Posted tagged ‘Pinstripe’

RPO Continues Its Stride in Q2 2011

August 16, 2011

If you didn’t pay attention to the news and only looked at the recent financial results reported by staffing and RPO providers, you’d think that everything is fine with the global economy.  Let’s take a look at a few of the highlights including year-over-year revenue growth in Q2 2011 compared to Q2 2010 and some numbers of contracts awarded:

  • Talent2 (fiscal year 2011 for period ending June 30) +26%, RPO +57%
  • Kelly Services +16%, KellyOCG + 22.5%, and RPO ~+50%
  • Kenexa +59%, RPO + 45%
  • Manpower + 24%, ManpowerGroup Solutions +21% with 37 RPO deals closed in Q1 and 31 new RPO contracts awarded in Q2
  • Pinstripe won or extended 15 RPO contracts in H1 (revenue not reported)
  • SeatonCorp +20%, PeopleScout +95% with 9 new RPO contracts signed.

Why was growth and the number of contracts awarded so high when the sad reality of the news headlines is that there are debt problems, slowdown in GDP growth, and a continually high unemployment rate?   Well, that is precisely why!  There are several reasons including:

  • Organizations who have had to downsize are turning to RPO because they don’t want to invest in hiring recruiters and associated staff only to potentially downsize again (i.e., it’s better to outsource recruitment to a vendor that can provide variable pricing and who can scale up or down quicker than the client)
  • Obtaining  better quality of candidates and quality of hire from an outsourcing specialist
  • Allowing HR to work as a strategic partner and in-conjunction with the RPO vendor to engage employees and retain talent (instead of focusing on hiring)
  • Wanting to get out of the technology management business, which isn’t usually a client’s core competency
  • Reducing time to hire, improving hiring manager satisfaction, etc.

In addition to revenue growth from new contracts and renewals, growth comes from existing clients that have increased their hiring volumes. Other sources of growth are from contracts won in prior quarters that take several months before fully ramping up.

RPO does not look like it is going to slow down anytime soon.  In NelsonHall’s HR Outsourcing Confidence Index, published in June, pipeline growth reported in the prior quarter was higher for RPO than all of the other HRO services.

At NelsonHall, we’ve seen an increase from buyers wanting to know who we see as the leading RPO providers by country and region. Buyers, are you evaluating outsourcing recruitment, if you haven’t done so already?

Gary Bragar,  HR Outsourcing Research Director, NelsonHall

HRO Confidence Continues to Soar!

July 21, 2011

Our recently published Q2 2011 HRO Confidence Index indicates that 50% of HRO suppliers, which includes payroll, RPO, learning, benefits, and MPHRO vendors, are much more confident in the HR Outsourcing business over the next twelve months compared to the previous twelve month period.  Thirty-five percent are slightly more confident and 15% are as confident.  The driving factors are two-fold.  The top reason is new contract activity, first reported as the main reason in Q3 2010, and the other reason is increased scope of existing contracts.

In the past, my colleague Linda Merritt and I have written about new contract awards. For this blog, I wanted to focus on the importance of contract renewals, including increases in scope expansions as they are closely following new contract activity as the reason for this high confidence in HRO!

A few examples of recent contract renewals and scope expansions include the following:

  • Last week, Genpact was awarded a 7 year MPHRO contact by Nissan to include payroll, recruiting, training, and benefits administration.  Genpact had been providing HR services to Nissan group companies and affiliates.  It has also been providing services outside of HR that included F&A, procurement, collections, customer service, and analytics.  As part of the contract, Genpact acquired Nissan’s HR shared service center in Yokohama, Japan, which handles HR functions for 54,000+ employees globally. The center, renamed Genpact Japan Service Co., Ltd., will serve Nissan, its affiliates, and other Genpact clients.
  • In June, NorthgateArinso was awarded a 7 year MPHRO renewal and scope expansion by Fifth Third Bank that I wrote about in my blog on the 23rd.
  • In June, Pinstripe was awarded two RPO contract extensions and scope expansions by Johns Manville and Rayonier. For Rayonier, the scope was expanded  from professional hires for one division to include all professional and hourly hiring for all divisions.
    • In April, Aon Hewitt was awarded a flexible benefits contract by Emap, a business-to-business media group in the U.K.  Aon’s Risk Solutions business had already been providng services to Emap.
    • In addition to winning a total retirement outsourcing (TRO) renewal earlier this year with BP America, Fidelity Investments also won a  5 year contract renewal for TRO in North America by HP, adding 162,500 participants from EDS who were previously serviced by other providers.

