Posted tagged ‘rpo. hr outsourcing’

Mid-Market HRO is Hitting the Big Time

February 25, 2011

HR BPO has historically been targeted to and bought by large organizations.  However, the mid-market, defined by NelsonHall as 500 – 15,000 employees, is rapidly gaining traction.  How so?  In NelsonHall’s Targeting RPO Market Analysis, that was published this week, mid-market RPO grew from c. 1/5 of total revenue in 2008 to c. 1/3 in 2010.  The rapid growth is the result of mid-market clients looking to take advantage of the following benefits:

  • Reducing the costs of HR services
  • Improving service delivery, including standardization of technology and consistency of process across lines of business and geography
  • Gaining access to better technology that clients may not be able to invest in themselves
  • Taking advantage of expertise and knowledge of best practices.

In fact, many HRO providers have introduced solutions or made acquisitions specifically for the mid-market.  In RPO, SourceRight Solutions launched RPO One for the small to medium-sized (SMB) market in December 2010.  Targeted at organizations with 100 – 5,000 employees, RPO One provides clients with a dedicated account manager and team focused on the SMB market.  It also has a pre-configured Peopleclick ATS (applicant tracking system) bundled with SourceRight’s reporting and analytics platform and Avature’s customer relationship management (CRM) system that includes social recruiting.

In payroll, NorthgateArinso recently launched agoHRa, a payroll solution for companies with up to 500 employees per country.  agoHRa can be used as a standalone local payroll solution or as part of a multi-country solution.  It can also be linked into NorthgateArinso’s euHReka platform.

In benefits, Aon Hewitt’s acquisition of RealLife HR was an early example of a provider expanding its services, particularly health and welfare benefits administration, to employers with fewer than 15,000 employees and/or retirees.  Mercer rolled out its Enterprise Momentum service to help mid-market employers gain an advantage navigating the insurance broker market.  In addition, Mercer acquired Innovative Process Administration in 2010 for its recordkeeping and enrollment technology as part of its growth plan in the health and benefits mid-market outsourcing space.

In learning, IBM is targeting the mid-market with a new offering, Smart Business Learning Services, a cloud-based solution with quick implementation and variable pricing.  Although it’s geared toward the mid-market, it offers all the services and functionality of an LMS for the large market.  IBM has also recently launched Smart Business Learning Content Services for the mid-market, which is delivered on the cloud as well and priced on a per user basis.

NelsonHall continues to see and capture mid-market HRO contract wins in our tracking service, providing evidence of success with this market.  Consequently, expect HRO providers to continue to launch offerings with cloud-age technology, services, and cost points that will finally bring mid-market HRO into the big time.

Gary Bragar, Lead HRO Analyst, NelsonHall

Show Your RPO Mojo

May 20, 2009

On drill-down discussions and research, we’ve verified that RPO providers’ pipelines are quite strong right now, in some cases never stronger, but deals are taking longer than ever to close. Why this prolonged decision-making process, when RPO offers such an impressive value proposition – average 43 percent reduced time-to-hire and average 24 percent reduced recruitment costs?

Our just released “Targeting Recruitment Process Outsourcing” research study found that two of the major factors inhibiting buyers from putting pen to paper are: 1) change management issues, e.g., lack of buy-in and commitment from senior management, internal politics, etc.; and 2) lack of baseline data to make the business case for RPO. And of course, let’s not downplay business uncertainty, and consequently workforce uncertainty, and their contribution to RPO contract signing delays.

 Given RPO’s value prop, we recommend:

Buyers put aside fears while gathering the baseline data to evaluate the RPO business case for their unique organization (and providers will help with the baselining), understand that new flexible pricing structures allow for “pay per hire” contract terms to reduce financial output risk, and realize that, once the economy turns around and hiring volumes increase, internal recruiting departments will not be able to ramp up and hire the right people quickly enough…they’ll likely need assistance.

Providers actively adopt a variable cost model, offer prospects support in obtaining baseline data (at minimum on current recruitment costs and time-to-hire), and provide solid evidence of results achieved for other clients. Our research found that the number one selection criteria for an RPO provider is experience, reputation and client references. If you reduced a telecommunications company’s time-to-hire from 90 to 27 days, shout it out. If you beat time-to-hire targets for engineers at a global manufacturer by 30 days, tout it. If you reduced talent sourcing costs by 60 percent for a U.K. financial services company or by 50 percent in just six months for a consumer food product company, highlight it as a case study for prospects. In other words, show your RPO mojo!

Gary Bragar, Lead HRO Analyst, NelsonHall