While IBM led the provider pack in the number of large deal signings last year, Accenture claimed the biggest contract in 2006 by landing Unilever. In a year of slowing deal growth, there were still enough big buys to keep HRO in the headlines.
Deal-making isn’t what it used to be in the HRO marketplace. After a torrid 2005 in which Hewitt alone won more than a dozen large contracts, helping the industry continue its red-hot growth, providers came in for a soft landing last year.
Sure, there was the headline-grabbing $1 billion Accenture-Unilever deal that raised the bar higher in contract value, eclipsing even the DuPont-Convergys contract signed a year earlier (compared on an annualized basis). However, there were fewer global, end-to-end HRO engagements overall, according to analysts and sourcing consultants contacted by HRO Today. As expected there were a few renewals as well, as some of the earlier, first-generation HRO deals neared the end of their terms, including a huge, five-year Lockheed Martin extension valued at $500 million.
Among new signings, HRO continues to prove its appeal across a number of industry verticals, including consumer product goods (AVON), retail (IKEA, CVS), energy (Centrica), healthcare (Cardinal Health), manufacturing (Sanyo), financial services (Russell Investment Group), and quasi-public organizations such as the BBC and the Catholic Health Initiatives.
Does the slow growth in enterprise deals signal a forthcoming decline in the HRO market? Worry not, readers, as providers, analysts, and sourcing consultants say plenty of new deals are in the pipeline this year, and some deals in negotiations last year simply have taken longer than expected to execute. Moreover, look for the mid-market to make up for fewer global contracts.