They’re the biggest and baddest, but judging by the lack of consolidation in 2005, enterprise providers in the HRO market aren’t ready to pack it in yet, despite signs of slowing growth.
You might mistake this year’s list of top enterprise HRO providers with that of last year. That’s because the consolidation wave that many thought would take place—including this crack staff at HRO Today—fizzled out. The ranks of the biggest vendors remained unchanged, and even Tier 2 players—the ones with a more regional flavor—are sticking through the up-and-downs.
Is this a good or bad development for the HRO industry? You decide. More choices are usually good for the consumers, but if many providers aren’t profitable, they’ll have to either cut corners or eventually sell. Our preference is mergers, since no one wants to see quality decline in an industry that has battled so hard to be respectable in the eyes of clients.
Most of these names should be familiar to the well-informed HR professional. And if not, then we’ve achieved our mission of educating the buyers in this market. HRO is all about choice, and this is a good list to start from. Keep in mind, however, the biggest may not always be the best for your needs, as there are many smaller PEOs and other services providers who can meet your needs. Also, the biggest in this list have markedly different skills than the smallest.
We’d also like to acknowledge Stan Lepeak of EquaTerra for his guidance on the biggest players in this market. His insights were valuable in helping confirm some of the choices on this list.
Criteria for the list: Providers must have at least one documented end-to-end HRO client,1,000 employees or larger, and be able to provide national service. Providers are listed in alphabetical order.
THE TOP 21 HRO PROVIDERS
Accenture HR Services accenture.com/hrservices
Examples of End-to-end Clients: BT (Second Generation), Best Buy, Sandvik, Transportation and Security Administration, NewPage, Telecom Italia
HRO Services: Recruitment, workforce performance, learning, compensation and benefits, payroll, and employee services
Description: Accenture is one of few end-to-end enterprise providers offering multi-tower services in both the HR and finance and accounting domains. Recently, the company made a huge play for penetrating the mid-market with the acquisition of Savista of Wichita, KS, which specializes in BPO for organizations with 2,000 to 12,000 employees. This purchase was an ideal complement for a service provider that had trouble launching its own mid-market offering.
ACS (Global HR Solutions) acs-inc.com/hro
Examples of End-to-end Clients: Chubb & Son, Delta Air Lines, Goodyear, General Motors Europe, Motorola
HRO Services: Benefits administration, health and welfare, compensation administration, consulting, employee contact center, global mobility, HR technology, payroll administration, workforce development
Description: ACS is a premier provider of fully diversified, end-to-end business process and information technology services to commercial and government clients worldwide. With more than $5 billion in revenues, more than 55,000 employees, global operations reaching nearly 100 countries, and a host of high-profile clients, ACS offers a global footprint. It can manage the entire HRO, BPO, and IT spectrum so companies can focus on core business functions.
Adecco (Global HR Solutions) adecco.com
Examples of End-to-end Clients: IBM, General Motors, Goodyear, and Microsoft.
HRO Services: Payroll, recruiting, staffing, training, HRIS, employee service center, EAP
Description: With 6,600 offices in 70 countries and territories, Adecco has been undergoing some transformation of its own. While the company recently reported strong earnings, it also brought in a new CEO in Dieter Scheiff , who had been the CEO of Germany-based DIS, a company in which Adecco acquired a majority stake earlier this year.
Examples of End-to-end Clients: Fort Worth National Bank, M3 Logistics, Inc., BI3 Solutions
HRO Services: Employment administration, benefits management, retirement services, business services, compliance, employer liability management, recruitment, training and development
Description: Graduating beyond small businesses, Administaff is now one of the larger PEOs ready to make a big splash in the mid-market. With more than 5,000 clients and 96,000 worksite employees, the company is well-positioned to compete with the likes of Gevity, Ceridian, Core3, and HRXcel .
ADP (Employer Services) adp.com
Examples of End-to-end Clients: Blue Cross Blue Shield of Massachusetts, Apple Vacations, CarMax
HRO Services: Payroll, benefits administration, HR information management, HR administration, self-service, data management, performance management, compensation management, applicant management.
