So what’s going on in HRO these days? Here’s a summary of a few things I’m thinking about.
Global HRO – Global HRO has existed for a while, but the vendors keep expanding the offerings to more remote countries. However, if I tie together a couple of ideas, if ADP could figure out how the combine it’s SAP GlobalView for payroll product with it’s HRO offering, it could be a low price leader. With proven global expertise in payroll and a low price point, they would be an interesting vendor to enter the global HRO marketplace.
ERP vs. Point Solutions – SAP is a clear winner. PeopleSoft transactions are diminishing with good reason. Until Oracle Fusion is released, there isn’t much reason for anyone to apply huge fees to a disappearing platform. However, the battle for the talent market is heating up with SAP and point solutions like Authoria, SuccessFactors, WorkStream and SumTotal making plays. While SAP is the market leader for core HRMS, I’m not sure any of the vendors are using it or PeopleSoft for the talent applications.
Mid market and smaller transactions are increasing – ADP is firmly entrenched and Accenture is also making a play at the mid-market. In fact, employers with fewer than 20-25K employees are al looking at HRO as a viable outsourcing solution and other than ADP, the space is un-tapped. It will be hard to unseat ADP in the market below 10K as they have the strongest payroll solution. However, their lack of talent solutions will drive other vendors.
Prices drop as competition increases and vendors leverage their existing platforms and experience – There have been clear price per employee changes over the last few years. I can only attribute this to competition and vendors getting a better understanding of the delivery model. If my mid-market theory holds true, the price points will keep coming down as this market segment is much more price sensitive.
