Last week I attended the Benefitfocus Seller Place 2020 conference. Benefitfocus has repositioned itself from a software company to a benefits platform provider with solutions focused on engaging and improving the user experience while helping employers and employees make more informed decisions and reduce cost.

Benefitfocus has 25m consumers, serving 150k employers with 15.5m employees, partners with 700 brokers, 144 medical carriers, 50 voluntary suppliers, and has 1,700 associates. The BenefitSAIGE platform processes 42m transactions per week, worth $18bn between BenefitFocus and its ~100 payroll partners with a 99.9% first pass yield. 100% of data is delivered on time during open enrollment and 100% of payroll and enrollment files/data transmitted is encrypted.

Why Benefits Engagement Matters

The importance of engaging employees with benefits for attraction and retention of talent cannot be underestimated. Benefitfocus presented data showing that there is a 19.3% employee turnover rate in the U.S. Employees are spending more on benefits than all other expenses except for home mortgages and car payments, yet they are getting less value. Since 2009, medical costs are up 54%, deductibles up 162%, while worker earnings are up just 20%, and 74% of employees are confused by their benefits options. In 2018, $3.65 trillion was spent in the U.S. on annual health costs, 20% of the GDP. Family costs have increased 2x faster than wages in the last decade, and 64% have delayed receiving care due to the costs involved.

BenefitSAIGE Platform Notifications

Benefitfocus has made significant investments in its BenefitsSAIGE platform, including the use of AI. BenefitSAIGE is event-driven: instead of benefits being an annual event, you can enroll and change benefits when you need to. BenefitSAIGE engages with participants throughout the year, including participants receiving a proactive notification when something changes. Every person who comes to the BenefitSAIGE platform receives push messages on a weekly basis that will help them to make informed decisions and save cost. A dedicated content manager helps to ensure compelling content is delivered throughout the year. A few examples of notifications are:

• If an employee gets married, they will receive a message (email or text) on the top 5 things newly married couples needs to do regarding benefits
• If an employee moves, their auto insurance may change, so BenefitSAIGE will notify the employee to review insurance products that the platform recommends
• Personal reminders such as ‘today is your core strength training day’ or ‘it’s time for your doctor’s appointment today’
• Cost-saving notifications such as ‘the prescription you just filled can be $3 cheaper at the CVS pharmacy near you’.

Examples of Benefits Achieved

The following are examples of the type of benefits that can be achieved using the BenefitSAIGE platform:

• Ability to make a company HR admin a super-hero! For example, in looking at medical claims and trying to get a handle on costs, with one click you can get the top 10 categories driving cost and the dollar amount spent on (say) cardiovascular, with the number of claims
• ER costs have risen dramatically in the last 10 years. As such, you can identify the types of claims and diagnosis appropriate for alternative care. An example was given of a Benefitfocus client with high ER costs that implemented telemedicine communication and realized a $50k saving with a potential of $400k over 2 years
• Ability to run a report on zero cost claimants that are never going to the doctor (even for preventative physicals) and deliver messages to inform them they are covered for no cost for preventative annual visits and/or incentivize them to open a Health Savings Account and then see the impact it has
• A midsize employer with a lot of non-compliant prescription diabetics created member populations to track strategy effectiveness and realized a 24% increase in medication compliance, getting employees the right medication, and increasing employee engagement
• A large employer who was seeing double-digit pharma cost increases y/y, analyzed data and found improper billing/fraud and was able to reduce y/y spend by ~10%
• Open enrollment daily insights to HR admins including number of log-ins, elections, comparison of plans selected vs. last year, number and types of questions asked; allowing HR admins to proactively communicate anything that needs to be clarified
• Individuals enrolling in benefits are given insights; for example, ‘We recommend 2019 HDHP Premier as your medical plan, which can save you $3,822 on premiums compared to the PPO standard plan’. It will then provide further information on Total Risk and Savings Opportunity.

2020 Roadmap

Benefitfocus’ planned enhancements for 2020 include:

• Integrated case management capability to allow employees and employers to have full access to case history
• Email notifications will incorporate employer branding, including client logo and email styles
• In Q1 2020, in addition to email, text notifications will be made on mobile devices
• Increasing the number of broker partners from 700 to 1,000.

Outlook

Benefitfocus’ emphasis on using its BenefitSAIGE platform to provide proactive communication throughout the year gives it a unique position as a benefits partner in helping employers, employees, brokers and carriers to make more informed decisions, reduce company and employee costs, and improve engagement.

