HR Tech Another Success: Part 2

Gary Bragar, HRO Research Director, NelsonHall

In my blog earlier this week, I wrote about highlights from the new Outsourcing Track at HR Tech as well as the RPO meetings I attended. In related news, my fourth global RPO market analysis report was published on Monday.

In addition to walking through the exhibit hall and attending technology demonstrations, my additional meetings at HR Tech included:

• Patersons: Its 2012 revenue growth is 70% YTD, driven by multi-country payroll. Safeguard World International has also reported similar success due to high growth for multi-country payroll services according to a business update two weeks ago.
• IBM: The company is experiencing increased demand for its RPO and learning services and many of its key learning clients have renewed in 2012. New learning contracts include one in South Africa and pipeline activity includes a large global bank. The Kenexa acquisition will bring in new RPO and talent management opportunities that IBM will enhance with its social and analytics capabilities.
• Hogan Assessments and SHL Assessments: Both companies provide personality assessments to predict work performance. SHL has also issued a talent management report with key findings showing that Eastern Europe ranks 1^st in supplying IT and essential business skills; the U.S. ranks 23^rd.
• Secova: The benefits administration provider offers online enrollment, a 24/7 call center, eligibility verification, billing management, and leave management services that are delivered from their ISO/IEC 27001:2005 certified platforms. Services are provided from California, New Jersey, and Chennai.
• Equifax Workforce Solutions: This was formerly operating as TALX, which rebranded as a result of its increased emphasis on the provision of workforce analytics and business intelligence to help clients improve their company’s performance.
• HireVue: Offers a Digital Interview Platform that saves time, travel, and costs by allowing clients to create online interview guides with scientifically proven questions. Candidates then record answers via a webcam, which recruiting and hiring managers then view on demand, including from smart phones, to build digital talent pools.
• JobVite: Provides a modular SaaS-based recruiting platform for applicant tracking, recruiter CRM, and sourcing talent.

Highlights from ADP include having ~30,000 clients for its cloud-based HCM platforms including:

• ADP Workforce Now: Launched in October 2009, it supports clients with 50 – 1,000 employees. The majority of its 20k+ clients purchase the broader HCM suite.
• ADP Vantage HCM:Piloted in October 2011 with general availability launched in June 2012, this platform, which targets employers with >1,000 employees, already has >30 clients. ADP has been adding ~5 – 6 new clients a month with a high percentage buying talent management, benefits (H&W), and time & attendance in addition to payroll. New wins include:
  • A national restaurant chain with ~24,000 employees
  • An employee healthcare staffing company with 15,000 employees
  • A retail chain with 4,500 employees.
• ADP GlobalView: It now includes ADP Talent Management globally and has won several major clients including an electronics manufacturer with 85,000 employees in 29 countries including the Americas, EMEA, and APAC, which recently added the compensation module.
• ADP Talent Management: It provides recruiting, performance, learning, compensation, and succession in 14 languages and 80 currencies for ~4,000 clients.
• ADP Mobile Solutions: Deployed globally and offered in 12 languages, the app has ~30,000 clients and ~450,000 users.

See you all next year at HR Tech in Las Vegas October 7 – 9, 2013.

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

HR Tech Another Success: Part I

Gary Bragar, HRO Research Director, NelsonHall

HR Tech was again a very worthwhile investment of my time. Here are some highlights of the new Outsourcing Track presentations I attended:

• Cisco Uses RPO to Help Hire Up to 15,000 a Year:Using a hybrid co-ownership model, the Randstad Sourceright recruitment team works alongside the Cisco recruitment team to provide services including sourcing, recruiting, and onboarding. Services provided are primarily in the Americas, but may expand into EMEA and possibly Asia where Randstad Sourceright has a presence. Using the hybrid model, Cisco has been able to cut its $120m talent acquisition spend in half.
  • Mark Hamberlin, VP HR Global Staffing, Cisco
  • Rebecca Callahan, President RPO, Randstad Sourceright
• Ericsson Outsources Global Payroll in Manila:Ericsson issued a RFI to 25 vendors, then created a short-list of 5, and ultimately selected Talent2. Managed payroll services provided by Talent2 for Ericsson in Southeast Asia and Oceania include 4,500 employees in 12 countries, which prior to outsourcing had 12 different payroll processes. Manila is the shared service center. Major benefits obtained by Ericsson thus far include: reduced risk management, minimized complexity of dealing with local tax laws, and ease of expanding into new countries.
  • Mark Howes, HR Director Asia Pacific, Ericsson
  • Mary Sue Rogers, Global Managing Director, HR Managed Services, Talent2
• Whirlpool Leverages RPO to Transform Talent Acquisition:Pre-RPO recruitment was decentralized and lacked consistency and methodology in its sourcing approach. Business partners were also spending a lot of time doing transactional work including screening and reviewing resumes. Kenexa’s RPO services include: sourcing, screening, administration, candidate management, creation of employment value proposition, and management of the candidate experience primarily in North America with some testing in Europe. KPI’s include: time to fill, quality of the candidate slate, diversity slate, and end-user satisfaction.
  • Lynanne Kunkel, VP of HR, Whirlpool North America
  • Rudy Karsan, CEO, Kenexa