I believe we will of course continue to see contract renwals, but within the next one to three years, we will see an even larger increase in scope expansions.  Why?  Although buyers are increasing their propensity to outsource, since the recession began in 2008 we’ve seen new HRO buyers treading more lightly to test the waters before diving more deeply.  A common example I see is in recruiting, where a new contract may start out for a particular business unit or geography, but then expand based on client satisfaction and increased benefits to enterprise-wide RPO, similar to the Pinstripe example above. When these contracts come up for renewal and the clients are happy, having  obtained the benefits they signed up for and maybe even had their expectations exceeded, then there’s a good chance these clients will be looking to increase whatever scope they can.

We’ll come back to additional findings and trends in our HRO Confidence Index in a future blog, but in the meantime , NelsonHall clients can view the full report at the NelsonHall website.

Gary Bragar,  HR Outsourcing Research Director, NelsonHall

Customer Service More Important than Ever – Even for HRO

January 21, 2011

Spherion recently released its new customer service survey results conducted by Monster.  Results show that nearly three quarters of consumers make a purchasing decision based on customer service, second only to quality and price.  That’s huge!  As a former quality trainer and college adjunct, I’ve been studying customer service for quite some time.  According to prior research by TARP, Technical Assistance Research Program, the figure was close to two-thirds, which indicates that the demand for better customer service has gotten even stronger.

Consumers are fed up with the lack of good customer service and thanks to more service provider competition, buyers don’t have to put up with bad service.  Consumers can simply go elsewhere.  Granted when it comes to HRO, the switch is not as easy, since it cannot be done by each individual client employee, but collectively, they can make their voices heard through internal communications that the provider may not be aware of immediately (which is why SLA’s alone don’t always tell the whole story).  Here are just a few things HRO service providers should do to keep clients happy at the individual participant level; otherwise this would be a white paper, not a blog!

  • Ensure polite, courteous, and responsive service representatives in everything you do, e.g. Are you as responsive with a tier 2 inquiry or problem that needs the help of an SME as you are tier 1?
  • Be easily accessible, e.g. when providing an 800 number for clients for particular service questions, if there are several prompts that must be selected, why not include the prompts to select in the original communication.  Test your own IVR as a user.
  • Have user-friendly technology.  For websites that may be infrequently used, e.g. checking pension cash balance or 401(k), is there an easy way to check and reset passwords for users that can’t remember?  Are you providing simple instructions for infrequent transactions, e.g. annual enrollment?  Also, web information changes over time, so periodically check for broken links and user friendliness.

In my current RPO market research study, a track record of delivering quality customer service, including obtaining client references, is one of the top vendor selection criteria, as it was in my recently published learning BPO study.  The Spherion survey is a reminder that customers will not be shy about sharing bad experiences.  It’s best to be certain you know how your client’s employees really feel.

The good news is that HRO providers are, for the most part, providing a high level of service.  For example, SourceRight Solutions, SFN Group’s RPO unit, was the top enterprise RPO provider in HRO Today’s 2010 RPO Bakers Dozen and it was rated number one in quality of services by provider clients.  SourceRight Solutions was also only one of four companies to increase the satisfaction of existing customers while growing its customer base (the others included Kenexa, Pinstripe and AMS).  I tip my hat to SFN Group for conducting the survey and for walking the talk!

Gary Bragar, Lead HRO Analyst, NelsonHall

HRO is Never Static or Still

October 12, 2010

During every stage of the economic lifecycle, HRO service providers are doing something to either anticipate or react to changes in the marketplace and client needs while simultaneously striving to achieve strategic goals. This week I wrap-up NelsonHall’s review of 3Q 2010 HRO activity with a look at what’s new in offerings, partnerships and acquisitions.

One way to quickly expand a service line or fill-in gaps is to partner with a provider that is already offering the service or operating in the target geography. Last quarter was most active for RPO. Those announcing new RPO-related partnerships included Alexander Mann Solutions (AMS), Kelly Services, Kenexa, Pinstripe and The RightThing. Notably, two of the partnerships were to continue to expand RPO services internationally in the Asia Pacific region, with AMS adding reach into India and Kelly in Vietnam.