In terms of challenges, Benefitfocus needs to ensure that its notifications continue to add value and not lead to communication overload. But that can be overcome if the messages are short and succinct and help to make better decisions while saving money. Also, while there is merit in being a premier platform provider, Benefitfocus should let it be known that they are still a service provider with a Benefits Center and specialists able to answer questions on the phone when needed.

NelsonHall expects to see double-digit growth in Benefitfocus products bought and revenue generated in 2020.

ADP’s CEO Carlos Rodriguez began the company’s annual client conference, Meeting of the Minds, by talking about unprecedented challenges faced, including global talent needs, growing compliance burdens, and rising expectations. And though perhaps not the most original of messages, Rodriguez singled out service as the core differentiator that enables ADP to deliver positive impact on its clients’ business and that differentiates it from software companies. Here I take a look at how ADP’s focus on service as a differentiator cuts across several lines of business.

ADP Comprehensive Outsourcing Services (COS)

COS provides a full range of integrated HR services to clients. Some recent service highlights include:

• With clients using on average ~3 ADP services, an effective governance team process is essential. ADP has taken its operational reviews to the next level, and its value proposition includes 6-month interval reviews to make sure processes are optimized and ROI expectations are met
• Adoption of mobile across all clients has resulted in a reduction of paycheck calls by 14%
• Benefits obtained for a new COS security client included change management workshops and detailed plans to manage organizational change, communication, and people strategy. Plus, process optimization and cost reduction (including pay group consolidation, pay frequency change, go green, and paycard).

ADP DataCloud

Predictive analytics, including Predictive Turnover Probability, are delivering insights including:

• Competitiveness: How much future voluntary turnover might my organization have, relative to others in my industry?
• Hidden Drivers: What combinations of factors are contributing to the likelihood of employees leaving, so I can take action?
• Hotspots: Where are the likely areas of highest voluntary turnover in my organization – within jobs, locations, or teams?
• At-Risk People: Who are the high- and medium-risk employees I need to work to retain?

ADP RPO

Growing from 90 clients in 2015 to 114 today, the majority of new recruitment process outsourcing (RPO) clients are first-time adopters. One of ADP’s competitive advantages is its AIRS Recruiter Training provided internally to ADP staff (who are required to be re-certified every year) and also to clients (for whom 750 classes are held annually, with 10,500 people trained, and 3,600 certified).

2017 investments include:

• Global expansion and capability building in EMEA, APAC and LATAM to support growing U.S. multi-national corporations
• Enhanced RPO analytics and DataCloud Integration, including linking candidate profile data to retention and performance.

Mobile

ADP has 10m+ mobile users, providing capability that includes:

• Accessing and printing pay & W2 statements, access to categorized pay reports, setup of direct deposit, and comparison of pay statements
• Tracking time and timesheet approvals, view, request and approve of time off
• Checking 401k account balances, viewing account performance, and changing contribution rate or account allocation.

Benefits Administration

Providing Benefits Administration for 1 in every 17 employees in the U.S. and 9.4m participants, ADP receives ~850k calls annually to its service center, and first-time call resolution is 90%. Recent client case studies include:

• Upon automating Benefits Administration for its client Areas (including open enrollment), errors were reduced by ~75%, and benefits enrollment was reduced from 2 months to 2 weeks. Client feedback was that this was a smooth experience, the process being intuitive and easy to understand (http://bit.ly/2lB7fBK)
• Sumitomo Electric Wiring Systems turned to ADP for ACA Compliance and automating open enrollment. Feedback from the Corporate Compensation and Benefits Administrator included acknowledgement of ADP’s customer service expertise (http://bit.ly/2hirs9u).

The importance of service

The importance of customer service is hardly a new theme, but it’s worth reflecting on just how much it makes a difference. Consider these statistics:

• Most customers make their decisions on who they will buy from based on service as the most important criterion
• 3 in 5 Americans (59%) would try a new brand or company for a better service experience
• The probability of selling to a new prospect is ~15%. The probability of selling to an existing customer is ~65%
• It is 6.5 times more expensive to acquire a new customer than it is to keep a current one
• 91% of unhappy customers will not willingly do business with you again.

ADP clearly grasps this, and is committed to improved customer service and experience as a core differentiator across its HR business lines.

