Posted tagged ‘nelsonhall’

Targeting Payroll BPO, Part I

April 18, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

The NelsonHall Targeting Payroll BPO report has recently been released by my colleague, Gary Bragar. Payroll is such a well-accepted mainstay of HR outsourcing that it’s nice to see it still showing steady growth year after year.

Gary regularly produces the payroll market analysis, and profiles leading vendors in this space. Over time you can see how what seems like a basic service has grown, evolved and increased in strategic importance. What has not changed is that buyers are looking for savings by outsourcing payroll. The good news is that payroll BPO delivers: first-time payroll outsourcing can save from 15% to +40% depending on the degree of complexity and variables (like the number of locations, with everything from a single location to more than 100 countries).

The full report includes more on what buyers want from payroll outsourcing and what’s key in vendor selection; including where data needs vary between the mid-market and large market. Here are a few highlights of the report:

Why Outsource Payroll?

Cost saving remains the number-one reason to outsource payroll, and several nuances have been added including:

  • Clients want a more variable cost structure and less fixed costs
  • Savings now often include not having to refresh client technology (cost avoidance)
  • Simplifying payroll after a series of M&As or restructurings reduces cost
  • Reduction in payroll losses from ineligible and overpayments.

Centralization and standardization of process and technology has increased in importance, similar to what has been seen in other HRO areas. Where clients used to want customization, many are now seeing the benefits of standardization to improve efficiency, reduce cost, and to increase timely access to accurate payroll data across the enterprise.

With constantly-changing regulations and taxation across multiple jurisdictions, accuracy, compliance and risk management remain core payroll benefits.

Multi-Country Payroll

For MNCs, multi-country payroll remains a sought-after capability. MNCs want one vendor, one contract, and one payroll platform. Also wanted is visibility to aggregated costs and data reporting, in addition to the flexibility and scalability to add or change geographies.

Payroll BPO vendors have responded to the blended needs of clients for cost savings and global coverage by:

  • Increasing nearshore and offshore service centers
  • Partnering for coverage in some countries
  • Offering multiple technology platforms from SaaS to ERPs.

Pricing Pressure

Given the focus on cost reduction, pricing pressure should be no surprise. This is a market with many mature and capable suppliers, which in itself adds competitive pricing pressure and the need for differentiation to focus on value as well as cost.

As an indicator of payroll service provider capabilities to compete, I earlier mentioned the steady year-over-year revenue growth. That growth has been achieved at the same time as the average price per-payslip has fallen significantly over the last three years!

There is so much more in the Targeting Payroll BPO market analysis, look for more highlights in a future blog.

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by clicking here.

RPO Generation 2.0 is Ready to Go

March 28, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Recruitment Process Outsourcing (RPO) is one of the younger HRO service lines and it is both growing and maturing quickly. The March issue of HRO Today recognizes the emergence of RPO 2.0.  NelsonHall’s RPO specialist, Gary Bragar, would certainly agree. Gary’s October 2012 Targeting Recruitment Process Outsourcing market analysis highlighted many of the same developments in this rapidly growing HRO segment.

What is New in RPO 2.0?

The rapid growth and incorporation of social media for recruiting is a big part RPO 2.0, one that keeps pushing RPO to the leading edge of innovation in the HRO space.

RPO services are rapidly moving up the value chain, and changing client expectations is the key. While reducing the cost of service provision is always on the table, it is no longer the number one issue. Flexibility and scalability will always remain important as well, given how quickly hiring needs can change.

Today’s RPO 2.0 clients are looking for more value:

  • Improved quality of hires
  • The latest tools and technologies for social and mobile
  • Expertise in accessing talent pools and passive hires
  • Greater focus on candidate experience
  • Analytics and insights, in addition to metrics and reports
  • Improved retention
  • Access to advanced services including employment branding, talent management, talent engagement, and integration with workforce planning.

Clients Simply No Longer Want To Do It

In the last few years, many buyers reduced internal recruiting staff in line with the reduced volume of hires, and they do not want to rebuild and reinvest in the rapidly evolving technologies and advanced skill sets it takes to succeed in today’s competitive, social, mobile, and global recruitment process market.

