Accenture and Unilever Renew Major MPHRO Contract for Five More Years

Linda Merritt, HRO Research Analyst, NelsonHall

Let’s wrap-up 2012 on a high note for HR BPO with news of Accenture’s award of a 5-year multi-process HRO (MPHRO) contract renewal from Unilever. When orginally announced in 2006, the 7-year contract was the single largest HRO deal signed with an estimated value of $1bn.

First Generation HRO

The focus of the first generation Unilever contract was largely on cost reduction (20% – 30%) and creation of a unfied global HR operating environment of systems and services across 100 countries and 20 languages. Unilver had already begun the tranformation process by introducing shared service centers in key areas to capture some of the early gains on its own as part of its One Unilever program to reduce the cost of back-office services including HR, F&A, and IT. It then moved to HRO to make further progress in efficiency, cost, and to gain a single source of the truth in reporting and mearsurement capabilities.

Second Generation HRO

Accenture will continue to support ~130,000 Unilever employees operating in more than 100 countries through its global delivery network including multiple centers across the U.S., Europe, and Asia Pacific. MPHRO services include:

• Core HR administration
• Payroll administration
• Recruitment
• Learning services covering content sourcing and development, program planning and delivery, and learning system hosting
• Management and administrative services.

As is common with renewals, there are some expansions of scope and a greater focus on improvements, in addtion to a desire for further cost reducing efficencies.

Accenture will be introducing service improvements to drive greater efficiencies and improve the user experience and align the services it delivers with Unilever’s Talent Agenda. New elements include:

• Introducing a more proactive recruiting approach, including the expanded use of social media (Accenture itself has been using LinkedIn and Twitter to recruit staff for a few years now)
• Expanding the scope of the learning services delivered by Accenture to include professional skill-building modules in the curriculum to support Unilever’s focus on developing future leaders; learning programs will make greater use of virtual instructor-led training (VILT), which is in line with Unilever’s sustainability agenda
• Evolving in performance metrics to go beyond traditional operational SLAs to include metrics focused on the client’s desired business outcomes.

It is a good quarter when you can announce a major MPHRO deal, whether it’s new or a renewal. For FY Q1 2013, Accenture’s revenues were $7.2bn, up 5% in local currencies; EPS were up 10% to $1.06; and operating income was up 7% to $1.05bn. Outsourcing brought in $3.26bn in revenues, and $3.3bn in new bookings. A good quarter indeed!

Happy holidays from the NelsonHall HRO team: Gary Bragar, Amy Gurchensky, and Linda Merritt.

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Does HRO Help or Hurt in Achieving Human Capital Leadership?

Can employers be recognized as leadership development advocates and a great place to work and still take advantage of HRO services? Yes—and recent “best companies” announcements provide plenty of examples.

Fortune’s annual 100 Best Companies to Work For list includes a number of companies known to use HRO services. RPO examples include: American Express (Hays RPO), Edward Jones and Intuit (Manpower Group), Microsoft and Novartis (Alexander Mann Solutions), and SAS and Telefonica (Ochre House). Accenture, which provides HRO services, is on the list as an employer.

HRO clients are also among the recognized companies in the 2011 Top Companies for Leaders, another recent Fortune study in association with Aon Hewitt. PepsiCo (Aon Hewitt) and Unilever (Accenture, IBM) are among the multinationals taking the lead in developing leaders. Again we see RPO as a common talent management service selection; Eli Lily and Novartis AG (The Right Thing, An ADP Company), GE and Siemens AG (KellyOCG), and Whirlpool (Kenexa). IBM, another major HRO player, is recognized, as is Wipro. Accenture is noted on the U.S. list and Infosys is on the Asia Pacific list. ADP is included in the 2012 list of 10 Best  Companies for Leaders rankings by the Chief Executive.

Business Today has just released its 11th annual “Best Companies to Work for” in India and top companies include HRO providers such as Accenture, IBM, Infosys, Wipro, and TCS. Honeywell International (SourceRight Solutions) also made the list and is on the U.S. list for Leaders as well.

The lists go on and on and you will find companies that use HRO as well as HRO providers among the best of the best. You can be a pioneer in leadership development and use HRO in critical talent management areas. You can achieve greatness in any region of the world. You can even look to some of the HRO providers to share their own expertise as a “best company” in the human capital leadership arena.

Will HRO automatically make you the best company? No. However, HRO will not slow you down and may even provide a committed partner in accelerating your success.