In partnership with Thomsons Online Benefits, ADP is now offering global benefits management via the cloud, with Darwin software used to provide global employee benefits administration. ADP Enterprise Benefits is a centralized, yet locally integrated, platform supported by ADP’s managed services. It is country and benefit agnostic, and does not need to be hard-coded to a specific country. Benefits can be configured at local level, which includes setting up employee data from a client local system of record or, if they are an ADP GlobalView client, from the GlobalView platform.  Currently 75 countries and 26 languages can be supported, with 100 countries contracted to be live by end of 2016.

Client drivers for adopting global benefits management include:

• One system to manage a global and diverse workforce, with increasingly complex legislation in each country
• A standardized user/employee experience in any country in their own language, e.g. enrollment in benefits
• Globally aggregated analytics to obtain actionable workforce data. Examples include understanding who is utilizing which benefits by country with the ability to drill down into demographic data
• Global insight into spend (according to a recent Thomsons Online Benefits survey, 44% of companies do not know what they spent on benefits)
• Ability to provide total rewards statements globally, contributing to increased employee engagement.

In a live demo, several benefits of the global system were apparent, including:

• Ability to toggle to a local country and see a total rewards statement of salary and benefits (plus additional benefits available)
• Depiction of ‘% of salary’ by basic salary, finance and protection (i.e. life insurance, disability), and lifestyle benefits
• Analytics showing a global overview of headcount, spend (including spend per headcount, spend over time), and benefits utilization (including login rate by demographic)
• Map-based analysis of spend by country, along with usage of medical and wellness, etc.

ADP has yet to build its own global client base for this new offering, but examples of Thomson Online Benefits clients include a tech consumer products company in 44 countries and a manufacturer in 19 countries. Clients using the Thomsons global system include Volkswagen, Microsoft, Samsung, Visa, and NCR.

ADP will primarily target existing clients using ADP GlobalView (available in ~110 countries for large MNCs), which currently has ~1,120 clients. The provision of global benefits will be attractive to MNCs, and we would expect a good proportion of ADP’s clients to adopt the new offering. Deployment times vary depending on the number of countries involved (a 52-country deployment took 18 months, ~3 countries per month). 

More generally, ADP will continue to focus on product and service innovation (a key theme of the MOTM conference) by working with clients via its 55 product advisory councils and the ADP Innovation Labs. 

With employees keenly aware of the annual rise in their out-of-pocket health insurance premiums, this provides a great incentive for employees to participate in their employer offerings. Examples where this may be utilized include:

• Education
• Clinical services including prevention services
• Programs and health initiatives, e.g. fitness centers, weight loss, including rewards for achievement of objectives.

In addition, new developments since my last wellness blog include:

• Morneau Shepell enhanced its MY EAP app to include a Financial Wellness Score assessment that helps users gauge their financial health and complements other tools that measure stress levels and relationship quality
• Xerox launched an incentive-based financial wellness program, SavIncent, to improve employees’ financial health and retirement readiness. SavIncent is linked to the company’s retirement savings plan and uses monetary incentives to reward employees for participating in wellness activities
• IBM developed a Watson-based mobile app, Pathway Panorama, to analyze information about an individual’s lifestyle and wellness-related biomarker data to provide personalized options to help the user and their physician make informed decisions about living a healthier life. Panorama will also monitor a user’s health and wellness information, and ping the user with any new relevant recommendations
• Ceridian expanded its LifeWorks wellness offering, launching a sleep coaching program which includes research-based information and support on healthy sleep practices
• Benefitfocus launched a new benefits software offering for consumers, employers, insurance carriers, and brokers that includes a wellness ecosystem including health assessments and rewards programs via RedBrick Health
• Businessolver launched a wellness administration technology offering, HealthTracker, to connect wellness and insurance-based incentives
• Towers Watson partnered with U.K.-based Fitbug and Australia-based HealthLogix to launch a web-based health management offering, HealthVantage. It incorporates new technology such as wearable devices and online applications for smart devices, and features for employees including a wellness assessment. Features for employers include a corporate dashboard to show overall workforce health.

According to ManpowerGroup's annual Talent Shortage Survey released May 18, 2015, 32% of U.S. employers report difficulties filling job vacancies due to talent shortages, which is down from 40% in 2014. And, while there are many factors contributing to talent retention, I believe increased focus on employee wellness, leading to increased employee engagement and satisfaction, is an important contributing factor.

Benefits providers are making smart choices in continuing to develop their wellness offerings, and this combined with the new EEOC guidance has given employee wellness programs a welcome shot in the arm. 

