NGA’S Trey Campbell was there at the birth of modern outsourcing. He’s now helping lead the 3.0 generation. Or is that 4.0?
By Dirk Olin
Samuel V. “Trey” Campbell became president NorthgateArinso North America in September 2009. He has extensive experience in business process outsourcing (BPO), particularly in the areas of HRO and related technology services. He joined NorthgateArinso from Accenture, where he was president and CEO of Accenture BPO Services, LLC.
Before joining Accenture, Campbell was business unit leader for Hewitt Associates, managing a large portfolio of strategic HRO accounts. He also held deal-making positions at Exult, Inc., Spherion Corporation, and PricewaterhouseCoopers. He holds a B.S. in Marketing from the University of Alabama and an MBA in Finance from the Gatton Business School at the University of Kentucky. He recently sat down with HRO Today in his Atlanta office to reflect on oversight of the NGA acquisition of Convergys, the history of outsourcing generally, and the opportunities he sees in the post-crash global economy.
What’s the state of your merger?
We closed in June of 2009 so it’s been a year and a half. A massive amount of effort. You’ve got a very mature client base that was used to a certain profile with Convergys. Our value proposition all along was to add new tools and capabilities to what I’ll call—well, I don’t want to use the word stagnant—but a pretty burned-in, non-innovative environment for Convergys over the last several years.
Their clients were more technophobic than yours?
No, the deals that Convergys had were of a bygone era. Large, multifaceted, highly customized delivery models and tools. Single purpose for that client, some cases dedicated service teams where you don’t necessarily get the best practices flowing in and out. The trials of Convergys were well known during the last several years of their ownership—it was in significant financial distress and not in a position to do a whole lot from an innovation standpoint with either its client base or its employees. So that was the challenge and the risk, and that’s what required the expense and investment. So as we entered the scene, we knew we could maintain operations while bringing a whole bunch of things from our toolkit—integration services and our technology platforms that were evolving and innovative. As we began the integration process, we refreshed the client account side.
But how do you unwind a customized engagement?
In many cases, you don’t. If the client was happy with it, we knew we wouldn’t necessarily transform these large customized technology and services arrangements. But we knew that we could do some things even without touching those major pillars to present shared services aspects, best practices flow, and quality flows. In some other cases, the clients were quite receptive to the notion of transformation. And our first major example on that front was with Fifth Third Bank. It was in need of a refresh on its technology. So we engaged with the company to upgrade and enhance its user interface by using our euHReka tool set. And there are others who are receptive to transforming toward much more standardized, self-service platforms. Then it can just become an evolution, depending upon their appetite. There is another constituency—particularly the public service clients, for example—where they’re highly constrained in their ability to move up to a customized platform, so the opportunities with them have been much more on the service enhancement side, as opposed to technology transformation. That’s something we’ll work through with all of our clients over time, because there was no expectation that they’d have to go to any prescribed anything.
Fair enough. Now let’s talk about your internal dynamic. How has the integration gone with your employees?
We had very much of a beleaguered, stressed workforce that had been under the gun for years. In some cases we were hearing things like, “We were the whipping child of Convergys, because as one of the three divisions our financial performance caused the others not to receive their bonuses.” So what we wanted to do was to revitalize them, refocus them on our pure play HR to make them feel part of the mainstream. We needed to get them excited about where we were going as an enterprise. We’re talking about 2,000 employees in North America, and what this acquisition had done for NorthgateArinso was bolster skills and scale in North America, where we had had a relatively small practice. It gave us both a lot of new talent and a credibility in the marketplace that we didn’t have before. That was relatively easy, but as we then went to integrate them into our HR and finance and management structures, that involved several months of a gate-by-gate approach. The cultural integration piece is something that we formalized within about six months of closing the transaction, once we’d gotten everybody’s paychecks and badges and security worked out. We wanted a single culture. NorthgateArinso itself had been built up from four or five historical enterprises. We did a lot of work around focus groups to get a baseline of where we wanted to drive our values.
How would you describe that baseline?
