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Demand for Multi-Country Services Drives Growth in HRO

Per NelsonHall’s HR Outsourcing Confidence Index (HROCI), around one third of HRO contracts signed in Q4 2013 were for services in multiple countries. There were multi-country deal signings across all HRO service lines, the highest number being in RPO and payroll.

RPO

In 2013 nearly one third of all deal signings were multi-country, up from a quarter in 2010. M&As and partnerships activity continues, as vendors look to enhance their RPO capability and increase geographic coverage. So far this year we have had:

  • Staffing firm True Blue acquiring SeatonCorp in June (which includes U.S. based PeopleScout and Australian based HRX which PeopleScout acquired in February)
  • The Pinstripe & Ochre House merger and rebrand as Cielo in May
  • WilsonHCG’s merger with CPH in April
  • Allegis Talent2 alliance which became Allegis Global Solutions in April

Approximately 15% of multi-country contracts cover two or more regions, e.g. Hudson’s contract with a global financial services firm across the Americas, APAC (10 countries) and the U.K. Kenexa’s contract with Eli Lilly for all permanent hiring in the Americas, APAC and Europe and Seven Step RPO hiring for an electronics company in Asia Pacific, North America and Africa. 

Payroll

Demand for multi-country payroll was the top driver of the large/multi-national enterprise market in 2013 - some vendors, such as ADP and Safeguard World International saw very strong growth in multi-country payroll.  Multi-country contracts signings represented ~12% of the market, though a much smaller percentage was deals covering three or more regions.

A key feature of these contracts is clients looking for consistent multi-country payroll processes and a common view of payroll data across geographies, integrated with their wider HR and ERP systems to provide common employee and management information. Vendor selection criteria include the provider having an international footprint in the geographies where the client has operations, the ability to scale, and multi-lingual employee support. Clients are looking for a single contract with one vendor and one set of SLAs.

Per NelsonHall’s recently published payroll market analysis, half of vendors are currently providing multi-country payroll, with four of them focusing solely on multi-country. Providers continue to enhance their capabilities, e.g. in May ADP expanded its payroll capabilities through its Streamline offering to 100 countries in support of multi-country payroll.

Benefits Administration

In benefits administration, providers continue to launch new offerings around multi-country activities for example:

  • Towers Watson launching in May a multi-country benefits offering, Global Access, targeted at employee populations where customization is not required in benefit design and is available in ~30 countries
  • Allianz launching a multi-country benefits offering in January, focused on corporate life insurance, pensions and health products

MPHRO

The multi-country standardization segment has the highest growth rate within MPHRO.

Accenture’s 5-year MPHRO contract renewal by longstanding client Unilever in December 2012 is one of the largest in the industry. HR services provided by Accenture to ~130k Unilever employees in ~100 countries range from core HR administration and payroll  to recruitment and learning services.

Learning BPO

Clients are looking for vendors able to provide learning resources in country and also virtual instructor-led training to quickly provide learning to a high volume of employees that are geographically dispersed.

An example of a recent signing is HSBC, for whom GP Strategies commenced deployment of LBPO services in the U.S., Canada, U.K. and Hong Kong in Q1. Additional geographies to be deployed this year include smaller operations in countries in APAC, LATAM and the UAE. Providers are also enhancing their multi-country learning capability. Enhancements made by Raytheon Professional Services include its Catapult technology which allows for fast development of content, including instantaneous multilingual courses in ~30 languages.

Expect for strong multi-country growth across all HRO service lines over the next few years, led by RPO and payroll. 

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