The Year of the Mid-Market? Was it 2004, 2005, or is it now? We finally have the definitive, absolutely certain, for-sure answer.
OK, let’s get the mea culpa and disclaimers out of the way. We at HRO Today first called the Year of the Mid-Market in 2004. We saw some deals. We reported on them. We thought a few data points indicated a trend. As it turns out, we were early.
The second time we called the Year of the Mid-Market was 2005. We saw even more deals than in 2004. We reported on them. We thought for sure that because we saw a few more data points than in 2004, it really indicated a trend. And as it turns out, we were early.
So fast-forward to today, April 2006. HRO World 2006 happens this month. It is the fourth iteration of the world’s second-largest HR show and the world’s largest and most respected outsourcing event. Let’s dive in and look for data points.
Regardless of size, a detailed analysis shows that the majority of the buyers registered are HR leaders from organizations that sport 500 to 12,000 employees. Now turn your eyes to the exhibitor list. Of the 200 or so exhibitors, more than ever have offerings that are targeted not at the Fortune 1000 but at mid-market companies. Next, we turn to the program and the speakers, and what do we see? For the first time, there is a mid-market HRO panel, plus several sessions featuring mid-market firms such as the Princeton University Store, CarMax, Danka, and Covance—impressive mid-market activity, indeed. But are these just a series of data points, or do they really mean something?
In this issue, we also see another first: a multi-page piece from Ceridian, pronouncing its strength in the mid-market. What? Is that more than one large provider in one issue declaring a focus on 500-to-12,000-employee organizations?
Then we read that GevityHR, the largest publicly traded HRO provider serving sub-50-employee firms, has added a seasoned sales team previously from Accenture to address the mid-market. How about Aon HRO’s new focus on mid-market companies such as Michelin USA? And how about ADP? They’ve just announced some new customers in the mid-market, too.
AN EVEN BIGGER TREND EMERGING?
We see another thing we have never seen before: a story about a big-box outsourcing provider, Accenture, having acquired mid-market HRO/FAO service provider, Savista. From my viewpoint, this means that this great industry has reached a huge tipping point and the model of the future—one which substantially raises the bar for client services and accelerates outsourcing solutions.
Well here it is, folks. Mark my words; mid-market buyers are seeking an integrated service provider approach, one that bundles together FAO and HRO into one world-class back-end technology platform. The new wave of mid-market buyer will seek bundled outsourcing solutions that add to profitability—service providers who can demonstrate a multi-generational BPO management team who have grown up and have their roots in a mid-market outsourcing provider environment. Buyers require reference ability and, above all, services excellence.
Ok, so we had bad timing in 2004 and 2005. So what if we were 24 months ahead of the market with this trend prediction (we like being ahead of the market)? Now we can confidently tout that 2006 is the Year of the Mid-Market. And maybe it’s 12 months or so early to predict an integrated solutions approach on a more wide-spread basis. But if I were a service provider or a mid-market buyer, I, too, would look at Savista through a highly focused lens.
I’ll go out on a limb here in closing this fine column and make one more prediction for 2007: This will be the year of the lower mid-market!