Enterprise. HRO Deals. Top SPECIAL FEATURE. HRO Trends 2004: Guide-At-A-Glance

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1 Top Enterprise HRO Deals Welcome to the hotly-contested Second Annual HRO Today List of Tier 1, Enterprise-Level HRO Providers! You may notice some additions to and omissions from the companies on last year s list. You can blame this in part on our new standards. You may not like them, you may not agree with them, but every company that appears on the list meets them: To be included as an Enterprise-Level HRO Provider, you must have at least one client of 1,000+ employees for whom you provide full-service, end-to-end HR, and you must be able to offer this service on a national level. A second reason for the changes you see to this list is the rapid evolution of the HRO market itself: Several providers on last year s list consolidated, several are no longer providing end-to-end enterprise HRO, and several newcomers have added clients that pushed them into the ranks of the top 23. And according to recent studies, you can expect much of the same over the course of the next years. In fact, several recently released studies are projecting big things for the HRO market in the next few years. If you ve been reading recent issues of HRO Today, you ve already seen the results of some of those studies: In April and May, Phil Fersht published a two-part piece on the results of The Yankee Group s most recent research on HR BPO. In this issue, on page 52, David Rhodes of Towers Perrin gives us a sneak peek of the results of an in-depth survey of active (outsourcing at least 5 functions in last 5 years) HR BPO users perhaps the first of its kind. And coming up in future issues of HRO Today, look for results from the Conference Board s most recent report on HR outsourcing. Okay, okay. We realize that s a lot of page-flipping, so we ve made you a nice little cheat sheet that highlights some of the results of each of these studies and where to learn more about current trends in HRO in our HRO Trends 2004 Guide-At-A-Glance. HRO Trends 2004: Guide-At-A-Glance CONFERENCE BOARD STUDY KEY FINDINGS: The last year has shown a 14% increase in the number of large firms ($1 billion+ in annual revenues) that would consider HRO (from 77% in 2002 to 91% in 2003) 80% of respondents would outsource again based on current experience 77% have measured hard dollar savings over the life of the outsourcing Companies with shared services are more heavily involved in outsourcing and are experiencing more success in outsourcing than those without Technology costs are a major consideration in both the decision to outsource and the selection of a vendor Look for more detailed information from the Conference Board Study in upcoming issues of HRO Today or visit YANKEE GROUP RESEARCH KEY FINDINGS: HR BPO services are projected to increase in market share from 17% to 29% during the next 5 years (versus HR consulting, estimated to decline from 38% to 36% and HR volume-processing services, estimated to decline from 45% to 35%) Global spending on HRO services is projected to grow over the next 5 years from approximately $40 billion to $80 billion Business drivers behind the adoption of HR BPO: lower external costs of HR services, lower internal admin costs, integration of discrete HR processes, increased visibility and strategic reputation of HR, M&As, increased use of self-service applications, and ERP rollouts and integration with F&A Look for more detailed information from The Yankee Group in the April and May 2004 issues of HRO Today or visit TOWERS PERRIN STUDY KEY FINDINGS: Top 3 reasons for HR BPO: cost savings, freeing time for strategic HR, improving service quality 3 main findings of active (outsourcing at least 5 functions in last 5 years) HR BPO users: outsourcing alone can not transform HR, implementation challenges are largely about behavioral change, HR generalists need new competencies to fully leverage outsourcing Factors critical to HR BPO success: timing, number of processes outsourced, number of points of contact, involvement of business leaders Read more about these findings on pages of this issue of HRO Today or visit Consultants Process Specialists Pure-play BPO IT Mid-market 22 HRO TODAY JUNE 2004