The Congressional Budget Office estimates that employer-shared ACA responsibility penalties will produce revenue of $8bn in 2016 (from 2015 penalties). This may sound surprising because ACA was signed into law in March 2010 with a clear employer mandate: companies with 50 or more FTEs are expected to offer healthcare benefits to at least 95% of their FTEs or pay a penalty.

To be ready, companies have been scrambling to determine if they are required to conform, who is eligible, and if they will indeed offer benefits to all those who are eligible. Perhaps unsurprisingly, with the law running to ~2,400 pages, this process is far from straightforward. Here are a few key determinants (without all the details) of which businesses should provide coverage for their employees:

• For businesses with less than 50 full-time equivalent employees (FTEs), offering health insurance to employees is optional – there are no penalties
• Companies with 50 or more FTEs may be penalized if they do not offer coverage to at least 95% of its FTEs or if they offer coverage that doesn’t meet the ACA’s requirements. The penalty, or Employer Shared Responsibility (ESR) payment, is $2,000 per employee
• The law requires businesses to offer coverage only to those employees who work 30 hours per week or more (as defined by statute, a full-time employee is an individual employed on average at least 30 hours of service per week). An employer that meets the 50 FTE threshold is referred to as an applicable large employer (ALE)
• To be subject to the ESR provisions for a calendar year, an employer must have employed during the previous calendar year at least 50 full-time employees or a combination of full-time and part-time employees that totals at least 50. Seasonal workers are also taken into account in determining the number of full-time employees 
• The individual mandate under ACA went into effect January 2014 with a penalty of $95 or 1% of income, whichever is greater, for an individual who chooses not to elect coverage. In 2015 the penalty becomes the greater of either 2% of earnings or $325 for an individual ($162.50 for children under 18) and up to $975 per family. It will be included in the individual/family tax filing; penalties will continue to increase over the coming years.

Clearly, employers face significant challenges and have many decisions to make regarding ACA. Some have tried to avoid the ACA mandate by reducing employee hours below an average of 30 hours per week to avoid offering healthcare. However, this is likely to be detrimental in terms of lower employee morale and loss of talent. And, further adding to the complexity, there will be instances where it is cheaper for employees to purchase healthcare through an exchange with subsidies than to take healthcare insurance offered by their employer (currently there are ~12m employees in exchanges and ~8m have qualified for subsidies).

Given the complexity of ACA, we can expect to see an increase in employers seeking help from third party providers such as Equifax Workforce Solutions, who can assist with the entire ACA process, including understanding the regulations, determining eligibility, and ACA IRS reporting.

Equifax’s ACA platform provides employers with capabilities including:

• Measuring and tracking ACA eligibility
• Deciding to "pay or play"
• Communicating eligibility status with automated reports and notifying stakeholders of potential changes in eligibility status
• Reporting to the IRS
• Updating of calculations, models, and reports as new provisions are rolled out.

Equifax’s ACA platform covers ~8.3m employees. Client size ranges from 700 employees to 300,000; Equifax’s sweet spot is companies with 7,500 – 40,000 employees, though it has ~20 clients with <2,500 employees.  

Other vendors helping employers include:

• ADP, who in 2013 launched a healthcare reform website to inform employers about the ACA, including an interactive ACA compliance timeline (to track guidance, deadlines, changes and updates) and downloadable materials (infographics, webinars, and white papers). Also in 2013, ADP enhanced its PEO offering, TotalSource, to help small and midsized businesses manage compliance and avoid penalties with the ACA. In 2014 ADP launched a Health Compliance offering to help employers comply with ACA and avoid financial penalties
• In 2013, Ceridian enhanced its Dayforce HCM platform for ACA compliance, specifically the Employer Shared Responsibility provision. In 2014 Ceridian added capabilities to ensure compliance with ACA including a single real-time system for ACA variable hour employee benefits eligibility calculations & enrollments.

To date, ~16m Americans have gained health coverage under ACA. But it is clear that many employers are still struggling to get to grips with their ACA responsibilities and processes, and to ensure that employee communications on the subject are clear and constructive throughout. Hence, third party providers can expect to have a significant role to play.

In a subsequent blog I will look at the state and federal exchanges that will make subsidies available to employees who apply and qualify. 

2014 was a busy year for HRO with ~60 partnerships, mergers and acquisitions combined. We now take a look at what to expect in 2015 and beyond for each HRO service line, including service offerings, market developments, and growth.

