Issue link: http://www.e-digitaleditions.com/i/94708
Institutional Knowledge And among those who say HR outsourcing will stay the same, again the reasons also are generally similar: • Buyers will bring activities back in house, due to either economic recovery or poor service/bad experiences (this is also the most common/primary reason cited by those who said they thought the market would decline) • Spend levels will be the same, but in different areas • There is not enough innovation to drive increased sales M&A Activity: Good, Bad, Indifferent Given the spate of mergers and acquisitions across the HR outsourcing services market, we asked practitioners and providers who, if anyone, benefits from this activity. The majority of both practitioners and providers say M&A activity is good for both groups, although the providers are much more likely to hold that belief. Nearly a quarter of practitioners say M&As in this space are good for providers but bad for practitioners versus 14 per cent of providers. And, although it's a comparatively low 14 per cent, still practitioners are three times more likely to say M&A activity is bad for both than are providers. I believe merger and acquisition activity in the HR outsourcing space is ... 14% 7% 14% 4%5% 77% 24% Providers Good for both Good for providers; bad for practitioners Bad for both Good for practitioners; bad for providers Practitioners and providers who say this consolidation is good for both generally cite similar reasons: • Improves efficiency by removing less viable options from the market and retaining better options 55% Practitioners • Creates stronger providers with higher levels of specialist capability giving buyers the dual benefit of high specialisation within a "single point of purchase" • Engenders better service • Improves innovation • Leads to simplification, reduced complexity, increased standardisation Providers also noted that this activity increases scalability for providers and therefore better product solutions for buyers. Amongst those who say it's bad for both, again comments were common between practitioners and providers. The most commonly cited include: • Fewer choices means less competition means lower standards • Buyers are negatively impacted by the sometimes painful and messy merger/acquisition process What practitioners need from providers over the next three to five years: • Benchmarking metrics • Capable, effective HR technology • Change management • Consultation, experience, guidance • Continuous improvement of systems and services • Cost management • Flexibility and the ability to take more of the risk of delivery/execution • Innovation • Ongoing cost/benefit analyses What providers believe they must do over the next three to five years to stay competitive and shape the market: • Build cost-competitive solutions on the utility based model • Continuously innovate • Create truly global models that still provide significant cost savings to clients • Identify more technical products for client companies that will change the way they attract, assess and on-board talent • Improve service quality and keep cost down • Increase expertise in SaaS solutions and hybrid outsourced/shared service models • Work on integration efforts between variety of platforms and models [30] HRO TODAY GLOBAL | FALL 2012