Posted tagged ‘multi-process hro’

HR Tech: Another Winner!

October 6, 2011

Kudos to Bill Kutik and everyone involved in planning and organizing the 14th Annual HR Tech Conference that took place October 3 -5. Surveys are still being collected, but I’d rate it as a success! As an analyst, I did attend a couple presentations and briefly visited the showroom floor but, the majority of my time was spent in small meetings learning about new outsourcing contract activity and technology offerings, which included demos.  Highlights from some meetings included:

  • IBM, already a major global MPHRO and LBPO provider, winning three significant contracts in the past month with clients headquartered in three different continents including a MPHRO contract with Air Canada (press release issued this morning). More to follow on the Air Canada win as well as the other MPHRO and LBPO contract awards as those press releases are issued.
  • ManpowerGroup Solutions’ RPO business continuing to grow at > 50% thus far in 2011 with dozens of new clients added YTD in countries that include: U.S., Mexico, Costa Rica, Nicaragua, Australia, China, Hong Kong, Malaysia, Taiwan, India, Vietnam, Japan, U.K., Israel, Belgium, Finland, Poland, Netherlands, Sweden, and France.
  • ADP’s demo of Vantage HCM, which is initially targeted in the U.S. for organizations with 1,000 – 20,000 employees.  I was impressed with the performance management capabilities and the overall ease of use, which included setting goals, identifying competencies, weighing performance to goals, linking performance to compensation, succession planning, etc. I could easily see how this platform can make an organization’s talent more effective, especially when combined with project management and implementation consultation.
  • Kenexa’s recent announcements that include: launching Social Solutions for Recruiting and its new performance management suite, 2x Perform, which integrates performance management, succession planning, and compensation; a partnership with Skillsoft to integrate its e-learning content and SkillPort platform with Kenexa’s talent management platform and 2x Perform; a partnership with The Brooklyn Group to increase RPO presence in Australia; and a partnership with HR GlobBlog for global talent advice.
  • SourceRight Solutions, whose revenue has been growing from both new contract wins as well as existing clients increasing hiring volumes, with the biggest news that Randstad completed its acquisition of the SFN Group for ~$771m last month. SourceRight will be the RPO arm for Randstad and with combined company revenue of ~$22 bn, of which ~80% are in Europe, expect great opportunities abroad as well as continued success in North America.
  • Mercer’s Human Capital Connect, which combines talent management technology for performance management, succession planning, and compensation. It uses the PeopleFluent platform and a client success team that does a readiness assessment and stays with the client for life. Since its launch in mid-2010, a few major clients have been won, but names cannot be disclosed.

I attended twelve other meetings, demos, and presentations I’ll write more about in a future blog, but for now common themes are that HRO is thriving and that vendors are introducing new offerings for clients to improve talent management. Yes, technology combined with consultation is important and is most effective by organizations trained in how to do performance management.

Gary Bragar, HR Outsourcing Research Director, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

The Intricate World of HRO Provider Partnerships

October 4, 2011

It is uncommon to see a multi-process HR outsourcing (MPHRO) provider with a go-it-alone strategy.  Beyond the services a particular MPHRO service provider considers core, you will usually find other select HRO vendors. The option to operate in a networked HRO supply chain environment can be a valuable choice.  Some benefits include:

  • Providing clients with the option of selected best-of-breed software applications with the primary provider managing the interfaces and integrations under one contract
  • Investing in what the MPHRO vendor does best and offering a wider range of service options through partnerships
  • Entering new geographies faster with less investment, an option especially seen in knitting together global payroll and increasingly in multi-country RPO
  • Buying time to develop more robust internal offerings
  • Creating a pool of potential investments or M&A targets.

This week, NorthgateArinso (NGA) and Workday announced a partnership to bring multi-country payroll to the Workday cloud.  Workday 16 customers will have the option to access NGA’s payroll processing capabilities in 51 countries through NGA’s new euHReka Inclusion Framework.

Workday, launched in 2006, is one of the first and largest start-ups to provide a SaaS-only HR ERP. Revenues are estimated to be  ~$150m this year with ~210 customers, most in the mid-market, but some are large market clients with 55k to 100k employees.  Still U.S.-centric in revenues and clients, Workday is expanding into the U.K. and Canada and plans to expand further in Europe in 2012. Workday is in a fast growth mode, targeting a 100% increase in revenues for 2012. It is busy selling, implementing new clients, and building out a full suite of HR and financial cloud-based ERP services. In the meantime, it can offer clients greater options via its partner network. In addition to NGA, other partners for multi-country payroll include ADP, Patersons, and SafeGuard World International.

Another example comes from Ceridian, which is expanding its investment and service partnership with Dayforce. The two have been partnering since 2009 to offer InView, a platform SaaS solution that blends Ceridian’s payroll, human resources, and benefits administration offerings with Dayforce’s workforce management software application. The expanded InView HR and Self-Service is to be released in 4Q 2011 and new payroll functionality is on track for 1Q 2012.

