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Dec 11, 2008

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Mark,

You are dead-on - this type of HRO is very different from the end-to-end blockbuster deals of 2001 - 2005. And this was what the industry had to do to get its act together to start delivering operationally-efficient HR services based on common technology and common HR standards. In reality, these types of "transactional" HRO deals are what we should have started with originally, and the service providers could have then upsold HR transformation services into their clients once they had a trusted and operationally-effective engagement underway. "Big bang" was too messy, too much of a shock, and ultimately, not profitable. It had to change.

I am certain many of these relationships will broaden overtime to include additional HR processes, but this is the "back-to-basics" approach that is saving this market.

Oh - and a new name? How about "Transactional HRO"...

PF

Phil -

Great data and a nice write up as usual.

The only issue I take task with - and I think you'll agree - is that our definition of what constitutes "HRO" has been modified significantly over the past 8 years. There was a day when one had extremely stringent criteria to 'qualify' as a true HRO deal. This often required in excess of six processes, the technology and the people.

Sure the market has evolved to it's next generation which necessitates an evolution in how HRO is defined. However, I'm afraid that the language of "HRO" has been diluted so significantly that it no longer has meaning in the eyes of the industry. I could probably list 500 vendors who claim to offer HRO and that's a problem. Perhaps it's time for you to invent a new term my friend!

Nice work.

Best,
Mark

While there were, indeed some serious service delivery problems, let's recall that the HR departments that HRO replaces aren't exaclty very high on the corporate popularity scale (usually just above internal audit and below IT!).

HRO providers inherit an disliked mess in most cases, so I cut them a little slack. There's no excuse for making commitments they cannot live up to, though.

The next step for HRO providers is to shift from the "necessary evil" perception to "facilitator" or perhaps even "game-changer". That would bring this segment of the industry to a complete turnaround. Not to mention, if one or more of these providers truly revolutionizes HR, the case for corporations to jump in would be very compelling.

Phil,

I couldn't agree more with James' comments. It's interesting how quickly the India offshore vendors have been moving into this market. Do you see then challenging the traditional payroll services vendors such as ADP, Ceridian, Northgate etc?

Pete Stringer

Phil,

Kudos to you for putting out the first balanced analysis on the HRO market in a long while. I am so tired of the constant trashing of HRO by the media, that it's refreshing to have someone put it into perspective... with a twist of reality and humor,

James

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