Linda Merritt, Research Analyst, HRO, NelsonHall

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Does HRO Stifle Innovation?

A question since the earliest days of HRO has been, what about innovation? We all want cake and want to eat it too, and that’s what buyers have always wanted: lower costs, improved performance, and innovation in HR business process management. Even when a deal was structured for the lowest cost pricing and standard SLA performance, clients soon asked “where’s the innovation?”

Knowing if a service provider is a market leader in HRO innovation is important to some clients, especially those companies that use innovation as a competitive advantage. Perhaps an equally important question is can an innovative company risk using HRO and will it help or hurt?

The Forbes List of The World’s Most Innovative Companies may help us determine if HRO providers can be innovative and if HRO is being used by innovative companies. The list is based on an “innovation premium” which is defined as “the premium the stock market gives a company because investors expect it to launch new offerings and enter new markets that will generate even bigger income streams.”

First, can HRO providers be innovative? Well, ADP (#87) is on the list of the top 100 that includes the likes of Apple, Google, Amazon, and Starbucks. Infosys (#15) is on the list and it also offers HRO services. Congratulations to both ADP and Infosys!

Next, can innovative companies risk using HRO? Yes, they can and they do. Here are some of the top 100 companies on the list known to use HRO and their vendor partners. Notable is IBM HRO with at least three clients on the list: P&G, Kraft, and Avon Products. IBM HRO focuses on large market HRO and clearly can be a valued partner in HR transformation with leading innovators.  Other partnerships include Unilever with Accenture; KAO with ADP; Kellogg and PepsiCo with Aon Hewitt; and Agilent with NorthgateArinso. RPO providers are also represented with the triple threat of The RightThing providing RPO support for Amazon, Campbell Soup, and Praxair. I am sure there are many more connections to HRO among the top 100. Congratulations to all, let’s have a piece of cake in their honor!

According to the newly published “The Innovator’s DNA,” the 3P framework for innovation is people, processes, and philosophies that foster innovation as everyone’s job and there are key leadership skills and behaviors than can be developed to weave innovation DNA into the company. Of course HRO, even at its most innovative, cannot make a client an innovator. That must come from within. HRO can support each element of the framework for innovation and become an enabling partner to clients that are innovative or those that are striving to be.

Do you have an innovation premium? Is your HRO service provider capable of enhancing your journey of innovation?

Linda Merritt, Research Analyst, HRO, NelsonHall

An HRO Provider on the “100 Best Companies to Work For” List… Now That’s Walking the Talk

I was very pleased to see an HRO provider, Accenture, named on Fortune’s “100 Best Companies to Work For” list for the third year in a row.  Last week I wrote about customer service being important to customer retention, so I thought this was an appropriate blog to write about this week, particularly when you are a true believer in the adage that employee satisfaction = customer satisfaction = increased profitability.

Accenture was cited for initiatives including its “Future Leave” program, which is a three-month, self-funded, sabbatical with continued benefits and assurance to be able to return to work when the leave is over.  Accenture also has a number of other programs for employees including:

• Learning and development: A global online learning portal with 20,000 courses available.  All Accenture employees are assigned a career counselor to help them manage their careers
• Flexible work arrangements: Options of how and where employees perform their work to help achieve a better work-life balance

Another HRO provider walking the talk is Kenexa.  Its CEO, Rudy Karsan, recently co-authored a book titled “We: How to Increase Performance and Profits Through Full Engagement.” The book highlights three common factors that drive engagement that I completely agree with:

1. “Growth: We need to feel that we are advancing in our careers or are learning new things.
2. Recognition: We need to feel appreciated and believe that our ideas count.
3. Trust: We need to trust our senior leaders and feel confident about the future.”

More HRO providers are offering talent management services and can help clients improve employee engagement.  For example, Kenexa was recently awarded a contract by Unilever to survey 140,000 employees globally in 2010 and again in 2012 to assess employee engagement.  Kenexa will also help Unilever with action planning for any issues identified to improve employee engagement.

Manpower is another example of an HRO provider, helping companies in Asia to develop effective workforce strategies to improve their competitiveness.

As I’ve written before, as the economy improves and more jobs become available, it will be even harder to retain talent.  HRO providers can help and where needed, implement new employee programs or strengthen existing ones that are not achieving the desired results.  In assessing which HRO vendor to work with on tools and services designed to increase employee retention and engagement consider the vendor’s own human capital management practices. Who better to work with than an HRO partner that walks their own talk!

Gary Bragar, Lead HRO Analyst, NelsonHall