InView is starting out quickly as a successful partnership. Ceridian set a target of 300 clients for the first year and exceeded that number in six months. As more clients go live, the partnership will have to carefully balance service with growth to ensure long-term success.

HRO vendor partnerships are not always successful and must be carefully structured and managed, especially when the vendor partners may well compete with one another in some markets or services. With care, this can be a strategy with benefits for clients and the HRO vendor partners.

Linda Merritt, Research Analyst, HRO, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

HRO and Shared Service Organizations: Integrated Business Service Partners

September 30, 2011

I used to speak frequently at shared service and HRO conferences based on my experience as a HR director and contract manager of one of the early major HRO outsourcing deals. I soon found I had to turn down most requests to speak at HR shared services events as it wasn’t a good use of my time. HR outsourcing was seen as a competitor to internal shared services and I sometimes spoke to nearly empty rooms.

Business process outsourcing and shared service organizations (SSOs) have both evolved, and more and more leaders are seeing that the two can go hand-in-hand and become synergistic partners.  In a new study by Accenture, “Trends in Shared Services: Unlocking the Full Potential,” more than two-thirds (69%) of the executives interviewed said their organizations began using outsourcing to meet their global service requirements within the first four years of establishing shared services programs. Accenture, a leader in providing large market global multi-process HRO according to the NelsonHall’s 2011 Targeting Multi-Process HRO report, recently shared the research at its 11th annual global shared services conference.

Executives who lead SSOs are increasingly accountable to the corporate C-suite. The number of SSO executives directly reporting to the CEO has doubled in the last two years, up from 8% to 17%. Overall, 59% report to C-suites officers including finance, operations, human resources, and information technology.

As shared service programs have become more proven and popular, they are being designed to deliver services that require more skills than basic administrative functions. And within the next five years, 49% of executives said their SSOs intend to deliver innovation services as well as other value-add services such as data analytics and research. Also, SSOs tend to grow; 90% of the executives are reporting that they are already delivering services to more geographies and markets.

At the same time, internal SSOs can find it hard to create, maintain, and continually invest in services that achieve both process excellence and quality excellence. This can become a barrier to moving into a more strategic role. HR policies had been standardized by 26% of respondents and 25% lacked the needed supporting systems. While 78% said their organizations define processes globally, 48% still implement locally. HRO can be very useful in standardizing services and processes, accessing and managing rapidly changing technology, and providing services globally at a lower total cost.

Integrated business services that leverage global corporate resources and contract with outsourcing partners are already being seen in the more advanced SSOs. The question is no longer internal shared services or outsourcing, and it is no longer sufficient to simply silo processes running in them in isolation. To take advantage of increased C-suite interest and expectations, it is time to build strategic SSOs and HRO partnerships to provide business results in ways and at costs neither could achieve alone.

Are you building integrated business service partnerships with the strengths of both?

Linda Merritt, Research Analyst, HRO, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

First Year+ Strong for ACS, a Xerox Company

September 9, 2011

With a year and a half passing since Xerox acquired ACS, Xerox has appropriately defined its new tagline: “Services-Led, Technology-Driven” with revenues roughly split equally between its Services segment and its Technology segment. Of Xerox Services, BPO is leading, accounting for 55% of revenues. The remainder of its Services revenue is ITO (12%) and DO (32%).

Within BPO, its four segments are HR, F&A, customer care, and transaction processing. Focusing on HR specifically, ACS is doing well according to information shared at yesterday’s Industry Analyst Meeting in NYC.  In total, the company has secured 44 HR services deals in the past 18 months.  Its first HRO deal since the acquisition was closed was a 5 year H&W services contract with P&G in March 2010.  

Some recent HRO highlights include signing a long-term TBO contract with a wireless telecommunications company, winning its largest ever learning services contract with a pharmaceutical company, and leveraging the ACS and Xerox relationship to win a multi-process HR outsourcing (MPHRO) contract from a competitor. 

Serving more than 11m employees and retirees worldwide, the company is focused on “consumer-driven solutions” or viewing the client employee as the end-consumer.  Part of this initiative includes its client collaboration group, FutureThink, which began piloting last year and has recently expanded. 

Its plans for geographic expansion are ripening.  The company has made great progress with its first target, Europe, with revenues increasing 10% and pipeline growth up more than 100%.  Approximately 90% of this pipeline improvement is the result of Xerox synergy.  Another positive is a recent MPHRO win from this region. 

Aside from Europe, ACS is targeting Latin America, specifically Brazil and Mexico, and Asia.  In Latin America, the company has a good market presence due to its acquisition of ExcellerateHRO last year. 

Additional acquisitions and partnerships can’t be ruled out either, especially for building out service capabilities.  Finally, to support all this growth, ACS has made investments in CRM, expanding its India and Malaysia centers.