MPHRO driven by continued shift to cloud-based platforms

• The Multi-Process HRO (MPHRO) market will grow with a mid-single digit CAAGR through 2018
• In terms of revenue, North America will be the largest region, and LATAM will grow the fastest
• Offerings will continue to be structured around a core model, including payroll and HR administration; benefits and recruitment services will continue to be the most popular add-ons
• Workday use will increase in MPHRO contracts; other cloud-based platforms such as Employee Central will penetrate as well. Momentum among existing MPRHO clients for cloud-based platforms will pick-up significantly by 2017
• Partnership activity will far exceed acquisitions, with partnerships primarily focused on cloud-based platforms and analytics (in 2014 ~3/4 of all HRO contracts were platform-based, of which the majority were cloud-based)
• The proportion of mid-market clients will outnumber large market activity by 2016 (in 2014 the mid-market represented 45% of the market, up from 35% in 2012)
• Demand for end-to-end MPHRO deals will be almost non-existent, as buyers continue to seek specialists for some of their services (e.g. learning) and reduce risk by not having one vendor provide all HRO services.

Benefits Administration exchange offerings will be key

• The benefits administration market will grow at an upper single digit CAAGR through 2018, with the majority of activity coming from the private sector
• The U.S. market will be driven by a need to control costs and be compliant with legislation; the U.K. market will be driven by auto-enrolment legislation
• Within Health & Welfare (H&W) services, private health insurance exchanges, reimbursement account admin, and leave of absence offerings will grow the fastest through 2018
• The main emphasis for vendors will be to develop or enhance exchange offerings (e.g. launching an exchange geared towards the mid-market, adding extended lines of coverage); other efforts will focus on enhancing existing Employer Shared Responsibility offerings
• Technology updates will continue to focus around expanding portals with additional features, and improving the user experience, in an effort to further engage participants
• Multi-country benefits admin activity will take one of two approaches: leveraging existing benefits brokerage and consulting relationships, or focusing exclusively on a technology platform.

Learning key to attraction, development and retention of talent

• The Learning BPO (LBPO) market will grow at mid-high single digit CAAGR through 2018, with Government being the largest sector with growth led by Healthcare
• Selective LBPO contracts will continue to outpace full LBPO, led by content development, including the conversion of instructor-led training (ILT) to e-learning
• Client learning spend will accelerate for job skill training and professional development for purposes of attraction, development and retention of talent
• Vendors will continue to strengthen and integrate their talent management service and technology offerings with learning, both organically and via M&As and partnerships
• Clients will seek the help of LBPO providers to select and implement social learning platforms. Vendors who can help clients monitor and measure their effectiveness will have a competitive advantage
• Vendors will explore adding Corporate Massive Open Online Courses (MOOC) capability as clients seek to further reduce costs and reach a wider net of learners
• E-learning will continue to exceed ILT, though ILT remains important, including for hands-on learning and role-playing, e.g. performance management.

Payroll outsourcing driven by multi-country and platform integration

• The payroll market will show solid mid-single digit global growth. Primary growth is driven by demand for multi-country services and for integrated HCM/payroll cloud integration and/or interfaces
• There will be increasing uptake of employee access to payroll information via mobile, particularly in the U.S. Half of clients globally have self-service, and access pay statements online
• Payroll consolidation will continue to support geographical expansions
• Payroll services will develop by greater focus on technology and automation, including integrating with HR-cloud offerings and using platform-based outsourcing
• Retail, manufacturing, and financial services will continue to be the largest purchasers of payroll services
• Cost and compliance will remain fundamentally important requirements of payroll outsourcing.

RPO and MSP (Contingent Workforce Outsourcing) the fastest growing HRO services

• RPO and MSP are the fastest growing HRO services, expected to continue with mid-teen CAAGR through 2019, in a market driven by increased demand for talent
• Vendor consolidation and partnerships will continue to expand into new geographies to meet demand for global RPO / MSP services
• In the candidate-centric market, services will develop to support greater capability in analytics, improved visibility of labor market supply data, and workforce planning processes to address growing talent shortages. Candidate engagement and a streamlined process will remain a fundamental focus
• Technologies to support mobile marketing and video interviewing will be increasingly popular
• Vendors will continue to invest in onboarding services that go beyond the initial hire to support year 1 retention, and are expected to play a larger role in recommending employee progression and career advice for candidates to support retention
• Contingent workforce management services will grow in Statement of Work (SOW) programs and direct sourcing services to ~28% by 2018
• Requirements for diversity sourcing will be reinvigorated following the new legislation in the U.S. on veteran hiring
• Blended RPO / MSP services will increase in adoption, driven by a focus on developing optimal workforce strategies and bringing greater value to engagements through single governance and reporting and broader analytical insights on the total workforce.