Buyer Choice is Broad

For every large staffing company that does RPO including Adecco, Kelly, Manpower, and Randstad, there are smaller vendors that specialize in RPO such as Ochre House and Pinstripe.   Most leading RPO vendors of all sizes can offer services in most of the regions of the world as they have partnered and made acquisitions to make their footprints global.

Not long ago, major multi-process HRO (MPHRO) providers either did not provide end-to-end RPO or saw it taken out of contracts. Now, more MPHRO providers have full RPO services strong enough to be offered as standalone services including ADP, Aon Hewitt, Infosys, and IBM.

With RPO 2.0 You Can Have It All

While having it all may still be a bit aspirational for most of us, we are finding evidence that successful client / provider RPO partnerships can improve process efficiencies (e.g., reduce time to hire 20% to 50%), reduce the total cost of hire (often 20% to 30% or more), along with increasing hiring manager and candidate satisfaction.

Imagine what we can achieve with RPO 2.0!

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by clicking here.

Ceridian Has a Whole New Feeling

February 14, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Ceridian just held its annual sales kick-off meeting and according to Jayson Saba, vice president of marketing strategy and analyst relations, there was “a whole new feeling of excitement.”

Ceridian Made a Big Bet

Ceridian is a mature service provider having been in payroll and HR services since 1932. So, what is causing such excitement in 2013? The answer is Dayforce HCM.

Ceridian began partnering with Dayforce in 2010, which soon led to investing in the company, and then to purchasing the company in early 2012 and forming a new business unit, Dayforce, led by David Ossip, Dayforce’s CEO.

This was a major strategic bet on SaaS as the new direction for a large portion of an already successful company with an estimated $1.5bn in revenues. How big a bet? Well, in late 2012, Ceridian made the decision to realign its sales and marketing efforts behind Dayforce HCM in North America, the company’s largest customer and revenue base!

The company will continue to support clients on its current systems and will not force migration. In fact, it will continue to invest in adding more features and functionality in key areas. Its other service lines will also continue including international payroll, benefits administration, EAP, and stored value solutions (electronic cards with preset or refillable financial value).

Dayforce HCM is a Party of One

Dayforce is a cloud-based platform built as a single application with one record, one rules engine, and zero interfaces. Real SaaS can eliminate the need to enter data in multiple systems, manage complex interfaces, and confusion about who to call when multiple vendors are involved, and it provides easier implementations.

Dayforce HCM includes:

  • Payroll and tax: view, edit, fix, and preview payroll in real-time
  • Workforce management: plan, schedule, and forecast labor requirements, and time tracking and compliance
  • Benefits: manage enrollment, calculate eligibility, and support an unlimited number of benefit plan types
  • Human resources: forms and workflows for managers and employees to manage work and life events
  • Mobile: access, manage, and change schedules and other aspects of employee records including shift trading, availability, and time-off requests.

The system can scale for small, mid, and large market clients with a sweet spot in the 1,000 to 10,000 range. Ceridian already has several deployments of 15- to 30,000+ employees. Major retail clients include Aéropostale, Pier 1, and Crate & Barrel.

With a Clear Roadmap for the Future

The new system already has hundreds of clients and is available in the U.S. and Canada, and NelsonHall predicts that it will soon be expanded to the U.K. as well. We estimate Dayforce will become  the HR system of record for all of Ceridian’s HCM customers including managed and international payroll services and eventually become a global HRIS offering.

Ceridian is also working on new additions for talent management (performance management, compensation, and recruiting) and other social media features.

Nothing Succeeds Like Success

Imagine the excitement when your new system far exceeds expectations, wins awards, and delights customers. No wonder a good time was had at Ceridian’s annual sales conference!

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The Importance of Defining MPHRO by Market Segments

January 22, 2013
Amy L. Gurchensky, HRO Research Analyst, NelsonHall

Amy L. Gurchensky, HRO Research Analyst, NelsonHall

In NelsonHall’s last “Targeting Multi-Process HR Outsourcing” (MPHRO) market analysis report, I identified four unique market segments that MPHRO buyers fall within and their characteristics.  Namely:

  • Multi-Country Standardization
  • Shared Service Transformation
  • Core Business Focus
  • Technology-Led HR Service Enhancement.

