Contributors

HRO, Across the Pond

 Our European expert shares new findings.
 
In lieu of our regular HeRO feature this month and next, Editor-in-Chief Dirk Olin sat down with Faye Holland, managing director of European Operations for HRO Today’s parent company, SharedXpertise, and executive director of HROA in Europe. Holland recently emceed November’s HRO World Summit Europe, gaining key insights from the delegation in person and from the live interactive voting system in use. This month’s discussion covers the European market in detail, while next month’s will explore broader industry trends.
 
What’s going on with the HR services markets in Europe?
 
Overall the European HRO market is stable. We are seeing more single source contracts, and mid-sized companies are the ones to watch out for, for new contracts.
 
There’s a fair amount of optimism across practitioners, providers and advisor groups about the economy in 2010. At the Summit, 71 percent of delegates said that recovery is underway, and the economy will be back to 2007 levels within threee years; only five percent believe the economy is “stuck” for the foreseeable future. At the same time, about a quarter say the economy is sector-dependent, with some sectors recovering, while others never will.
 
What’s the European view on spend?
 
The budgets for almost all buyers, providers, and advisors in 2010 versus 2009 are most likely to be down, with 44 percent saying budgets will be lower or significantly lower. However, nearly a third expect budget growth, and interestingly buyers are most likely to increase, providers most likely to decrease.
 
So, let’s pick out a couple solution areas:
 
Multi-process HRO
Large deals are still live and kicking! Unilever, Procter & Gamble, Bristol Myers Squibb. The key now is for those companies to share their stories and experiences a few years down the line so that those who are on the multi-process train hear the good as well as the challenges.
 
The HROA (HR Outsourcing Association) Europe Awards presented at the Summit has one category dedicated to multi-process customer deals. Very apparent this year was the lower level of entries in this category, with a number of companies suggesting they’d rather wait until next year to announce their successes. Winner of 2009 was Kraft, which signed an 8-year contract with IBM’s Managed Business Process Services and Application Management Services for HR outsourcing.
 
This is typically one of those multi-process stories that started years ago when Kraft began investigating outsourcing as a potential option for providing HR services for their 102,000 employees worldwide. They needed to find a partner that could both deliver a foundational technology platform upon which to grow upon, as well as help them to become more strategic in how they deliver services to their employees. 
 
IBM will provide a full portfolio of services to employees in US/PR, Canada, UK, France, Germany, Belgium, Switzerland, Austria, Brazil and Mexico. Additionally, the agreement calls for basic services (primarily technology & global process call center support) to be provided for more than 63 additional countries.
 
Of notable mention was also the runner up, SELEX Galileo and Xchanging (XHRS). SELEX Galileo, part of the Finmeccanica Defence Electronics group, was formed in 2008 following divestment from BAE Systems. The legacy full scope HR outsourcing arrangements with XHRS continued until March 2008, at which point a new contract was struck, taking the HR partnership to a new level of clarity and understanding. Over  nearly a year, new clearer service measures created far greater transparency to the relationship. New governance structures were implemented, allowing for monthly Service Reviews, a quarterly Technology Steering Board, and, most valuably, regular Service Performance Reviews with Line Managers at which both XHRS and the SELEX Galileo HR team let Line Managers  review performance as one HR function.
 
Payroll
The winner of the HROA Single Process of the Year was Avery Dennison and ADP.
Avery Dennison provides identification and decorative solutions for businesses and consumers around the world, and it has been an ADP National Accounts Division’s client for over 10 years in the U.S. Over time, trust grew such that Avery Dennison’s Global HR Division recommended ADP as the HR BPO provider for its European payroll outsourcing, and ADP was picked as single provider for payroll outsourcing in Europe covering 19 countries and serving 7,000 employees. Next up is expanding to the Asia-Pacific rim.
 
Payroll has become such an obvious function to outsource that you find most buyers and providers all have their own experiences. When we asked the delegates what they considered the primary driver for multi-national payroll outsourcing, only 36 percent selected cost reduction as first. The next levels were improved quality of payroll services, simplified HR technology, and increased compliance and control.  Only 3 percent showed payroll as making HR more strategic.
 
Most interestingly of all, only 55 percent agreed that single-process payroll outsourcing leads to full HRO. So what else are multiprocess solutions consisting of, if they are to move to or develop as full HRO?
 
Talent Management
At the event, we asked about the solution range that was of most interest to the delegates. Of course, it was no surprise, given the recent economic climate and the hopeful view for 2010, that attendees said that their investments are likely to focus top-of-the-pile on talent management (that was 53 percent) and recruiting (49 percent), followed by outsourcing (that was 41 percent).
 
RPO
So, as I said, the second largest projected area of spend in 2010 was recruiting (49%).
When asked about the staffing profile of the organization, a third of delegates responded that they would maintain staffing organizations in individual countries. Next most common, at just over a quarter, is globally managed organizations that operate with country/divisional teams, and at 5 percent of all respondents, global outsourcing is very uncommon.
 
For those considering outsourcing, nearly three quarters plan to apply a hybrid model, rather than full outsourcing keeping RPO somewhat single-source.
 
 
Learning
I am really excited about this area. What is Learning 2.0, and how do you outsource more than you already have?
 
One of the top sessions of the whole Summit event was the Learning Summit, as it provided some real innovation. Jose Milano of AXA France explained why one should outsource learning and how to construct a learning deal; and Raytheon joined the Summit for the first time with their client, Gary Standen, Lt. Cdrr RN, UK Ministry of Defence (MOD). Gary gave a fascinating insight into Large Scale Organizational Transformation of three types of specialist training that are critical to the UK Armed Forces, whilst managing, building, and running the MOD’s Defence Technical College.
 
Gary also explored the parallels of HR Outsourcing between military training and commercial markets, as well as a detailed look at the transformation process for training management and support that Raytheon Professional Services and consortium members are using to manage, plan, and schedule this comprehensive training solution.
 
January 2010 also will see the launch of the HROA’s Learning Special Interest Group, which will further build this area, initially in Europe but then on a global basis. Readers  can find out about it on hroaeurope.org or by contacting me directly.
 
So payroll, HRIT, and learning all have renewed focus in Europe, as the question of how to outsource or improve existing outsource contracts. Global mobility, relocation, and xpats, recognition etc. have yet to see similar numbers, but I say watch this space—not to mention the impact that we will see from greater involvement from Asia-Pac in 2010 as they are always bringing  exciting new ideas to the pot as well. 
 

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