Posted tagged ‘Pinstripe’

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

Multi-Country, Single Provider RPO Contracts Gaining Traction

November 5, 2009

Recruitment Process Outsourcing (RPO), just like all other HRO process areas, has been impacted by the recession and lower hiring volumes. And revenue recovery and growth will be further impacted by the lagging nature of hiring after a recession. However, those RPO providers with multi-country capabilities are better positioned to tap into today’s limited opportunities, and will have the opportunity to fare better than their single-country counterparts when hiring volumes return.

NelsonHall’s 2007 and 2009 RPO Market Analysis studies found that multi-national buyer organizations are increasingly seeking single-provider RPO solutions for reasons including: 1) Standardized technology and consistent processes, which results in increased efficiencies and reduced cost; 2) Consolidated reporting from one system, which results in better data quality; and 3) Reduced provider management efforts.

While RPO providers can gain global delivery capabilities via partnerships, as discussed in my July 22 blog, we are also seeing individual providers win multi-national RPO deals. Their ability to win these contracts are due to a number of factors including increased local presence and knowledge of where and how to attract local talent, technology to support multi-country recruiting efforts and ability to provide onsite support.

Examples of recent multi-country RPO deals include:

•  Kenexa on October 26 announced it was awarded an RPO contract by LSG Sky Chefs, a corporation with 30,000 employees in 49 countries. Using a hybrid model of onsite and service center delivery, Kenexa will provide LSG with global recruitment services which are expected to reduced costs due to centralized recruiting and deliver a better candidate hiring process.

•  PeopleScout on November 2 announced it won a multi-million RPO contract with Covance, a global drug development company with 9,600 employees in 20 countries. PeopleScout will perform hiring services for professional and hourly positions for Covance in North America, South America, Australia and Asia.

•  Pinstripe on August 18 was awarded an RPO contract by Agilent Technologies for the provision of complete end-to-end RPO services from job requisition through on-boarding for exempt and non-exempt employees in the U.S., Canada, Mexico and Brazil.

To underscore providers’ acknowledgement of the importance of single provider multi-country and global RPO capabilities, Manpower on October 30 announced a realignment which combines its HRO and RPO groups into a dedicated business unit, Manpower Business Solutions (MBS), to strengthen its outsourcing service offerings. RPO services are delivered in 20 countries today. As part of the combined group, MBS can further leverage Manpower’s reach, in 80 countries today, to increase its RPO delivery footprint.

I believe this is the tip of the iceberg in that we will see more global RPO contracts being awarded over the next several years. Providers with the capability to support multi-country RPO will see increased opportunities to win new business and expand existing domestic-only hiring contracts for multi-national and global clients.

Gary Bragar, Lead HRO Analyst, NelsonHall

Partnering for Multi-Geo and Global RPO Capabilities

July 22, 2009

As we identified in our 2007 RPO market analysis and reaffirmed in our May 2009 RPO report, the ability to deliver RPO services on a global basis is a critical success factor for the provider community in order to serve the needs of buyers looking for recruiting support beyond domestic regions and to buoy their own revenue growth.

While some RPO providers have acquired others to expand their geographic delivery capability, we are also seeing a handful of partnerships forming among pure play RPO, and RPO and multi-process, providers. Examples include KellyOCG and IBM, Spherion’s RPO division and Spring Group’s RPO division – named hyphen – and Pinstripe and Ochre House.

The most recent announcement came from U.S-based The RightThing, which on July 14, 2009 announced it partnered with U.K-based Alexander Mann Solutions to enhance its global RPO delivery capability. The RightThing is immediately leveraging this new partnership by expanding its existing contract with Medlmmune, headquartered in the U.S., to provide hiring services for the company’s Cambridge and Liverpool (U.K.) and Netherlands locations.

As buyers look to reduce costs and the number of suppliers they work with, we’ll see an increasing number of global RPO RFPs. We’ll also see an expansion of existing domestic-only RPO contracts into more geographies, if buyers are happy with their existing provider and it can offer a multi-geo or global solution.

Therein lays the opportunity, and the rub, for RPO providers. To meet the increasing need for global RPO capabilities, domestic-only suppliers that want to expand will need to determine where and when to do so, and whether organically or via partnerships.

Would-be global RPO providers considering the partnership approach must carefully balance the benefits of lower start-up expenses, quickly obtaining the requisite knowledge on local laws and legislation, and insights into how to best source talent in the region with the inherent risks including how to ensure consistency and quality of services and technology integration into a virtual single platform.

We don’t anticipate seeing more than a few additional large partnerships forming in the next year. But perhaps there will be more niche partnerships, such as Kenexa’s partnering with R&J Management Consultants in April 2009 – forming Shanghai Kenexa – to extend its RPO presence in the Chinese market. In the meantime, global RPO by partnership should be explored and entered into cautiously by providers and buyers alike.

Gary Bragar, Lead HRO Analyst, NelsonHall