In the latest report that is due to be published this month, I cover how these segments have evolved and take a closer look at contract activity in the last two years among each segment.

Some highlights include:

  • The average number of countries for all contracts in the “Multi-Country Standardization” and “Shared Service Transformation” segments versus the average number of countries for contracts within these segments signed since January 2011
  • Average employee headcount for each segment overall and for contracts signed after January 2011
  • Client drivers, benefits, and inhibitors by segment
  • Average contract length by market segment and the trend for contract durations by segment since January 2011
  • Pricing model trends within each segment
  • Market size and growth rates by market segment
  • Vendor revenues by segment.

To really understand the MPHRO market, distinctions by market segment need to be made since trends in one segment can incorrectly skew data.  For example, the average MPHRO contract length for all market segments combined is approximately six years.  However, durations by segment reveal that the Shared Service Transformation contracts average 8.1 years, while the other segments average somewhere between 4.8 and 5.5 years.

Stay tuned for more insights on the current shape of the MPHRO market.

What’s New Again in HRO for 2013

January 15, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Even though predictions are a perennial New Year activity, the truth is that most trends play out over many years. Most HRO “predictions” are more like annual status checks and updates.

Transformation is new again

Several aspects of our old friend, HR transformation, are back on the table for 2013:

  • Operations transformation: new, upgraded, standardized, and integrated HR tools, systems, and processes
  • Strategic transformation: increases in overall HR performance that improve business performance
  • Accelerated transformation: the cycle of transition, standardization, and improvement needs to move at a faster pace than ever; which provider can help you get where you want to go with a track record of getting there faster?

A return to transformation fits with our NelsonHall 2013 HRO trend of value balancing cost and pent up demand for improved operations.

Even with more client and vendor maturity this go-around, we need to ensure that strategic HR transformation goes hand-in-hand with the evolution of the retained staff, HR generalists, and service delivery operations. One can either leverage and empower the other or hold back real progress in both.

Evolution and the use of new HR technologies  

Rapid technology advancement continues across all HRO services and within in each service line, providing a great opportunity for HRO buyers and a challenge for HRO service providers.

  • Easy access: mobility, bring-your-own-device, and cloud-based SaaS impacts every business including HR BPO. Increasingly, not only clients, but end users are expecting the same types of access and functionality from HR as they experience elsewhere.
    • HRO providers with modern platforms can bring these technologies to clients and their employees faster and at less overall cost
    • Service provider investments and the rapid pace of introduction add cost and stress to release cycles for services rapidly becoming table stakes which could pressure margins.
  • Emerging technologies: social media and analytics are new transformation tools, potentially powerful ways to improve performance of HR services and produce business results.
    • RPO leads in integrating the use of social media in recruiting, which helps RPO become a value play in the war for talent. This is a win-win: improved recruiting for clients and fuel for growth for vendors
    • Leading vendors with an active client community including early adopters will be able to create and test new and effective ways to leverage the new technologies that then can be added to service offerings. Learning vendors are already experimenting with effectively incorporating social media and gamification
    • Investments in leading-edge technologies that have not yet found breakthrough acceptance require a long view of growth and profitability, a risk that not all service providers are willing or able to take on.

From the most basic cost-reducing transactions to advanced partnerships in HR transformation, the full and growing range of HRO services has something for every organization in 2013.

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Onward and Upward for HRO in 2013

January 7, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Each year, the NelsonHall HRO team is asked by HRO Today to make predictions for the year ahead. Here is a summary of our featured article, Onward and Upward to kick off our 2013 blog series.

HRO is reaching maturity

There is a growing level of acceptance with less perceived risk in making the HRO decision; value is balancing the focus on cost, and pent-up technology needs will be opening the door to new service provider opportunities.

  • Value and cost are reaching parity for many buyers that want agile new HR capabilities that produce results, including the ability to measure and manage HR issues across the enterprise as well as improve the employee experience
  • The need for core HRMS upgrades and new technology should reach the point of increased budgeted spend; be ready to discuss whether upgraded and bolt-on additions versus a new core HRMS is the better path for increasing business impact and the total cost of ownership.