A more committed path to rounding out or adding new services is to buy it. Making small to large acquisitions is another constant in the world of HRO as players define and redefine their portfolios. In addition to the close of the three game changing major acquisitions in the benefits community (ADP/Workscape, ACS/ExcellerateHRO, and Aon/Hewitt), other folks were also making deals. For example, Mercer acquired IPA and ORC, and Xafinity bought PwC’s pension consulting and administration business in the U.K. Further, Randstad continued its acquisitive ways, this time outside of Europe, with its planned acquisition of FujiStaff in Japan.

Health and welfare (H&W) outsourcing used to be limited to the U.S., and that will remain the major market. But no matter how health insurance and care is funded, H&W concerns are growing globally. In the U.S., Fidelity is partnering with RedBrick Health to offer its clients wellness services, and in the U.K., Capita is acquiring FirstAssist Services to add to its health service offerings.

Finally, if you cannot find what you want in the marketplace, you can build or expand it yourself. Ceridian wants to truly offer a new line of BPO services and has announced it is ready to consult, build and manage the health insurance exchanges that some states will need in a couple of years as part of the U.S. health care reform program. 

Most announcements of “new offerings” are incremental additions. For example, Hewitt is adding Micromedex medical reference information to its advocacy service offering. You can also simply package what you have and call it new. Aditro has done that with a standardized set of payroll services that include preset services levels and implementation process to make a lower cost bundled option.

Yet another variation blends supply chain partnerships with building it yourself to make a new service offering. Take a SaaS HR service from Oracle or Sap and wrap in value added enhancements and services additions and, voila, you have a new HRO service platform. Mercer introduced its Human Capital Direct that uses PeopleClick Authoria’s talent management suite as the core, surrounded by Mercer’s consulting, tools and methodologies such as decision support, competency models and analytics.

In HRO, somebody is always doing something. What have you done lately?

Linda Merritt, Research Director, HRO, NelsonHall

HRO Total Contract Value Jumps 38 Percent in 1H10 – Where are the Gains Coming From?

July 15, 2010

During our Quarterly BPO Index webinar last week, NelsonHall CEO John Willmott reported that HRO total contract value (TCV) revenue increased 38 percent in 1H10 in a year-over-year comparison to 1H09. While HRO’s gains weren’t as great billions of dollars-wise as other BPO segments such as multi-process or industry-specific BPO, it is good to see the start of an upturn.

So where are these gains coming from? Forty-five percent of the contracts were signed with North American organizations, 43 percent were awarded to European enterprises (of which two-thirds were based in U.K.), and organizations in Asia Pacific accounted for the remaining 10 percent. And by service type:

• Recruiting – 32 percent of deals – including contract wins by Hays, Manpower, Kenexa, OchreHouse, Pinstripe, CPH Consulting, Alexander Mann Solutions, The RightThing, KellyOCG and PeopleScout

• Payroll – 22 percent of deals – including contract wins by Capita, MidlandHR, Raet, NorthgateArinso, ADP, TDS and Ceridian

• Benefits Administration – 20 percent of deals – including contract wins by Workscape, Aon, Secova, Mercer, Convergys and Xafinity

• Multi-process HRO (MPHRO) – 14 percent of deals – including contract wins by Accenture, Ceridian, ADP, Xchanging and Hewitt

• Learning – Eight percent of deals – including contract wins by Edvantage Group and General Physics

• Other HR – Four percent of deals – including talent management-related contract wins by Kenexa

Overall, I was not surpised with the above breakdowns as they were very consistent with the predictions in our June 2010 quarterly HRO Confidence Index.

Digressing a bit here to add to the buzz about Aon’s acquisition of Hewitt…while much written and water-cooler discussed has been about benefits administration, a sizeable amount of Hewitt’s revenue comes from MPHRO. A good example of this is Hewitt’s five-year contract renewal with International Paper, announced in April 2010.The renewal will support 40,000 International Paper employees with payroll, workforce administration, health and welfare administration, recruiting support, SAP application support and help desk, call center and HR manager support, learning administration and flex staffing management services. Given the amount of revenue coming from Hewitt’s MPHRO client base, I believe Aon will not only happily want to continue to support these existing clients, but also want to continue to grow the MPHRO business.