The new folks were ignorant of our strategy and what we were going after. They were a highly HR-BPO business—that’s pretty much all they did. We were bringing in systems integration elements and technology. So education was a bit part of the acculturation, explaining, “What is the NGA way?” So that was our first tranche. Now we’re on to our second tranche, which involves enhancing our intranet experience and making that a place for knowledge, plus driving our own rewards and recognition program. Overall, I’d say we’re well into the third quartile of this transformation.
Can you talk about a particularly problematic or complicated client during this transition?
Again, we never had an agenda to fix something that wasn’t broken. There was a minimum number of Convergys’s 16 major clients who had to consent to this transaction. And that meant that after we made the initial announcement, we immediately were out on a road show to get to know them. And we had situations where a client had been stagnant for some time. Convergys was very reluctant to take risks and was not very oriented toward professional services delivery. We had one client who immediately called and wanted a meeting with their head of procurement and HR. The story was very much one of frustration, of being held off and stalled. And they said, “We want no more of that.” Over the next nine months, we struck an extension of the agreement along with a new technology transfer agreement on top of that. Here’s another, and most have the same theme—a built-for-purpose technology platform that is too expensive, can’t do that much with it, and every time you try to change it the cost is millions. Now everyone is attracted to the simplicity of SaaS, but if the client can’t get there yet because of their profile, we get them as close to it as we can.
And with SaaS, you have an inverse relationship between configuration and cost cuts, right? The more you configure, the less you save?
That’s generally true, and with SaaS it’s even more restrictive. When you’re in a shared environment, you just can’t monkey with what the provider is maintaining, because the updates flow through you. You automatically get the newest and greatest, and if you’ve done a lot of customization, that breaks.
Do you have a typical client?
We have good representation in pharma, a variety of manufacturing companies, but industry specialization usually doesn’t get you very far. That can be different with learning, for example, where in pharma you have regulation by the Food and Drug Administration that creates unique needs, but outside of that payroll and workforce administration are common processes that cut across other industries.
You were at Exult, going back to the BP deal, so where does that put your thinking in the evolution of all these processes?
In the early days—the Wild West days—everyone was attracted to this notion of getting a huge platform by giving up service provision to a provider, who will drive a cost improvement that will pay for new technology, and I can do that across recruiting, performance, payroll, everything. It got a little out of control as people were swinging for the fences. Now there are a number that have worked and work to this day. But there are many where there was a mismatch in expectations. Clients would quickly gloss over what it would mean for them to switch from an HR generalist world to a shared services world. And that can put the provider under massive loss positions, and things get tense, and things explode.
So what are the lessons?
There are many. You had providers so eager that they were saying, “I’ll fund this myself,” and they’d provide $50 or $60 million of investment that they thought they would make up over 10 years, and they got underwater. So the value proposition changed, and you stopped saying I’ll provide stuff for free. Also, the idea that you could provide everything in a best-of-breed fashion was just not the case. Recruiting, for example, just has a completely different footprint than centralized admin. And most tried to banked their technology platform around the ERP providers—PeopleSoft and SAP—which then gave you a limitation against best-of-breed providers. And that stalled the industry as we got into 2007 and 2008. Now we have a reemergence of appetites, but they’re more measured, more focused. As a result, we still see global transactions, including payroll, but I’m not willing to swing for the fence the way I used to be.
Okay, so where does that put you on the map now?
We have three main businesses: HR outsourcing, systems integration, and technology. In some cases, we do one of those, in some, like Fifth Third, we do all of them. And more broadly, that’s why we built euHReka, because people for a long time have wanted a common pay platform and reporting platform across their multinational footprint. Of course, you still need local presence and know-how—whether in Germany or the Netherlands or France. We’ve got clients with nine or 10 languages that have to be covered. And that is not easily constructed. So that’s another revelation that’s come over the last several years.
So what have been your highlights and lowlights over the past few years?