We look forward to an exciting year!

Amy Gurchensky, Liz Rennie, Gary Bragar

• First, the cost of employees missing work due to sickness, diseases and stress-related illnesses can be significant in terms of healthcare costs and productivity. Per Towers Watson, employer healthcare costs are expected to increase 4.4% on average in 2014.
• Secondly, companies are seeking wellness programs to increase employee engagement, leading to increased productivity, retention and improved quality of work and customer satisfaction.

Wellness programs can take various forms and include:

• Education
• Clinical services including prevention services
• Programs and health initiatives, e.g. fitness centers, weight loss and may also include rewards for achievement of objectives

HRO providers are astute in recognizing this growing interest and have been developing their offerings. NelsonHall finds that ~20% of vendors who provide benefits administration services are either launching or expanding their health and wellness offerings. Some examples include:

• Mercer, in July 2014 launched Mercer Benefits U, a total wellness education campaign for employees whose retirement and health plans it administers
• WageWorks and Summit Health partnered for Wellness, February 2014. Summit Health is a provider of on-site wellness, health screening and immunization programs
• Ceridian, in October 2013 launched an enhanced wellness offering which includes: life health assessment; online workshops; team and individual exercises including exercise, walking and nutrition challenges; incentives, and a knowledgebase health library
• ADP, launched its Vitality Wellness offering in August 2012, and its contract with The Jackson Companies includes a wellness portal, health risk assessments, biometric screenings and personalized wellness plans with  recommended goals and activities.

Mobile apps for wellness are developing and include:

• Ceridian’s mobile companion app, allowing participants to record and track progress toward health goals and its LifeWorks app for EAP, work-life and wellness resources
• Xerox’s Benefit Wallet app, to manage multiple health accounts including HSAs, HRAs. FSAs, HIAs (health/wellness incentive accounts), and other specialized services.

We will see HRO buyers accelerate seeking the help of their benefits providers to develop and administer Wellness programs as organizations place greater emphasis on the development and optimization of their talent. The next step needs to be more companies using analytics to measure the impact of their programs. Per the Hay Group, only 58% of companies with Wellness programs are measuring their performance. Yet another opportunity for HRO providers to help their clients!

There were ~1,100 HCM professionals at ADP’s Meeting of the Minds last week, most being ADP clients. The conference began with ADP CEO Carlos Rodriguez stating the company's desire to be the market leader in global HCM. To address this goal, ADP is engaged in:

• Providing a suite of cloud based HCM, benefits, talent management and payroll platforms and services, assisting organizations in achieving a more standardized and integrated end-to-end HR platform environment and making it easier to manage international employees. According to the ADP Research Institute, the average global company has 22 HR and payroll systems making unification a top priority of HR leaders
• Focusing on providing an improved and more seamless user experience; a system demo was given of a new user experience covering pre-board, on-board, benefits enrollment, etc.
• Investing in platforms and processes to scale HR BPO
• Leveraging ADP’s global presence to offer organizations HCM, benefits, talent management and payroll wherever they do business.

The following are highlights of some meetings and sessions I attended.

US Comprehensive Outsourcing Services (COS)

• In 2013 ADP added 17 new clients (combination of new ADP clients and ADP single HRO service clients who became COS) with y-o-y growth of 15% from 2013 – 2014. The majority of clients are U.S. headquartered
• Across all of ADP’s ~98 COS clients, average client size is 12k employees, with newest clients averaging 15k employees
• All COS clients use both managed payroll and employee call center, most purchase time, 40% purchase benefits, and 3 clients use RPO services
• ADP's clients are primarily supported onshore though most also have a hybrid model that includes some offshoring of back-office administration from India and Manila. A few clients have chosen to be supported primarily from India
• No client employees are rebadged to ADP to support a newly awarded contract. However, where opportunities are available supporting other COS accounts, ADP will take some employees as requested by the client.