Here are highlights from my RPO meetings:

• Pinstripe and Ochre House: Pinstripe has won 12 new RPO contracts YTD and its partner Ochre House continues to win new contracts in EMEA including North Africa and the Middle East as a result of its acquisitions of TAAHEED and Carmichael Fisher in early 2012.
• ManpowerGroup Solutions: New contract wins YTD include 40+ RPO deals globally in 20 countries. It has also expanded existing clients into new geographies including a U.S.-headquartered firm that expanded into China and Southeast Asia and a Spanish-headquartered firm that expanded throughout Europe and Latin America.
• Randstad Sourceright: Currently with ~100 RPO clients, it won 18 new contracts YTD. Four of its new wins are global deals as a result of the merger of Randstad and SFN Group, which was completed in September 2011. Its fastest growth has been in the mid-market.
• The RightThing, an ADP Company: Total RPO client count is at 80+. YTD wins include several enterprise and mid-market clients with ~50% as new clients and ~50% as existing ADP clients that added RPO services.
• WilsonHCG: Primarily serving large and mid-size clients, WilsonHCG also has small clients with <500 employees. The company has a 94% satisfaction rating with candidates and hiring managers across clients.

Stay tuned for my next blog where I will discuss additional meetings I had with Patersons, IBM, Hogan Assessments, SHL Assessments, Secova, ADP, Equifax Workforce Solutions, HireVue, and JobVite.

In the meantime, NelsonHall just published its fourth global RPO market analysis.

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

WorkForce Software Fits with HRO

Linda Merritt, HRO Research Analyst, NelsonHall

“Let’s elevate the discussion on workforce management.” That’s how Kevin Choksi, CEO of WorkForce Software, kicked off the company’s first analyst day. Workforce management, with time, attendance, and scheduling at its heart, is not the most exciting topic, even when it is designed on open systems, is fully configurable, addresses all employee types, and can be deployed globally. But when you have passion for your products, the heart can beat with the energy and excitement that keeps the three founders on board after 13 years and attracts top talent to take the company to the next level of growth.

The inflection point for the company was late 2010 when the SaaS version of the core product, EmpCenter, was introduced. New clients selecting the SaaS option quickly grew to 80% compared to the licensed on-premise or hosted system options. Revenue growth has also accelerated dramatically and Workforce Software has increased the average size of its clients, total users, and services in 30 countries.

The live demo showed how clients can use the flexible rules engine to self-define and update calculations for workforce policies, labor/union requirements, etc. The flexible Advanced Scheduler can create schedules based on a wide range of customer defined requirements and can even directly contact employees to fill in empty shift positions according to availability, skills, seniority rules, etc.  

Two additional modules, Absence Compliance Tracker and Fatigue Management, are available as standalone services or can be integrated with EmpCenter, adding to the differentiation of the workforce management up-and-comer that is in a market currently dominated by the much larger Kronos.

Absence Compliance Tracker supports leave intake, leave determination, and case management. The system provides a recommended leave determination and supporting rationale based on the employee’s eligibility; company policies; and for the U.S., the more than 300 state and federal leave laws and regulations, improving consistency of policy application and providing evidence of compliance.

Fatigue Management helps prevent scheduling fatigued employees, something that is already a requirement in industries such as nuclear power, transportation, oil and gas, pipelines, etc. It will also accommodate industry, labor/union, or company best practices, all of which can address compliance and safety needs.

Making money does cost money. The good news is that WorkForce Software has secured its first infusion of external capital to ensure it can keep up with growth and its development roadmap. Look for it to add staff, geographies, and service locations over the next couple of years as well as adding more BYOD (bring your own device) mobile access and enhanced services.

Expanding is always easier when you have friends, so the company is working to enlarge its partner network. Recent additions include SuccessFactors, Oracle Fusion, and Patersons. WorkForce Software would do well to increase its connections to the HRO vendor community too, as even major HRO vendors sometimes integrate or refer clients to best-of-breed preferred partners.

It was refreshing to spend time with a company not only succeeding, but accelerating in this economic environment. It made even my HRO analyst heart beat just a bit faster.

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

The Intricate World of HRO Provider Partnerships

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.

Much Ado About Payroll Outsourcing

When taken literally, the title of Shakespeare’s famous play “Much Ado About Nothing” implies that a great fuss is being made of something insignificant. But we can all easily agree there is nothing insignificant about payroll – not for those being paid, the company paying its employees or the vendor providing the payroll services in an outsourced environment.