I’ve been here two-and-a-half years, and it’s been incredibly exciting as we chase, secure, and stabilize the North American market. Was it difficult? Yes, very. But we’re moving into third- and fourth-generation HRO now with a cloud-type interaction that isn’t based on zillion dollar systems. We’re working on it; Workday is working on it; SAP’s move with SuccessFactors is another indication. More mobile, with self service as a given, and a more standardized approach. It’s a very clear trend.
But, in the wake of the crash and with Europe still in flux, isn’t it awfully tough to plan right now?
Are our clients worried? Yes, definitely. The problem is not going to go away overnight. The debt load and the cultural shift needed on entitlements and productivity just have to be addressed. It’s a tough equation to solve. It’s beyond their willingness to agree, it’s also a matter of execution. So that requires a reevaluation by American multinationals.
So how has that affected your strategy and tactics on business development?
Sometimes you’ve got a global relationship with a multinational, sometimes you have a local relationship with their piece in France or Switzerland or Korea. It can be completely country-centric. That’s very true for us in the U.K. But we’re often global—two or three or more countries, and often that starts with multinationals based here in the states. We’ve got 8,000 employees total—1,700 in North America, 4,000 in APAC, another couple of thousand in the Europe including the U.K., and the rest in Latin America. But that’s not purely translating into the amount of business. APAC, for example, is growing fast.
Given that, what do the next two years look like to you?
I don’t think we’re going to see stagnation in this business. I think the state of things is going to accelerate desire for what we do. We’ve seen that just over the past 12 months.
There was a period when we were in the abyss during the meltdown, but now folks are out and after their agenda. They might be seeking a step change in their cost profile and greater efficiencies generally. And that’s why we maintain a variety of tools, because not everything is a nail if all you have is a hammer. I think we’ll continue to see multi-country payroll. People need to consolidate their information, especially when your employees represent 70 percent of your cost base. That’s why for us payroll is the ultimate source of truth. The other thing is the mobile phenomenon. Our systems have to be optimized for the device. It’s one thing to say you can get on your HR system with your tablet, which of course we offer, but it’s another to say, “I have 10 high-intensity, high-volume transactions, and I just want to be able to get on if I have a rec. to approve or a bonus to approve and I want a menu for my Blackberry or iPhone where I can get that done on the way to the airport.” We’re working very hard to get to that next generation. All the different operating systems create a lot of angst for the development guys, but it has got to get there. It will be second nature to be able to do three approvals before bed without calling someone, without support around it.
By the way, how did you get into this business in the first place?
I was with AT&T in New Jersey, spent 13 years there, ending with what is now Lucent. This was in the days of the new, competitive field of wireless communication, with start-ups all around. I was with network systems as a sales guy, worked up to being a general manager, and we were basically providing outsourced telecom. But I wanted to move to a smaller enterprise where I could have a bigger impact. And PriceWaterhouse was building a global outsourcing unit—finance and accounting, real estate, applications support, procurement, and HR—and this was in the mid-90s when no one was using outsourcing as a strategic tool. Anderson Consulting, the precursor of Accenture, was the other one out there. But if you’d asked me at the time whether the HR piece of that would be the one that would really break out, I would’ve said no. Yet that’s exactly what happened. And then I ended up at Exult—doing deals with BP and Prudential and International Paper—and it all started to gain traction. Which brings me back to the point about some of those big original deals still going strong. I was doing the IP deal when the towers fell, and it’s still going strong to this day. Next I went to Hewitt, and in ’05 everybody started doing this, and that’s when you started to see boats getting swamped. Then came the ice age, and now the thaw with the big, absolute reconfiguration that’s going on now.
So, given this revival, what’s your take on frequent demonization of outsourcing in a social context?
You can’t stop the globalization of the economy. You can talk about it. But you’re not going to. My clients are always worried about shareholder value, and if they don’t do it, they get fired. Now offshoring and outsourcing are two different things. You can get to some efficiencies through onshore centralization. We have a lot of clients who do that without ever getting to offshoring, because they have a philosophical opposition to it. So some are all about cost, while other weave in an emotional or practical set of considerations. I have a prospective Midwest client that right now is talking about bringing stuff back home. So it’s all become much more sophisticated, and nothing is one-size-fits-all anymore.