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RPO M&A Activity Makes a Flying Start in January 2016

As discussed in a recent blog, acquisitions in Recruitment Process Outsourcing (RPO) have become increasingly aggressive year-on-year, and the pace of M&A activity shows no sign of diminishing, with three deals already done in January 2016:

  • TrueBlue’s acquisition of Aon Hewitt’s RPO business
  • The completion of the merger between Pontoon and its sister company, hyphen
  • Orion International’s acquisition of Novotus

TrueBlue acquires Aon Hewitt’s RPO business

TrueBlue, via its PeopleScout RPO business, acquired Aon Hewitt’s RPO business and also announced a broader, ongoing relationship to connect PeopleScout’s recruiting services with Aon Hewitt’s assessment, employee engagement and analytics talent services. Prior to the acquisition, PeopleScout had ~1.5k employees and local presence in 14 countries across North America, Europe and Asia Pacific. It provides services to ~70 countries for ~60 RPO clients, six of which have >10k hires per annum each.

The acquisition expands PeopleScout’s global delivery capabilities, and brings in 650 Aon Hewitt employees based in the U.S., Canada, Asia Pacific, and Europe. In 2014 Aon Hewitt provided RPO services to ~100 clients across 64 countries, supporting nine languages.

In NelsonHall’s 2015 RPO market analysis, PeopleScout was ranked 9th globally by revenue, with Aon Hewitt ranked 5th in global standalone RPO revenues (4th including RPO as part of MPHRO contracts). NelsonHall is in the process of conducting its seventh global RPO market analysis, but even based on 2014 revenue estimates, the combined company would have been ranked number one.

Though not an acquisition of Aon Hewitt’s selection and assessment business, via the broader relationship, PeopleScout will have access to Aon Hewitt’s strengths including in:

  • Specialists in selection and assessment, with ~125 employees, including ~30 I/O psychologists, involved in the development, management and administration of tests and assessments
  • Aon Hewitt’s proprietary pre-employment assessments and platform, used to assess ~10m candidates annually covering sixteen languages and five continents: North America, South America, Europe, Asia and Africa.

Pontoon and hyphen merger completes

Pontoon and its sister company hyphen completed the merger first announced in October 2015, with hyphen's ~300 U.K. employees joining Pontoon's workforce. The combined brands will operate under the Pontoon name. Pontoon is now the global HR outsourcing brand for Adecco Group. 

The merger consolidates Adecco’s MSP and RPO providers into a single business unit with ~ 1,500 employees, and 150 clients operating in 92 countries. Hyphen, headquartered in London, also has offices in Singapore and Sydney. Pontoon opened its Manila office in 2012, and leverages Krakow as a nearshore center for European languages. Pontoon RPO delivers services to 40 countries in 20 languages and plans to expand across countries in Latin America.

In NelsonHall’s 2015 RPO market analysis, Pontoon was ranked 10th in North America and 5th in Continental Europe. In our 2015 MSP market analysis, Pontoon was ranked 3rd in 2014 global MSP spend under management, 3rd in North America, 2nd in EMEA, 2nd in APAC and 1st in Latin America.

Though NelsonHall had not previously estimated hyphen’s revenues separately, hyphen strengthens the Pontoon brand. Prior MSP contract awards included  Bank of America, Merrill Lynch, Experian, Tesco, Credit Suisse, Lloyds Banking Group, Jaguar Landrover, Prudential and National Grid. Prior RPO contract awards included CGI.

We previously noted that hyphen’s MSP brand in the U.K. competes with the Pontoon brand, with a lack of business alignment, but the merger of the two companies will eliminate the internal competition. In addition, hyphen’s local presence in London, Poland, Singapore and Sydney will strengthen Pontoon’s geographical reach to provide both single-country and multi-country contracts for clients. Multi-country contracts represent ~36% of all RPO contracts, with 6% being global contracts covering three or more regions, and NelsonHall estimates multi-country contracts will represent ~50% of all contracts by 2019. Global MSP contracts account for ~15% of the market, as significant contract expansions and global awards were undertaken in 2014; with another 22% of the market representing multi-region or multi-country contracts. NelsonHall estimates Global MSP contracts will increase in importance and will account for 25% of spend under management by 2019, with another 25% of the market taking the form of multi-region or multi-country contracts.

Orion International acquires Novotus

The third M&A deal in January was Orion International (a specialist in U.S. military recruiter) acquiring Novotus, a provider of RPO and recruiting services. The acquisition will see Novotus leveraging Orion’s sales team and providing a military recruiting offering to its customers, and Orion leveraging Novotus’ RPO capability.

Orion International is headquartered in North Carolina and has five other regional offices in the U.S. Based in Austin, Texas, Novotus expanded to Houston in 2013 to accommodate growth. Houston is used to service RPO, sourcing services, temporary staffing and contingency services along with executive search services.

In the last few years, RPO providers have increasingly focused their recruiting efforts to include military veterans, a subject I’ll be looking at in a future blog.

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