As I reported yesterday on NelsonHall’s webinar, “Payroll BPO, How Buyers Benefit and What Providers Should Know”, two of today’s top drivers of outsourced payroll are, not surprisingly given the state of the economy and increased globalization, cost reduction/cost control and multi-country payroll requirements. Let’s look a little more closely at both of these.

Reduction and control of costs – this is the top driver in both the mid-market/national segment and the large multi-national segment, with a full 80 percent of all buyers outsourcing to reduce costs. And the savings are big…clients have reported anywhere from 10 – 50 percent, with an overall average savings of 25 percent. Providers are lowering buyers’ payroll costs by: 1) economies of scale via the one to many model; 2) labor arbitrage through offshoring and nearshoring of both back-office and front-office administration; and 3) improved quality of service/process improvement with better consistency and efficiency. For example, one vendor estimated that reducing “quill pen” (sorry, couldn’t resist the temptation to link back to Shakespeare) manual work and eliminating duplicate work can save clients 40 – 50 percent.

Multi-country payroll – large multi-national corporations are increasingly demanding a global/multi-country payroll platform environment wherein one single vendor – albeit with a SaaS solution or an ERP system such as SAP or Oracle PeopleSoft – can support multiple geographies with pre-defined country specific rules and templates. Providers that use ERPs and/or SaaS also use in-country payroll provider partners, as required, to ensure correct payroll-related activities. For example, although Patersons has more than 20 countries in which it can provide its own payroll services, it frequently uses a third-party provider to process in-country net payroll calculations. The third-party then passes the data back to Patersons Logon2 system, and Patersons in turn issues standard pay slips and reports.

Although the mid-market national segment is much larger today than the large multi-national market, we saw some very large multi-country payroll contracts awarded in 2009. For example, NorthgateArinso and AstraZeneca entered into a seven year payroll, HR administration, and talent management contract. The payroll component calls for NorthgateArinso to provide payroll services to AstraZeneca’s 65,000 employees across more than 100 countries (including Shakespeare’s native U.K.) And ADP was awarded a contract for managed payroll services by Swiss Re to support 10,000 employees and 2,500 pensioners in 25 countries (yes, you guessed it…including the heralded playwright’s own country.) Given that the large multi-national market is forecasted to grow at a much higher rate than the mid-market segment, we can anticipate seeing more large multi-country payroll contracts being signed this year.

There are many other drivers – beyond cost reduction and multi-country capabilities – behind outsourced payroll, including eliminating transactional work to enable focus on more strategic initiatives, gaining access to better technology without the capital investment, and ensuring compliance with ever changing tax laws and labor regulations. What are you seeing in the payroll outsourcing marketplace?

Gary Bragar, Lead HRO Analyst, NelsonHall

SaaS Solutions Continue to Emerge for HR

There’s little question that Software as a Service (SaaS) Internet-based solutions hosted by an external vendor offer a wide range of benefits to buyers including: 1) Access to a single database from any location; 2) No need for additional hardware other than existing laptops or desktop PCs; 3) No need to pay for maintenance and upgrades, as compared to in-house systems or ERP solutions; 4) No IT staff required for support or other needs; 5) The system can be accessed by users anytime 24x7x365; 6) When used across multiple locations and geographies, one system allows for standardization and efficiency, increasing compliance and lowering costs; and 7) Bottom-line reduced costs in service delivery.

But is SaaS a panacea for HR’s service delivery needs? In a word, no.  SaaS by itself is not a remedy for completely eliminating a buyer’s internal HR staff or an organization’s propensity to outsource, particularly in the mid to large market. That’s why we will continue to see an increasing array of SaaS and HRO services-bundled offerings from vendors supporting a wide range of HR processes including benefits administration, health and welfare administration, HRO analytics, RPO, outsourced training and payroll.

That said, examples of the SaaS components of these solutions include:

• MidlandHR’s iTrent software is a web-based, integrated HR and payroll system which helps its clients tackle HR issues such as payroll, talent management, succession planning, recruitment and absence management

• NorthgateArinso’s euHReka OnDemand supports HR administration and payroll processes, preconfigured for more than 50 countries, and talent management processes in 24 languages, on a single integrated platform

• Patersons, a global payroll provider, uses SaaS developed in-house to deliver payroll to companies in 160 countries via a global network of providers

• Cornerstone OnDemand is a SaaS offering that supports talent management, performance management, succession planning, learning management, compensation management, social networking and reporting and analytics (note: ADP and Cornerstone entered into a partnership in mid 2009 to enhance its talent management capability)

It’s important to note here that service providers are muddying the waters a bit by referring to their offerings as SaaS, on-demand or managed services. And while there are differences among the three – a topic we’ll cover in a future blog – suffice it to say that NelsonHall expects the volume of “SaaS-esque” contracts to significantly increase over the next several years. For data points and statistics, we’ll soon be reporting the results of our Q409 Outsourcing Confidence Index which includes a focus on “Proportion of contracts signed which were platform-based.” Stay tuned!

Gary Bragar, Lead HRO Analyst, NelsonHall