National Accounts Benefits Administration

The following are statistics on Annual Enrollment provided by ADP:

• Concurrent client annual enrollment open windows during the week of 11/8/13: 485
• Total annual enrollment projects over 19 weeks: 946
• Participant call center calls: 368.6k
• Overall enrollments for participants and dependents: 15m
• Enrollments per hour at peak: 3k

In pursuit of offering a more seamless user experience, ADP is focused on real-time integration between Benefits and HR including:

• Providing an improved user experience, with a greater range of tools to support employees
• Integrated cross-application reporting
• Increased compliance effectiveness

RPO

• The RightThing’s client retention is 98% and 2014 revenue growth is in the high teens
• The RightThing is experiencing growth in the financial services sector where ~45% of new hires are millenial's
• Approximately twelve of The RightThing’s clients are provided RPO in two or more geographies, including McGraw Hill, who started as an EMEA client and has expanded its use of RPO into the U.S. and LATAM. In addition, Ricoh, a U.S. client since 2012 has expanded into LATAM and Europe Ricoh’s vacancy rates previously ranged from 5-10% and are now <2%
• Approximately half of The RightThing’s contracts in Q1 14 were new clients to ADP and half were existing ADP clients adding RPO
• In LATAM The RightThing is growing at 100%. Its clients here are primarily U.S. headquartered with hiring needs in LATAM. However The RightThing recently signed its first Brazilian headquartered client to deliver RPO in Buenos Aires. The Buenos Aires office provides onshore services to LATAM clients, including in Portuguese for its new client
• In Europe The RightThing serves clients onsite (including in France and Italy) and onshore from its London office (~20 employees), and from ADP’s office in Prague
• Offshoring services provided from Hyderabad and Pune India are primarily for sourcing 24x7 in support of North America and Asia Pacific
• A few employees are also located in Japan and China.

Recruiting in a Mobile / Digital Age

• The RightThing performs ~200k hires per year and LinkedIn is the number one source of hires. Approximately ~14m people found their last job using social media and ~89% of all candidates use social media to look for a job. Industry-wide the top social sites are LinkedIn, Facebook, Twitter and Google
• It is becoming increasingly important for companies to provide mobile recruiting and for candidates to be able to receive text notification of job openings as well as to apply for jobs: 32% of candidates have applied for a job on a mobile device. With mobile, speed and responsiveness are imperative as ~40% of job seekers have abandoned mobile processes that are too slow
• Millenial's need instant gratification and instant feedback when submitting for a job or they will discount the employer. In addition, employment branding is becoming increasingly important for millenial's who need to be able to understand what it is like to work for a company
• Talent Communities are the “holy grail of recruiting”. Indeed, the top reason (81%) why global companies use social media for recruiting is in support of the development of talent pools.

Some interesting statistics on recruiting from the ADP Research Institute included:

• 73% of job seekers prefer weekly communication
• 58% believe a reasonable time between first interview and job offer is 1 - 2 weeks
• 1.7 is the average number of phone interviews job applicants believe is reasonable number
• 2.2 is the average number of in-person interviews that job applicants believe is reasonable.

Indeed social media is a key focus for the ADP Innovation Lab, which is focusing on using social media to strengthen the onboarding process by:

• Building social capability as part of the onboarding process with the goal of new hires becoming engaged before their first workday. Upon offer letter acceptance new hires can log in, learn about ADP and meet the team they will be working with, including their guide/buddy when they start, and get a jump on completing first day paperwork, etc.
• Enabling new hires to build a profile and import LinkedIn data to get started. Upon entering skills and interests they are pointed to similar people in the organization to enable them to start to integrate with communities of interest.

• Multi-process HR BPO services.
• Payroll Services
• Benefits Administration
• Recruitment Process Outsourcing
• Learning BPO.

The new Managed Services Program (MSP) demonstrates NelsonHall’s commitment to the HR field and in combination with the other HR programs, will provide the most comprehensive HR analysis on the market. Growth in the Recruitment Process Outsourcing is the highest of all the service lines. The scarcity of key talent and the increasingly global nature of employment markets has seen a market develop to even serve director and interim management positions. NelsonHall’s MSP program will evaluate:

• What is the market size and projected growth for the global MSP market by geography?
• What are the top drivers for adoption of MSP?
• What are the benefits currently achieved by users of MSP?
• What factors are inhibiting user adoption of MSP?
• Who are the leading MSP vendors globally and by geography?
• What combination of services is typically provided within MSP contracts and what new services are being added?
• What is the current pattern of delivery location used for MSP services and how is this changing?
• What services are delivered from onshore and which from offshore?
• What are the challenges and success factors within MSP?