2 The Top 23 Enterprise HRO Providers Criteria for the list: Providers must have at least one end-to-end HRO client, mid-market or larger, and be able to provide national service. Providers are listed in alphabetical order. (Mid-market is defined as 1,000+ employees) Accenture HR Services accenture.com/hrservices 900,000+ Examples of End-to-end Clients: British Telecom, City of Copenhagen HRO Services: Customer Contact Services, Exit Services, Information Services, Learning Services, HR Advisory Services, Pay & Benefits Services, Performance Services, Resourcing Services Description: Employing advanced technology and best-of-breed human resources practices, Accenture HR Services offers customized, integrated HR solutions that span the entire employee lifecycle from recruitment to retirement for larger enterprises. They also have a more standardized, integrated offering for medium-sized companies and individual services available a la carte. ACS (Global HR Solutions) acs-inc.com/hro 684,000 Examples of End-to-end Clients: Motorola, Goodyear, General Motors Europe, ACS HRO Services: Benefits Administration, Compensation, Core Process Redesign, Employee Assistance Program, Employee Service Center, HR Information Systems and Employee Portal, Learning Services, Payroll, Performance Management, Relocation, Selection and Assessment, Staffing Description: Providing diversified, end-to-end, BPO and IT solutions to commercial and government clients worldwide, ACS offers a suite of transactional, professional, and advisory HRO services. Benefits Administration involves claim administration, membership and enrollments, and other services. Compensation includes compensation programs and pay plan management and advisement. Employee Service Center provides full-service employee call and transaction services. HRIS includes self-service tools, data warehouse, and an open architecture solution that leverages a client s existing technology platforms. Learning Services provide training and admin services. Payroll includes gross-to-net payroll admin. Performance Management provides assessment and appraisal, succession planning, and executive development. Staffing services include requisition and candidate management, internal placement, and resume management. Administaff administaff.com 75,000 Examples of End-to-end Clients: Access Worldwide, Fresh Success HRO Services: Employment Administration (payroll, payroll taxes), Benefits Administration, Recruiting and Selection, Performance Management, Training and Development, Government Compliance, Employer Liability Management, Owner Support Description: This national PEO provides full-service HR support to small and medium-sized businesses across the nation. Administaff has 4 regional service centers and 38 sales offices nationwide and was listed among America s Most Admired Companies for four years in Fortune magazine and named to Information Week 500 list of one of the leading information technology innovators. Administaff is traded on the NYSE, accredited by the Employer Services Assurance Corporation, and an active member of the National Association of PEOs. ADP (Employer Services) adp.com million Examples of End-to-end Clients: Tyco, IHG HRO Services: Payroll, Benefits Administration, HR Information Management, 401(k)/Retirement Services, Screening and Selection Services, Expense Management, Time and Labor Management, Tax and Compliance Management Description: This data processing giant also provides full-service, comprehensive HR services including traditional and Internet-based outsourcing solutions to almost half a million employers in more than 26 countries. In addition to payroll solutions and tax returns, also offers complete outsourcing services through ADP TotalSource, a PEO. Advantec advantechr.com 20,000 Examples of End-to-end Clients: Coral Beach Hotels & Clubs, Crown Auto HRO Services: Benefits, Payroll, Recruitment, Risk Management, Human Capital Management Consulting Description: Located in Florida, this five-year-old company provides a range of HR services to clients nationwide. Innovative Internet service centers and a strong focus on HR consulting and ongoing training explains why they are one of the fastest growing HRO companies in the country. JUNE 2004 HRO TODAY 23

3 Aon Consulting aon.com 6 million Examples of End-to-end Clients: AT&T HRO Services: Benefits, Communication, Compensation, Expatriate, Investment and Management Consulting, Retirement Description: The parent company of this consulting arm, Aon Corporation, is a Fortune 500 company and leader in risk management, reinsurance and wholesale brokerage, claims management, specialty services, and human capital consulting. With 160 offices and more than 7,863 employees worldwide, Aon Consulting leverages its experience in human capital issues across a variety of client issues, ranging from the broad-based needs of multinational organizations to the specific service needs in a local country. Aon Consulting s global network of local resources delivers solutions in the areas of employee benefits, compensation and rewards, communication, HRO, process redesign, and talent selection and development. ARINSO International arinso.com NA Examples of End-to-end Clients: GM HRO Services: Consulting (business analysis, process improvement, transformation management, service-center design); Integration (HRMS, e-hr, enterprise portals); Operations (BPO, application maintenance, infrastructure management, payroll services); Health and Wealth Benefits Description: Founded in 1994, ARINSO currently employs 1,400 staff in 22 countries. This IT giant has expanded to offer HR BPO and has implemented best-of-breed HR management solutions for more