Outsourcing is reflecting this change. Today managed service providers (MSPs), which have been around since the mid-1990s, are growing in importance.

A July report from The McKinsey Global Institute found more than half of U.S. employers who responded to its survey will rely more heavily on contingent labor during the next five years. “Our survey reveals that employers foresee a more flexible and virtual labor force,” says the report. Specifically, 57.8 percent of the 2,000 respondents said they expect more part-time, temporary or contract workers in their workforce through 2016. (For the record, 25.5 percent expected to increase telecommuters with 21.5 percent planning to outsource and/or offshore workers.)

These numbers align with the findings of Yoh’s annual Workforce Trends study. Last year’s study found 80 percent of respondents expect their levels of temporary and contingent employees to stay the same or increase this year.

Bruce Morton, chief marketing officer of Allegis Group Services, says traditionally contingent labor experiences an uptick at the end of a recession. “But this time is different. There’s no going back. Contingent labor is not a blip but a trend that’s here to stay,” he says.

What is an MSP?

An MSP, typically a division of a recruitment process outsourcing firm, a temporary staffing firm or an HR consulting firm, manages the organizational process of recruitment, fulfillment and payment of contingent labor services. They perform a procure-to-pay process, if you will. The MSP manages all the vendors who actually employ the contingent employees. Using an MSP typically costs an outsourcing buyer nothing, although that model is changing. I will discuss how MSPs work in detail in Part 3 of this article series.

Why now?

“This is a new world of work,” says Kip Wright, the executive who manages TAPFIN, the global MSP offering of ManpowerGroup Solutions. “Contingent labor has become part of a company’s overall HR strategy,” adds Scott Fraleigh, vice president of managed services for SourceRight Solutions.

Lisa Fitzgerald, senior director within the contingent workforce practice of Kelly OCG, says the workplace has shifted because “it is becoming increasingly harder to predict the demand for talent.”

Globalization is a driver, too. “Companies are more sophisticated today and need global help,” points out Joan Davison, president and COO of Staff Management|SMX.

Adds Dave Barthel, executive director, Human Capital Solution for Allegis Group Services, “Before, using contingent labor was reactive. Companies needed these workers to handle a spike in demand or seasonal needs. Today contingent labor has become strategic.”

Fraleigh says companies learned some valuable lessons during the recession. “First, it was painful to handle layoffs. They didn’t like the impact on their brands. They realized they could get the work done without any long-term labor commitments.”

Barthel of Allegis observes companies still don’t feel like they are “out of the woods completely. They feel right now it’s safer to hire a contingent worker.”

Barthel says companies like contingent IT and engineering workers “because their skill sets can become outdated over time.” Using an MSP allows them to hire proven talent with niche skills. Davison of Staff Management|SMX adds, IT contingent labor “is a great way to get new ideas and innovation into your company.”

The SourceRight executive says companies are increasingly turning to MSPs because “they lack the internal resources to do it themselves.”

What exactly is contingent labor?

Contingent labor includes:

1. Alumni
2. Freelancers
3. Independent contractors (IC)
4. Interns
5. Retirees
6. Statement of work (SOW) consultants (typically hired for projects)
7. Temporary employees

Contract labor had its beginnings in two different areas. CEOs wanted a talented temp to sit in when his admin went on maternity leave while the engineering department and other professional areas like IT needed contract labor to fill specialty jobs.

Today, however, flexibility is one of the chief ingredients of survival, according to Rivera of Yoh. “Companies have research and development pushes and have to respond immediately to the economic cycle. Today they want the flexibility of contingent workers, not full time employees.”

“Employers want an employee right now who has specific skills. But they only need them for today because they don’t know about tomorrow,” says Davison of Staff Management|SMX.

However, this model only works if there are employees who don’t want to work full time directly for any one company. The changing nature of work has created a deep pool of this kind of talent, producing the supply to meet the new demand.

Next: How the changing nature of work is producing people who do not want to be full-time, direct employees.

This is the first of a five-part series. This article discusses “Why now?”

• Part 2: The changing nature of work. Why employees want to be contract labor
• Part 3: How does an MSP work? What are the benefits?
• Part 4: Tyros and mature buyers: The changing needs of both
• Part 5: A telling case study

Debra Floyd, COO, Outsourcing Center; Colin T Blakey, Account Delivery Management – Carillion, Accenture Finance Solutions; Beth Ellyn Rosenthal, Senior Editor, Outsourcing Center

Outsourcing Excellence Award – Best Global Services: Carillion PLC and Accenture
Carillion PLC is a leading support services company. It operates in a highly competitive industry where achieving its margin targets demands a rigorous approach to controlling costs and delivering profitable growth. Carillion’s disparate processes and underlying systems were a potential obstacle to that growth.

Carillion, which last year had annual revenues totaling £5.1 billion, has been on a major business transformation journey with a number of significant acquisitions and major contract wins over the last five years. The company had an internal onshore shared services center that ran multiple legacy HR and finance systems. Craig Brebner, eXcel program director for Carillion, says that as part of our transformation program the initial thinking was to implement an ERP system to enable the business strategy and achieve three goals:

1. Reduce cost
2. Provide greater transparency
3. Enable rapid growth

But during the business case development, it became clear the best way of achieving those goals was through outsourcing, according to Brebner. “In addition to enabling us to streamline and standardize our processes, the outsourcing cost savings also allowed us to invest in the new ERP system. The business case was compelling,” he says.