Eighteen months since the acquisition has closed, Xerox has demonstrated a successful integration of ACS and signs are pointing to a positive future for HR services.

Amy L. Gurchensky, Research Analyst, HRO, NelsonHall

Success Factors for the Market Segments of MPHRO

August 9, 2011

Last week, I discussed the four market segments of multi-process HR outsourcing (MPHRO) as defined in my 2011 NelsonHall MPHRO report: multi-country standardization, client-specific shared service transformation, core business focus, and technology-led HR service enhancement.  This week, I’ll examine success factors for service providers within each segment.

In the “multi-country standardization segment,” which is the segment with the highest growth rate for the next five years, it is critical for vendors to be able to support a client’s operations across a wide range of countries including emerging markets. Providers must also be able to rollout standardized HR administration and payroll to create a global system of record. Examples of service providers operating in this segment include ADP, HP, and NorthgateArinso.

To be successful in the “client-specific shared service transformation segment,” the largest of the four, vendors must provide HRO support directly or through a partner for all HR service lines (i.e., payroll, benefits, learning, RPO, and workforce development services) and have a high degree of multi-shore delivery capabilities to support clients in various locations.  Equally important is a service provider’s ability to be able to work with the client’s existing HR technology.  One of the biggest challenges faced by vendors in this group is getting clients to transition more than just back-office functions to its offshore service centers to reduce operating costs.  Service providers operating in this segment include those that have been long-term players in the MPHRO market such as Accenture; IBM; Aon Hewitt; ACS, a Xerox Company; and U.K.-based Capita.

Within the “core business focus” market segment, success is contingent on a provider’s ability to quickly deploy HR services and be accessible when expertise is required.  In terms of HRO offerings, standardized HR administration and payroll are a must and providing support for talent management services is very appealing.  The biggest challenge for vendors operating here is all the competition that exists from some of the following vendors: Genpact, TCS, Talent2, Infosys, HCL, Wipro, and Caliber Point.

Success in the final segment, “technology-led HR service enhancement,” requires vendors to provide their own standard technology for HR administration and payroll that includes talent management functions.  Also, it’s important that this technology be rolled-out relatively quickly.  Providers that fall within this segment mirror the multi-country standardization segment, but also include vendors such as Ceridian.

There’s lots of room in the MPHRO market for all types of buyers, so it’s critical for service providers to decide which segments are of strategic value and to define their sweet spots in their MPHRO portfolios and fill in capability gaps where contracts can be lost to competitors.

Amy Gurchensky, Research Analyst, HRO, NelsonHall

The Market Segments of MPHRO

August 2, 2011

NelsonHall’s 2011 Targeting Multi-Process HR Outsourcing (MPHRO) report identified four unique market segments that MPHRO buyers fall within and their characteristics.  Let’s take a closer look at each.

The first segment, “multi-country standardization,” makes up 15% of the MPHRO market and contains buyers looking to centralize processes within certain geographies.  Buyers in this category typically have a presence in more than 20 countries and more than 10k employees. MPHRO services are either deployed regionally for these clients or globally and include HR administration and payroll. Another service often incorporated in this segment is technology to support other HR functions.  The main driver for MPHRO within this sector is to centralize processes within geographies and gain consistency.  Of the four market segments, this one has the highest growth rate for the next five years.

“Client-specific shared service transformation” is the second market segment and the largest at 48%.  Again, buyers in this group have operations in 20+ countries, with an average of 50 countries.  Employee headcount is more than 30k and typically averages more than 100k. Services include the entire HR service line (i.e., HR administration, payroll, benefits, training administration, and learning administration) with buyers in this category purchasing MPHRO to make their HR departments more effective by implementing best practices.  In the next five years, growth will be modest, but its overall market share will shrink due to decreased total contract values.

The third segment contains buyers looking to focus on their core business.  This is the second largest category at 24%.  These buyers have operations in one or a small handful of countries and tend to be start-ups or buy-outs.  Average employee headcount is 8k, but can be as little as 1k.  MPHRO services utilized by this group are HR administration, payroll, and sometimes recruitment or training administration.  The main reason MPHRO services are procured by this group is to obtain HR capability quickly so internal focus can be applied somewhere else, as often experienced by organizations experiencing high growth, especially in emerging markets.  Growth for this segment will continue to be strong.

Buyers looking for “technology-led HR service enhancement” make up the final segment at 13%.  These organizations are usually in just one country with employee headcount ranging from 1k to 50k+.  The service scope includes a technology upgrade, HR administration, and payroll.  The driver for MPHRO services for this group is to update an antiquated system and improve processes.  Like the “core business focus” segment, growth for this segment will steadily continue.

Stay tuned to find out success factors for service providers within each segment.

Amy Gurchensky, Research Analyst, HRO, NelsonHall

A Steady State in HRO for 2Q 2011

July 7, 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