HRO Today Forum In Vogue

I found my attendance at last week’s HRO Today Forum to be very worthwhile. I presented my newly published research on the “State of the Learning BPO Marketplace,” including the emergence of social learning. While there, I took full advantage of attending many of the other sessions and meeting with several companies including: The Good Jobs, KellyOCG, Pinstripe, Randstad Sourceright, Kenexa, Aon Hewitt, Raytheon Professional Services, NorthgateArinso, Seven Step Recruitment, and Hays. Here are some of the highlights from the forum.

The Good Jobs: The Good Jobs is an online service that allows job seekers and employers an innovative way to find each other. Employers not only advertise job opportunities, but also their employment brand, culture, and corporate values to candidates. Job seekers can identify their life and work style priorities, and target those employers who meet their needs. Matching talent desired to employer desired will lead to employee engagement and retention in addition to business results, including increased productivity and lower cost by reduced attrition. No surprise The Good Jobs won the iTalent competition.

Where do Jobs Come From Panel: This panel was led by Prudential HR SVP Sharon Taylor and included Brink Lindsey from the Kauffman Foundation; Scott Case, CEO of Startup America; and John Haltiwanger from the University of Maryland. A few interesting data points from this session included the following:

• 90% of companies are small, but 65% of employees work for large companies
• 2003 – 2007 saw high job growth averaging 200,000 hires per month but it was not as strong as the 1990s
• From ~1977 – 2003, there were only 5 years that job growth exceeded layoffs for non-start-up companies, i.e. a net creation in jobs
• I missed the time period, but the point was that more jobs have been created in startups (3.5m) vs. established private sector companies (2.5m)
• The fastest growing businesses are also the most profitable.

Is Outsourcing Good for America Debate: Interesting points from the pro side included:

• 90% of outsourcing serves companies outside of the U.S.
• 95% of world consumers are outside of the U.S.
• 90% of what is made abroad gets sold abroad
• Foreign companies invest more in the U.S. (e.g. Honda, Nissan, BMW) than the U.S. invests abroad (it’s a 2 way street)
• The U.S. tax rate is one of the highest in the world adding to why some companies shift a portion of their business and jobs offshore.

Congratulations to all Bakers Dozen MSP winners led by Randstad Sourceright, Staff Management, Allegis Group Services, Adecco Solutions Group, The Bartech Group, Guidant Group, Advantage xPO, KellyOCG, Hyphen, Agile 1, Yoh, Hays Plc, and WorkforceLogic.

Congratulations to HRO Award recipients including providers NorthgateArinso, Pinstripe, Aon Hewitt, KellyOCG, and Evolv, Inc.; provider executives Cynthia Crose of IBM and Mike Ettling of NorthgateArinso; and buyer executive Chris Payton of Bank of America.

Gary Bragar, HRO Research Director, NelsonHall

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Top Topics at Last Week’s HRO Europe Summit

Although a working trip for me – as a learning session co-presenter with Raytheon, and on two panels, one on learning and one on RPO – I can easily say last week’s HRO Summit Europe got great marks in my book. About 40 percent of participants were buyers – a rare occurrence at conferences these days – with the balance being presenters, providers, analysts, press, researchers, staff and others. Discussions were lively and engaging, and…need I say anything about the beauty of Amsterdam, especially its architecture and canals?

My co-presentation with Raytheon, a learning outsourcing session called, “Bridging the Customer-Provider Divide,” was immediately followed by the learning panel, and witnessed buyer questions including: 1) What role does the retained HR learning organization play, including the role of the retained learning director, HR business partners and governance team?; 2) What lessons learned should a buyer that has just implemented a learning BPO contract incorporate?; 3) Why we are seeing more selective LBPO contracts and less full LBPO contracts?; and 4) What role does LBPO play in retaining knowledge as more employees will inevitably begin to retire? 