Breakthrough HR technology for 2013: cloud-based SaaS

Major technology costs will open the door wider for SaaS. As SaaS offerings move “up-stack,” the ecosystem for SaaS support will continue to develop in 2013 via consulting, implementations, integrations, BPO, etc.

  • SaaS HRMS adoption will continue to move fastest for mid-market organizations
  • Expect little large market HR ERP near-term erosion from SaaS HRMS; but cloud-based SaaS HR platforms are disruptive technologies that will quickly move up the value chain and be able to serve larger and more complex organizations
  • Total cost analysis, not just system costs, will be important in the adoption of SaaS HRMS in larger organizations; over time, the ERP per user pricing advantage will disappear, especially if evidence continues to mount of better performance and lower overall costs.

Emerging HR technologies: social media and HR analytics

There is increased interest in how to deploy the newer tools strategically. Look for adoption to slowly build as clients need a certain level of maturity in systems, services, and vision to create real value with the newer HR technologies.

The word for 2013: convergence

It may be a bit early to pick a HRO word of the year, but I think convergence will be a good candidate to cover changing client needs and new and emerging technologies.

Where, when, and how do we bring together the old and the new to create new synergistic capabilities? What can we do with a fully-integrated HRMS with HR analytics? How can we change the delivery of services with strategically deployed social media? Can we bring new magic to the employee experience with mobility and social tools?

As choices increase and grow more complex, confusion and inaction may result. With clear purpose, planning, and great advice and counsel the opportunity is before us all to create a real breakthrough year for HR and HRO in 2013.

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HRO Yesterday and Today

October 29, 2012

Linda Merritt, HRO Research Analyst, NelsonHall

NelsonHall was pleased to contribute to the HRO Today article Out of the Ashes for the 10th anniversary issue. 

Looking back ten years shows a picture of HR saddled with expensive and paper-heavy manual processes, even after the introduction of the big HR ERPs from PeopleSoft, SAP, and Lawson, providing impetus for an emerging HRO industry.

A New HRO Emerges…

The new HRO industry was full of great ideas and big plans and ready to grow well beyond payroll and benefits administration services. Unfortunately, intentions were a bit ahead of capabilities including the buyers, providers, and technology. Luckily for the industry, most clients and service providers fought through the issues, the losses, the changes in scope, and even changes in providers, to stay with HRO.

One of the biggest changes we have seen is the maturation of the HRO experience and enabling technologies. As the HRO experience has been developed, subject matter expertise has grown, global service delivery networks have been built, processes have become structured and standardized, and technology has advanced with more configuration and less customization.

…Goes Global…

HRO is now global in every sense of the word. Clients are based in every region of the world as are sales and service delivery. The highest revenues are still generated from the established markets like North America and Western Europe; the growth markets in Asia Pacific and Latin America are developing beyond service delivery (supply) for multinationals into internal markets for growing regional businesses (demand). For example, IBM is headquartered in the U.S. and Tata Consulting Services (TCS) is headquartered in India, both have major multi-county multi-process HRO clients in Latin America as well as a growing set of in-region service delivery centers.

… and Gets High Tech

Technology advancement is the great enabler of HRO services. The BPO industry as we know it would not be viable without global low-cost communications and the internet that allows work to be done anywhere at any time. Software advances bring not only better tools to clients, but improved workflow processing to HRO service providers, allowing work distribution to where it can be done most efficiently and effectively. Now an employee in the U.S. may call a service center on or nearshore with a complex issue that creates a tier 2 referral to a center of excellence in a third country using data and analysis derived from the data center in a fourth country.

Web-based services, mobile device access, and social media are all transforming the user experience and bringing more value at affordable prices to HRO. The creation of Software-as-a-Service (SaaS) services, HRO platform services that add BPO to SaaS, and the Cloud are bringing more options and affordability to all clients, especially to the mid-market.  

The HRO industry has grown in maturity, capability, and has an even greater future ahead. 

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