An example from the public sector is contractor procurement and management for 13 agencies of the Queensland government. In the private sector, contract wins included payroll, RPO, and learning, and cover Australia, China, Hong Kong, Japan, Malaysia, and even the Middle East.

With ~1,700 employees, Talent2 supports 30 countries in 30 languages from its 46 offices and service centers located across 19 countries. With its scale and services it should be no surprise to find that Talent2 is, according to NelsonHall, the HRO leader in Asia Pacific.

Perhaps it is reasonable then that Talent2 has attracted interest from investors wanting to take it private. Morgan & Banks Investments (MBI) and Allegis Group have entered into an agreement to acquire the company, which will remain operationally as Talent2 if the deal is successful. MBI represents current major stakeholders and Allegis is already a Talent2 RPO partner. It will be interesting to see if privatization allows Talent2 to fuel even more growth in and outside of the Asia Pacific region.

Linda Merritt, HRO Research Analyst, NelsonHall

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A Steady State in HRO for 2Q 2011

After several quarters of new HRO activity, the pace settled down a bit in the second quarter, but was still plenty interesting. Here are several samples from 2Q 2011.

Capita stands out for its volume and breadth of HRO activities. It is the largest MPHRO provider in the U.K. according to the NelsonHall MPHRO 2011 market report. Capita was awarded preferred supplier status by NHS in North Mersey, providing a potential of up to £27m by offering a mix of HR, payroll, and RPO services to 12 Mersey NHS trusts. There were also two awards for occupational health services, which it is expanding into the more holistic well-being services. An acquisition was also in the mix. Team24 was brought in to enhance medical RPO capabilities, further strengthening a market segment in which Capita is rated third in the U.K.

I like to look at the mix of new partnerships, offerings, and mergers and acquisitions to see where vendors are placing their bets on expansion and growth. Global remains hot and deal activity is there to keep hopefuls in the game of capturing new markets.

A leading example is ManpowerGroup’s strategic moves in China. It purchased REACH HR in south China, added Xi’ an Fesco with its 10k associates, and partnered with the city of Kaifeng in the Henan Province to add coverage in the west and north central area of China. To top off this spree, ManpowerGroup aligned itself with China’s Ministry of Industry & Information Technology (MIIT) for a five year plan.  It will develop a talent exchange center, enabling ManpowerGroup’s local partners to provide workforce solutions focused on manufacturing.

Remember that China is not a market you can just jump into and Manpower has been on the ground in mainland China for 17 years. It has the needed relationships and is well-positioned to benefit from the development expansions now moving into inland China.

Other APAC activity included Australia. Mercer was awarded a superannuation pensions administration contract by RBK. Also, Towers Watson is partnering with Link Group to enter the superannuation market in Australia which is not big in numbers, but each group plan can have a large number of members. Finally, Futurestep opened global service management centers in Australia and New Zealand.

Elsewhere in APAC, Genpact was selected for a five year learning content development contract by JobSkills in India; Merce r launched a flex benefits offering in Hong Kong, and is partnering with PayrollServe to offer its HR services in APAC; and ManpowerGroup acquired Web Development Company in India to strengthen IT recruiting.

With plenty of recent HRO deals in implementation and early stabilization, along with perkier volumes and special projects in existing contracts, service providers need to focus on balancing delivery performance with new acquisitions. Compared to some of the things we have experienced in HRO, a steady state is not such a bad thing!

Linda Merritt, Research Analyst, HRO, NelsonHall