Description: ADP in the past year has made a bigger push into the smaller enterprise HRO space. Partnering with companies such as Employease, ADP is broadening its reach into areas such as on-demand platform for recruitment, ongoing HR functions, and employee and manager self-service. It also recently entered into the accounts payable market to offer a more integrated solution in the FAO segment.
Examples of End-to-end Clients: Coral Beach Hotels & Clubs, Crown Auto
HRO Services: Payroll, HRMS, benefits administration. reporting and analytics, learning and training, risk management, screening
Description: Offering end-to-end services, Advantec provides small business a broad range of HR services, including technology. The company targets organizations with up to 2,500 employers, a range comfortable for most PEO organizations.
Aon Consulting aon.com
Examples of End-to-end Clients: AT&T, Michelin USA
HRO Services: Recruitment and staffing, administration for employment processing, employee benefit plans, payroll, tuition reimbursement plans, performance management; compensation plans, and COBRA /HIPAA.
Description: Aon Consulting reported 2005 revenues of $1.25 billion and and a headcount of 7,000 professionals in 120 offices throughout the world. Aon Consulting delivers integrated consulting solutions for employee benefits, HRO, compensation, communication, and management consulting.
ARINSO International arinso.com
Examples of End-to-end Clients: Sodexho, Baxter, PGGM
HRO Services: Employee self-service, report and audit, payroll and HR tools, transfer and migration of HR data
Description: One of the leaders in European payroll services, ARINSO operates in 24 countries including Europe, North America, and Asia. While it offers discrete outsourcing services, the IT specialist also provides Application Maintenance Outsourcing (AMO) and Infrastructure Management (ISO).
Examples of End-to-end Clients: BBC, Independent Police Complaints Commission (IPCC), British Nuclear Group
HRO Services: BPO and service transformation, back-office administration, customer service, finance and treasury, claims and policy administration, HR staff support and training, recruiting, and training
Description: In one of the largest outsourcing contracts signed by a non-profit organization, the BBC earlier this year awarded a 10-year comprehensive HRO contract to Capita for the administration of pay (excluding pensions), aspects of staff development, occupational health, and other services.
Examples of End-to-end Clients: Visteon, PHH Mortgage
HRO Services: Staffing, EAP, payroll and compensation, compliance, health and wealth, benefits administration, HRMS
Description: With more than 110,000 clients employing 25 million, the company recently began offering Ceridian Health and Productivity Management, which features full service and employer-administered leave administration; online health and productivity assessment tool; life enhancement wellness coaching; return-to-work management; and disability and disease management.
CGI Group cgi.com
Example of End-to-end Clients: City of Montreal, Universal Insurance
HRO Services: HR administration, payroll, time management, web-based recruitment, training, auditing, benchmarking
Description: Business process services, which include outsourced functions such as payroll and data management, remains a small sliver of CGI’s overall business.
CheckPoint HR checkpointhr.com
Examples of End-to-end Clients: American Stock Exchange, Kara Homes, Starwood Capital
HRO Services: Payroll, benefit administration, HRMS, recruiting and staffing, compliance, and healthcare administration, HR support
Description: This payroll provider has been expanding its expansion into the healthcare, hospitality, and manufacturing industries. Still, it is limiting its target clients to employers with 50-2000 employees.
Convergys (Employee Care) convergys.com
Examples of End-to-end Clients: DuPont, Whirlpool, State of Texas HHSC, State of Florida
HRO Services: Benefits, payroll, administration, recruiting and staffing, learning and development, call centers, data integration, vendor management
Description: Convergys was the big winner last year in the enterprise HRO marketplace, scoring wins with DuPont and Whirlpool. These big contracts—in DuPont’s case it was the largest ever recorded—helped catapult Convergys into the winner’s circle in 2005. It didn’t hurt that Karen Bowman, who heads up Employee Care, received the 2006 HRO Executive of the Year Award from the HROA. However, the company remained in the red as revenues from the two deals have yet to ramp up even as Convergys has spent millions winning those clients.
