The human resource outsourcing industry may be the fastest growth segment of BPO. However, the US HRO (HR BPO) market is in complete dissaray. Nobody has the entire service offering put together in a package that provides functionality and service in a proven model.
Traditional service providers such as ADP and Ceridian may have the service models required, but they are not truly HR outsourcers. Granted, Ceridian can't even release their annual report right now, so we should completely ignore their attempts at full HRO. ADP is probably the leader in the market with over 30 HRO clients at this time. Most of them were actually sold AFTER the ProBusiness acquisition. Perhaps only 10 of the 30 were aqcuired. However, ADP will not aquire a client's HR activities as they specialize in payroll, benefits and call center outsourcing.
The consulting firms are an interesting play in HRO. The new Towers Perrin/EDS service offering (press release) now has TP in the game and promises to be very strong. TP is a huge leader in HR thought leadership, and EDS should be able to provide a strong partnership in technology. However, it remains to be seen if they can provide the service delivery that is required.
Big 4 players have been in the mix in similar models to TP/EDS. Accenture has been there for a long time doing PS or SAP setups. IBM and Delloitte do the same, but really need to partner with once of the service bureaus like ADP or Ceridian to make it work. These guys don't want to get their hands dirty in the day to day muck of administration. Why do that when there are SAP modules, process consulting, and call center switches to implement at $500/hour?
They face a very different challenge compared to Hewitt/Exalt/Cyborg. What Hewitt was thinking with the Cyborg purchase is beyond me. The (lack of) integration at this time is ludicrous considering they have had almost 2 years. Exalt seems like a good purchase for Hewitt, but at a huge price premium that will take years to dig out of. Whatever anyone says, Hewitt/Exalt is still primarily a benefits play at HRO and lacks the payroll sophistication. Fidelity is similar to this, but they seem to have more of a go it alone attitude and are not making the acquisitions Hewitt has. This is probably smart as acquisitions in HRO are very expensive right now.
Then there's Mercer/Synhrgy. I don't know what's going on here as Mercer seemed ready to stay out of the HRO play. They never had the commitment to maximize the potential of their partnership with ADP. Maybe if they have more skin in the game they'll do better.
And lastly there is Aon. This is another mystery and they have made a disasterous move by caving to their sense of urgency to get in the market. In a sad display of rash decision making, they partnered with Ultimate Software. They are out in the marketplace trying to buy their way into the business, but with no clients to speak of and the total lack of a service delivery model. I wish the best to anyone cheap enough to be one of their first 5 clients.