than 100 of the world s largest corporations. Ceridian ceridian.com 23+ million Examples of End-to-end Clients: Comerica Inc HRO Services: Staffing, Admin, Payroll and Compensation, Compliance, Employee Effectiveness, Benefits Admin, HRMS Description: Ceridian Corporation is a leading information services company. Approximately 75% of the company business is devoted to its HR Solutions, managing solutions for employers in the U.S., Canada, and Europe. Ceridian s suite of managed business solutions for HRMS, payroll, tax filing, application outsourcing, time and labor management, benefits administration, employee effectiveness services, benefits enrollment, COBRA, and 401(k) administration explains why they serve 18 percent of the U.S. workforce. Their Ceridian Small Business Solutions unit offers fast, internet-based HR solutions for smaller businesses. CheckPoint HR checkpointhr.com 10,000+ Examples of End-to-end Clients: American Stock Exchange HRO Services: Payroll, Benefits, HRMS, Recruiting and Staffing, Training, Compliance Description: This New Jersey-based company provides HR and payroll outsourcing through both Web-based HRMS and personalized customer service. Targeting small and mid-sized companies (50 to 2,000 employees) they currently service more than 175 clients nationwide. Convergys (Employee Care) convergys.com 1 million Examples of End-to-end Clients: State of Florida HRO Services: Benefits, Payroll, Administration, Recruiting and Staffing, Learning and Development Description: With almost 20 years of outsourcing experience, this company s 50,000+ employees service clients in more than 40 different countries. In addition to full-service HR BPO, Convergys also offers billing solutions (including consolidation, service order and traffic processing, receivables management, credit assessment, and interactive technology) and customer care solutions and contact centers (including market research, database marketing services, IVR, Web-enabled customer service, and B to B telesales). EADS eads.com NA Examples of End-to-end Clients: Airbus HRO Services: Business Transformation Outsourcing (payroll, training, time management, insurance and pension plans, recruitment and administration) and Application Management (applications maintenance and management of HRIS) Description: The European Aeronautic Defence and Space Company (EADS), a global leader in aerospace, defense, and related services, surprised the HRO world in 2004 when they announced a joint venture with IBM to provide HR services. The venture, called HR Technologies and Management, or HRTM, launched with 100 employees and 35 business customers, including Airbus. EADS was created in 2000 from a union between some of the biggest European aeronautics businesses in France, Spain, and Germany. 24 HRO TODAY JUNE 2004

4 EDS eds.com 26+ million Examples of End-to-end Clients: CIBC, Infineon HRO Services: Payroll, Benefits, Training, Recruitment, Employee Relationship Management, Relocation and Expatriation, Knowledge Management and Reporting Description: EDS offers a broad portfolio of business and technology solutions to clients worldwide. With more than 130,000 employees, EDS supports companies and governments in 60 countries with IT, applications, and business process services; IT transformation; and management consulting. Their Enterprise Support Services unit manages key enterprise functions, such as HR relocation, and finance and accounting. Exult exult.com 2 million Examples of End-to-end Clients: BP, International Paper, Prudential HRO Services: Record and Support (HRIS, HR admin), Reward (payroll, compensation, benefits admin), Staffing (recruiting, assessment, sourcing, screening), Retention and Expansion (relocation and training) Description: The innovator in pure-play HR BPO, Exult provides comprehensive HRO, F&A, and procurement offerings to Global 500 companies. With customizable and scalable platforms, Exult uses Six Sigma standards to design, measure, and deliver its processes. Fidelity Employer fidelity.com 11 million Services Company (FESCo) Examples of End-to-end Clients: IBM, Bank of America HRO Services: HR Administration, Payroll, Defined Benefit/Contribution, Health and Welfare, Compensation, Consulting Description: The FESCo arm of financial giant, Fidelity, offers a comprehensive suite of HR and benefits outsourcing to corporations around the world, administering more than 11,000 retirement, pension, health and welfare, human resources administration, and payroll programs. They also offer specialized services for large (1,000+) and mid-sized (less than 1,000) companies. Gevity gevityhr.com 138,000 Examples of End-to-end Clients: ComUnity Lending HRO Services: HRIS, HR Admin, Recruiting and Staffing, Compensation and Pay Description: Their integrated human capital management solution allows this company, specializing in small and mediumsized business in the United States, to be the in-sourced HR department for clients. Providing employee