Eight service providers are running the global HR BPO game.
End-to-end HRO is no longer a pipe dream– it is a reality. A series of publications are dedicated to covering it, Wall Street and industry analysts are paid to research it, and sourcing advisors are flooded with requests to explore and manage it. There are even PR firms and marketing agencies springing up, eager to hone in on this burgeoning industry. Like the onset of the Internet, which necessitated unprecedented levels of investment from governments, telecom companies, and IT firms alike to build a global infrastructure, the same is now happening with BPO.
The HR BPO industry is entirely dependent on investment from Tier 1 and Tier 2 providers–it cannot thrive simply through a few smart partnerships. While advisors can talk up the business benefits, cost savings, and improvements to people management, there will be no industry if the IBMs, Accentures, Hewitts, and others fail to deliver the means to make this happen. So whats the state-of-play with the HR BPO service providers?
Hewitt–This provider has galvanized its position at the forefront of the HR BPO market since its Exult acquisition and will probably be boasting its fortieth multi-process HR BPO client by the time this article is published. Hewitt is the test-case for leveraging its growing service-center infrastructure across multiple clients. Its key challenge moving forward is to solidify delivery capabilities in mainland Europe.
ACS–2005 is turning out to be a consolidation year for the Texan outfit. Having taken the industry by storm with its “HRO in a Box” approach, the company is now working hard to merge its newly-acquired MellonHR operations and consolidate its global clients. Key challenges are to underpin its world-class global services delivery infrastructure with a robust technology platform and further mature its HR transformation capabilities.
IBM–It has been a watershed year for IBM’s HR BTO services, with the successful acquisition of the Dana Corporation and NiSource contracts and achieving significant progress with its global service centers. Key challenges are to integrate its IT software and services competencies into its HR delivery projects and acquire further competencies in the areas of benefits administration.
Accenture HR Services–The year started successfully with the renegotiation of BT, but Accenture has since missed out on several global contracts. However, some bright prospects with blue-chip organizations should get the company back on track in 2006. The integration of HR into its multi-tower BPO business under Kevin Campbell is eagerly-awaited with his Hewitt non-compete set to expire soon. Key challenges are to separately develop its outsourcing business from its consulting business and finalize a comprehensive strategy for both benefits administration and payroll.
Convergys–2005 is the comeback year for this outfit which has struggled with troubled contracts. Integration of Deloitte’s F&A business, combined with a world-class learning offering and a growing global delivery base, is setting up the company for a successful long-term outlook in BPO. Convergys’s challenges are to consolidate its new client wins and work on a successful IT and BPO alignment, as it looks to rub shoulders with much larger competitors.
Fidelity–Fidelity’s approach to HR BPO has been to build a proprietary offering based on its HR Access platform, which is set to go live in early 2006. It has been developing its benchmark client, Bank of America, as a test bed for its HR BPO offering. With first-class benefits administration and potential to have a one-to-many technology platform, the future looks bright. The key challenge is to make what they have work–and quickly–and decide whether to develop a global plan for HRO.
ExcellerateHRO–EDS’s HR offering has re-branded and re-launched itself this year. With 120,000 staff, great IT skills, a genuine global footprint, and landmark HRO clients such as CIBC and Infineon, ExcellerateHRO has some catching up to do to start fulfilling its potential. Key challenges are to successfully integrate the Towers-Perrin benefits administration software by early 2006, hire a team of HR-focused practitioners, and bid on some suitable global deals.
ADP–With mid-market offerings in payroll and benefits administration that could make it a formidable competitor at the high-end of the market, the question is not if, but when. ADP can take on a lot of business most of the others will pass over with their one-to-many service capabilities, a developing platform, and the scale to make this work. The challenges are to develop real global test-cases of ADP running on SAP and build a strategy to cater to recruiting and learning services. Nothing a smart M&A or two wouldnt resolve.