The NEAT (NelsonHall Vendor Evaluation and Assessment) tool will be applied to the MSP service line. NEAT is part of NelsonHall’s “speed-to-source” initiative.  It sits at the front-end of the vendor screening process and consists of a two-axis model: assessing vendors against their “ability to deliver immediate benefit” to buy-side organizations and their “ability to meet client future requirements”.

The NEAT analyses themselves are based on a combination of vendor and client interviews. The vendors are scored against a wide range of criteria, establishing a number of scenarios, each with different weightings to represent a different business situation or client business need.

To add further value in speeding up the sourcing process clients are able to input their own weightings and tailor the tool to their requirements. So they might say:  “This set of weightings for this business need looks about right to me but I want to place more emphasis here". With this interactive tool, they can tailor the weightings to meet their own specific sourcing requirements.

If you would like to participate in or join the MSP program, please contact Guy Saunders. 

MPHRO

• We predict the Global MPHRO market will grow at mid-single digits CAAGR through 2017
• The Shared Service Transformation segment will continue to grow mainly as a result of contract expansions and renewals with existing clients, but the Multi-Country Standardization and Core Business Focus segments have the highest growth rate 
• MPHRO offerings will continue to be structured around a core model with recruitment services as the most popular add-on as companies focus on adding back talent; in the near-medium term, demand will increase for learning, performance and compensation administration
• Increased partnership activity, primarily for technology, with acquisitions focused on strengthening existing standalone HRO offerings (typically by vendors with $400m+ in HRO revenues)
• Higher levels of multi-shoring from offshore vendors as clients demand onshore and nearshore support; Philippines and China will grow as preferred offshore locations
• Workday use will increase as MPHRO providers such as Aon Hewitt market this platform as part of its offering
• Proportion of mid-market clients will continue to grow making up the greater share of new contracts and MPHRO pipelines

Benefits

• The global benefits administration market will grow at mid-high single digits CAAGR through 2017
• Demand for DB and DC core services will primarily consist of second generation contracts and beyond; H&W administration as well as additional H&W services, specifically health insurance exchanges and health and wellness services, will grow as a result to control costs and comply with changing legislation
• Vendors will increase headcount and add chat services from onshore centers to enhance delivery strategies
• Multi-country benefits admin activity by MNCs will continue to grow moderately with providers that can leverage existing benefits brokerage and consultant relationships

Learning

• Learning BPO (LBPO) market will grow at mid-high single digit CAAGR through 2017, led by the Government sector
• Selective LBPO contracts continue to outpace full LBPO, led by content development, including the conversion of ILT to e-learning. However, full LBPO continues its resurgence as clients re-invest in learning but do not want to rebuild their internal learning organizations and instead seek greater value by outsourcing a larger share of their learning if not in its entirety
• Client learning spend accelerates for job skill training and professional development for purposes of attraction, development and retention of talent
• Vendors continue to strengthen and integrate their talent management service and technology offerings. SaaS talent management continues to accelerate combined with LBPO and across all HRO service lines
• Clients budget for social learning and seek LBPO vendors for collaborative technology. Within two years, clients will also seek help to monitor and measure the effectiveness of their social learning programs
• ILT continues to remain important but e-learning delivery continues to exceed ILT, including increased usage of VLT for geographically dispersed workforces and m-learning to access content for self-paced e-learning on smartphones and tablets

Payroll

• Solid mid-single digit global growth, led by Latin America and Asia Pacific
• Compliance is increasingly important to reduce risk by ensuring adherence to ever-changing tax laws and regulations, for both domestic and multi-country payroll
• Multi-country payroll continues double-digit growth as MNCs look to standardize and consolidate onto one global platform with one vendor for consistency of process, technology and service for increased efficiency
• Mid-market outsourcing continues high growth due to demand for platform-based payroll
• Pricing is per payslip or per employee per month and is expected to decrease due to pricing pressures from payroll buyers
• Where MPHRO services are provided, payroll will continue to be the initial footprint

RPO

• RPO will continue to be the fastest growing HRO service, with mid-teen CAAGR through 2017
• Vendor consolidation and partnerships continue to expand into new geographies to meet demand for global RPO
• Talent shortages deepen resulting in increased employer branding and talent pool development. Vendors increasingly help their clients with a more robust on-boarding process that includes new hire and employee engagement, employee surveys, and retention strategies. More vendors perform internal hiring of employees for their customers and also play a larger role in recommending progression of employees
• Blended RPO and MSP, including temporary hiring, increases to develop optimal workforce strategies
• For deeper insight, please see NelsonHall’s Targeting RPO market analysis published soon