recruitment and development assistance; payroll and benefits administration; workers compensation insurance; health, welfare, and retirement plans; and employment-related regulatory guidance through a combination of HR consultants and a scalable, Web-enabled technology platform. Hewitt Associates hewitt.com 17 million Examples of End-to-end Clients: Sony HRO Services: HR, Payroll, and Benefits Outsourcing; Health Care; Retirement and Financial Management; and Talent and Organizational Change Description: With a client roster that includes more than half of the Fortune 500 companies, Hewitt Associates provides outsourcing, consulting, and human capital services to companies around the globe. With more than 60 years of HR experience, Hewitt is the largest multi-service HR delivery provider in the world, handling 54 million HR interactions a year. IBM Global Business Services ibm.com 100,000 Examples of End-to-end Clients: Procter & Gamble HRO Services: Payroll, Benefits Admin, Compensation, Expatriate and Relocation, HRIT Description: What hasn t Big Blue done? Although P&G is their first end-to-end HRO deal, look for more BPO (or BTO, Business Transformation Outsourcing as IBM defines it) from this newly launched service. In addition to their IT background and business process knowledge of 18 different industries, IBM s integration with PricewaterhouseCoopers gives them strong industry knowledge and consulting change skills, while the inclusion of 800 P&G HR employees from 45 countries gives them both global reach and intellectual capital. 26 HRO TODAY JUNE 2004

5 Manpower manpower.com 2+ million Examples of End-to-end Clients: Toyota Motor Manufacturing Kentucky, Suntrust Online HRO Services: Staffing, Assessment and Training, On-site Workforce Management, Outplacement, BPO Description: With more than 4,300 offices in 67 countries, Manpower is a leader in employment services serving customers in small, medium-sized, and large multinational corporations. Specializing in permanent, temporary, and contract recruitment; employee assessment; training; career transition and organizational consulting services; as well as BPO; the company operates under additional brand names of Right Management Consultants, Jefferson Wells, Elan, Brook Street, and Empower. Mellon HR & Investor Solutions mellon.com/hris 15 million Examples of End-to-end Clients: American Express HRO Services: HR Admin, Compensation, Training and Development, Retirement Consulting, BPO, Communication Strategies and Corporate Restructuring Description: Leveraging the expertise of the entire Mellon organization, HR&IS fuses finance and human capital experience to help clients design, build, and operate integrated HR and investor services for their business. Mercer mercer.com NA Examples of End-to-end Clients: Cooper Industries, Stanley Works HRO Services: Benefits Admin, Compensation, HRIT, Communications, Workforce Development Description: Building on 60-plus years of employee benefits experience, this consulting arm of Marsh & McLennan employs more than 15,000 individuals in 40 countries. Working with a broad array of clients on both domestic and global HR issues, they specialize in compensation, benefits, communication, and human capital strategy. PlatformOne platformone.com 75,000* Examples of End-to-end Clients: Travel Traders HRO Services: Payroll, Benefits and HR Admin, HRIT, Onboarding and Leave, Training and Development Description: Part of SCI Companies, PlatformOne has evolved over 18 years to deliver HR BPO solutions to more than 450 clients* and is one of the fastest growing HR BPO providers to the mid market. The company offers two HR BPO solutions: the first is aimed at mid-market companies and includes HR technology infrastructure, HR administrative services, and HR professional support; the second is an industry-specific, turnkey technology solution for PEOs. * Combined with Staffing Concepts, an SCI PEO. RSM McGladrey Employer Services rsmmcgladrey.com 30,000 Examples of End-to-end Clients: BBB Services Corp HRO Services: Benefits Brokerage and Admin, Payroll, HR Admin Description: When the consulting firm RSM McGladrey acquired MyBenefitSource in 2004, they added end-to-end HRO to their existing HR service portfolio of payroll and benefits administration. Serving hundreds of clients nationwide, small and large, they offer integrated payroll and benefits systems in addition to benefits brokerage. Xchanging xchanging.com NA Examples of End-to-end Clients: BAE Systems HRO Services: Recruitment, Payroll, Training and Development, Outplacement, Benefits, Compensation and Incentives Description: Founded in 1998, this U.K. company offers BPO, FAO, ITO, as well as HRO to clients as renowned as the London Stock Exchange, Lloyds, and BAE systems. Its acquisition of RebusIS earlier in 2004 has expanded its capabilities in IT and HR and its reach in the United States and Asia. Consultants Process Specialists Pure-play BPO IT Mid-market 28 HRO TODAY JUNE 2004