Examples of End-to-end Clients: U.K. Armed Forces Personnel Administration Agency, CIBC, Raytheon
HRO Services: Payroll, benefits administration, relocation and assignment, absence management, compensation management, recruiting and staffing, workforce administration, workforce development, HR consulting
Description: Since EDS and Towers Perrin joined forces in 2004, ExcellerateHRO has seen modest results from the marriage. The company, while maintaining a global footprint, hasn’t posted the kinds of big wins as Convergys or the number of of signings such as Hewitt.
Fidelity Employer Services Company (FESCo) fidelity.com
Examples of End-to-end Clients: Bank of America, ABB, BASF
HRO Services: HR administration, payroll, defined benefit/contribution, health and welfare, compensation, and consulting
Description: Fidelity had been quiet on the sidelines for about 18 months, announcing only one major signing as it invested and implemented a robust HRIS system with payroll capabilities. However, company officials confirmed that as of May, its sales force is now ready to seek out new buyers to justify its hefty investment. Look for Fidelity to aggressively pursue new clients for the rest of 2006.
Examples of End-to-end Clients: Danka, Red Bull, ComUnity Lending, Krispy Kreme
HRO Services: Compensation administration, performance management, learning, payroll, benefits administration, risk management, compliance, exit services, HRIT and reporting, HR data administration, full portal, contact center, strategic HR leadership services, on-site HR generalist roles
Description: Gevity, a PEO that is moving up-market, provides comprehensive HRO services spanning the employee life-cycle. From small businesses to mid-market employers, the company recently took over all HR functions for Danka, a $1 billion reseller of office imaging equipment. The publicly traded company is positioning itself to become a broader enterprise provider for North American employers.
Hewitt Associates hewitt.com
Examples of End-to-end Clients: Wachovia, Omnicom, Rockwell Automation, Thomson Corp., Marriott
HRO Services: HR administration, payroll, benefits, retirement and financial management, recruiting, training and development
Description: No enterprise provider had more big wins in 2005 than Hewitt, which acquired Exult a year before. On the momentum of the purchase, the global provider went on an unprecedented string of contract wins with Fortune 500 clients such as Marriott and Wachovia. In 2006, the company said it expects to see a quieter level of activity as it tries to digest so many deals. Even so, the company recently signed Catholic Health Initiatives and the federal Office of Personnel Management (OPM).
IBM Global Business Services ibm.com
Examples of End-to-end Clients: Eastman Kodak, Dana Corp.
HRO Services: Payroll, benefits administration, compensation, expatriate and relocation, HRIT, consulting, vendor management
Description: IBM emerged from its shell of inactivity in 2005 to make a couple of deal announcements in HRO. Coupled with its F&A outsourcing capabilities, IBM is well positioned to tap into the current movement of integration of HRO and FAO, especially in the mid-market segment.
Examples of End-to-end Clients: U.K.’s Department for Constitutional Affairs, Department for Culture, Media & Sport, Department for Work and Pensions, Health Protection Agency, Her Majesty’s Court Service, Westminster City Council, The Public Guardianship Office
HRO Services: Performance management, policy leadership, recruitment and assessment management, compensation management, training, pensions management
Description: Liberata is one of the largest HRO providers to the U.K. public sector.
Examples of End-to-end Clients: KPN, Gendarmerie Nationale
HRO Services: Fully managed payroll, expatriate management services, flexible benefits administration, consulting
Description: Known more as a provider of IT outsourced services, LogicaCMG’s strength is in payroll, e-learning and self-service. The company’s integrated IT and payroll solutions allow it to offer comprehensive products to buyers of HR and IT services.
Examples of End-to-end Clients: BAE Systems
HRO Services: Payroll, screening, HR advice, employment law, resourcing services, health and safety
Description: Created through the spin off of BAE Systems in 1998, Xchanging provides outsourced HR services to 250,000 employees in the U.K.