Although most new MPHRO contacts will likely not be the mega deals of yesteryear, reducing the number of suppliers in the outsourcing portfolio continues to grow in appeal among buyers. If buyers are satisfied with their MPHRO deals, they will continue, albeit in smaller fashion, to benefit both buyers and providers.

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

Conflicting Job Growth/Job Loss Reports – What are HR and HRO to Do?

April 1, 2010

As reported in the March 31, 2010 edition of USA Today, a just-released ADP report said employers slashed 23,000 private sector jobs in March 2010, while the median of estimates from 35 economists surveyed by Reuters for the ADP report was for a rise of 40,000 private sector jobs during the month. Economists expect The Labor Department’s closely watched month employment report, due out on April 2, to show employers added 190,000 jobs in March.

While the ADP report only covers private sector jobs and the Labor Department numbers could be somewhat inflated as many temporary workers were hired to conduct the 2010 census, this is still a huge delta. Did we lose jobs in March? Did we gain jobs in March? What will happen in Q2, Q3 and Q4 2010 in terms of hiring? The answer is…there doesn’t appear to be much more than murky answers.

What is clear, however, is that we all know job growth is coming, even if we’re not certain when it will really begin and then stabilize. And apologies for this focus in another of my blog postings, but it is so important to the health of the economy, the job market and indeed the survival of many organizations…astute companies know they will need to begin hiring again to meet demand as consumers start spending more. But really smart organizations, particularly mid- and large-sized companies, are starting to prepare now by seeking the help of external recruiting process outsourcing providers that can build a ready talent bank to fill jobs when requisitions are approved. These forward-thinking companies know one of the keys to competitive advantage is an ongoing search for top quartile talent to tap when they are ready.

Evidence of this proactive and front-loaded talent search is demonstrated in The RightThing’s March 29 announcement of seven new RPO contracts Q1 2010 with companies including Homesite, Nationwide and CUNA Mutual. And there indeed has already been hiring in some pre-Q1 2010-signed contracts. For example, The RightThing hired 500 employees in North America, South America and the U.K. for five existing pharmaceutical clients during Q1, and 2,100 new hires in Q1 for seven clients expanding call center operations.

And additional recruitment contracts were awarded during the last quarter to companies including Hays, Kenexa, Manpower, OchreHouse, PeopleScout, Pinstripe, CPH Consulting, Capita and Kelly Government Solutions.

So while there are conflicting reports on job growth or job loss today and into the near future, we know the growth will come. As a buyer, are you ready now?

Gary Bragar, Lead HRO Analyst, NelsonHall

Hays and SourceRight Solutions: A Different and “Right Time” Global Recruitment Alliance

March 18, 2010

On March 16, 2010, Hays plc and SourceRight Solutions announced a strategic alliance to offer global talent acquisition solutions. The two vendors will provide customized recruiting services to clients around the world, including in the U.S., Canada, Europe, Middle East and Asia. Over the past couple of years other partnerships have been formed to offer global recruiting solutions including: Pinstripe and OchreHouse, The RightThing and Alexander Mann Solutions, and KellyOCG and IBM. So what makes the Hays/SourceRight alliance different from the rest of these partnerships?

This alliance is similar in that recruiters can be provided in-country, but Hays and SourceRight Solutions are also offering solutions that will encompass:

•  Recruitment process outsourcing (RPO)

•  Managed service programs

•  Professional contingent workforce services

Hays and SourceRight will tailor recruitment solutions that can include any combination of the above, including by industry and geography, and which can be delivered by dedicated account teams with 4,500 recruiters around the world.

Further, this more highly customized and comprehensive recruitment services alliance may be coming to market at just the right time; during the recession, permanent recruiting has been largely on hold and many buy-side organizations have been utilizing temporary hires and contingent workforces due to uncertainty of their business outlook. Tailored, multiple option recruiting solutions should open many doors between Hays/SourceRight and buyers looking for a combination of permanent placement and temporary staffing assistance from the equivalent of one provider across geographies. 

I continue to believe – as I wrote in my 2007 and 2009 global RPO market analysis reports – that global presence and the ability to partner to provide global recruiting services are critical success factors for providers in the talent acquisition space. While the global recession, which resulted in staff reductions and temporary hiring freezes, has somewhat impeded the uptake, I strongly believe the time is right for a buy-side adoption increase, especially for highly tailored, comprehensive recruitment solutions.

Gary Bragar, Lead HRO Analyst, NelsonHall