While tracks and presentations covered the HRO gamut, two of the major focuses were talent issues and RPO. Dr. Peter Cappelli, Director of the Center for Human Resources at the Wharton School of Business, opened the conference with a keynote entitled, “A Question of Talent.” He began by discussing that, in the 1950’s and 1960’s, 24 years of service with just one company was the average tenure per employee. At the time, companies invested heavily in continuous training, and believed in lateral and upward mobility. He then moved to the sobering stats of today’s workforce. Companies of course still want loyal employees, yet very few do little to give their employees in-turn loyalty, and only one in four of succession plans are utilized. The result is organizations spending thousands of dollars in employee development, only to lose them to competitors.

It almost feels as if organizations accept this as a looming cloud norm in today’s workforce environment. But I vehemently oppose that viewpoint. If you look at the pure financials alone, conservative estimates are that it costs one and a half times as much of an employee’s salary to replace that individual due to the cost of recruitment, development, learning curve, etc. How can that possibly be perceived as good business? I am feeling like an evangelist as I’ve written about it so many times in my blogs, but employee satisfaction and robust initiatives focused on talent retention are vital to competitive advantage and business growth.

One of the largest and most well attended tracks at the conference was on RPO. I was also a member of an RPO panel discussion entitled, “Deep Dive: Driving the Future State of RPO,” along with Alexander Mann Solutions, SourceRight Solutions and a professor from Lancaster University. One question posed by a buyer member in the audience was how RPO has evolved. Each panelist, of course, had its own answer. Mine, not surprisingly as an industry analyst, is that by providing what I call “value-added services” or what I consider to be the “richer RPO services,” you are a true end-to-end RPO provider. This means: 1) services on the front end in workforce planning, talent strategy and employment branding to ensure the right employees with staying power are hired; 2) services in the middle to manage internal recruiting/mobility; and 3) services on the back end, including robust onboarding and ongoing, bi-directional employee engagement.

There are other shifts occurring, including interest in global RPO, and I will cover more on that and learning outsourcing issues discussed at the conference in upcoming blogs!

Gary Bragar, Lead HRO Analyst, NelsonHall

HRO (and overall BPO) Total Contract Values up in Q1 – Q3 2010

During NelsonHall’s recent quarterly BPO Index Call, our CEO John Willmott stated overall BPO contract values were up for all BPO sectors, including HRO, both on a rolling twelve-month basis from 2009 – 2010 as compared to 2008 – 2009, and up year-to-date Q1 – Q3 2010 as compared to Q1 – Q3 2009. This is all good news, but not a surprise given that we are beginning to see some recovery from the recession.

Looking specifically at HRO, total contract value (which includes the value of the full term contract plus any renewals) in Q1 – Q3 2010 was up nine percent. The growth came primarily from North America, while Europe declined as it is coming out of the recession a bit slower and clients in that region continue to be more cautious about outsourcing their HR processes. Although its total contract values isn’t as large as in North America, contracts are still being awarded in Europe, e.g., wins in Q3 by Logica, Midland HR, HR Access, Raet and CPH Consulting, as recently cited by my colleague Linda.

HRO growth in Q3 2010 was particularly led by RPO, similar to numerous other points during these tumultuous times. But here, I’d like to take a quick look at why the learning services market is starting to recover (please see Linda’s October 5 blog entitled, “Recapping the Not-so-Dog-Days of HRO’s 2010 Summer” to see a few of the recent learning contract awards.)

In learning, providers are introducing new training offerings largely focused on certified training courses, primarily technical areas including IT. Training is coming back to life, and the initial emphasis is on strengthening direct job-related skills. Making sure IT professionals can keep up with professional certifications can also be a way to build engagement and head off turnover as the employment market improves. There was also some introduction of new leadership development courses, perhaps indicating a return to a focus on the future by investing in management skills development. Finally, social learning is continuing to make inroads, and Expertus introduced its new platform, ExpertusONE, which facilitates communities of practice, expert networks and mentoring, in addition to normal learning system functions. Other new learning offerings introduced in Q3 included those from Raytheon Professional Services, QA and Edvantage Group.

It will be interesting to see, at the end of Q4, which HRO processes, regions and industries are the leaders and laggards. But much, much more to cover before then, including my “Targeting Learning BPO Market Analysis” to be published later this month.

Gary Bragar, Lead HRO Analyst, NelsonHall