On the BPO side, Carillion outsources both HR (from recruiting through learning) and F&A using Oracle as its preferred ERP platform. Also, under a separate agreement, Carillion outsources application and infrastructure management. Accenture provides these services globally from the UK, India and the Czech Republic.

After Carillion signed the contract in 2005, it more than tripled its size through organic growth and acquisitions, which Accenture helped Carillion rapidly integrate. The majority of the UK Carillion organization now operates on an integrated Oracle ERP solution.

Moving the work offshore

Accenture and Carillion worked together to optimize the process for offshoring roles. For example, the two companies adapted their model to incubate work in India until fully stabilized. Brebner says Carillion “managed the offshoring process closely and the two companies worked together on the change management aspects of the deal. We only committed to offshoring roles and releasing people when we were confident that we could maintain our service levels.”

Like any outsourcing contract, this has been a journey. “The Carillion and Accenture teams have worked well together. Over the course of the contract we have taken on higher-value activities such as financial accounting. This is a reflection of the work Accenture delivered and the confidence in the teams,” says Steve Marsh, Accenture’s outsourcing account deliver manager for the Carillion BPO contract.

Marsh, based in the UK, is the primary Accenture executive with whom Brebner interfaces. And then Marsh and his team of service leads handle all interactions with the offshore delivery centers. Each center has a specialty; for example, Mumbai is the center of excellence for HR, Chennai is the expert in F&A and Bangalore is the technology center. “Delivering from multiple sites allows us to provide a high level of expertise,” says Marsh.

Accenture uses the time zone difference to its advantage. For example, the Mumbai office receives the time sheets and starts the payroll. When they leave, the UK center is ready to finish the work.

The Mumbai contact center answers a large majority of the calls on the first contact, according to Marsh. But if the caller has a more complex situation, the call goes to the UK team. “There’s no language barrier and they have great knowledge of Carillion’s corporate terminology,” the Accenture executive continues.

Ease of integration as a result of the outsourcing arrangement has been fundamental to Carillion’s successful growth. When Carillion acquired Alfred McAlpine plc in 2008, it asked Accenture to integrate the business on a tight timeline. “Getting this completed on time was a key milestone in developing confidence in Accenture’s people and their approach to offshoring,” says Brebner.

Today, Brebner says “all our offshoring locations are invisible to users. Most people at Carillion really don’t care where the service is coming from as long as it is on time and right the first time.”

Accenture’s services

Currently Accenture:

• Generates more than 350,000 paychecks annually. The service provider runs five different pay frequencies that include 15 different payrolls
• Administers 45,000 HR transactions annually across recruitment, benefits and employee lifecycle services
• Processes more than 360,000 supplier invoices, fuel cards and employee expense claims annually
• Completed 26,000 balance sheet reconciliations across 60 legal entities last year

The outsourcing agreement also has financial incentives. The two companies have a 50-50 gain/pain sharing arrangement depending on whether the actual costs fall above or below the baseline targets.

Carillion found Accenture’s value proposition “compelling.” Leadership liked the fact that Accenture “was willing to put skin in the game.” Brebner says Carillion executives felt they “could work effectively with the people we met and that the two organizations could work well culturally.”

Business results

Business results include:

• Produced a standardized set of processes and underlying systems. “Standardization allows us to more rapidly integrate new acquisitions, mobilize new contracts, transform business processes and reduce back office costs,” says Brebner. “This is an imperative to support Carillion’s growth agenda.”
• Provided a cost-effective means to finance the business transformation.
• Reduced cost by an average of 30 percent thanks to offshoring.
• Helped executives make better business decisions because of better knowledge. “We now have the ability to see rapidly across the company,” says Brebner.

“Outsourcing our finance and HR together with the implementation of an Oracle ERP platform has been an enabler of our business strategy. This allowed us to concentrate on what we are good at while Accenture focuses on running and optimizing these processes. We now are much closer to one version of the HR truth. It is debatable whether we would have been able to grow and change as rapidly without making this outsourcing work,” concludes Brebner.

In order to meet these needs, Allegis Group Services provides three distinct service offerings that can be delivered individually or in combination to meet every human capital or workforce management need that your company may have. Each service is comprehensive and fully customizable to align with your goals for a world-class workforce that is built to lead your company into a successful future.

Allegis Group Services’ Workforce Management Solutions help companies manage the entire spectrum of processes and systems that requisition, procure, manage and pay a contingent workforce and staffing supplier community. Our solutions encompass more than just the automation of these processes through a technology system. They include the entire solution design, process optimization, active cost management, reporting analytics, performance management, overall program oversight and sharing of best practices from the other highly successful programs we design and manage.

Service Lines

RPO – Recruitment Solutions from Allegis Group Services. Allegis Group Services has succeeded with world-class organizations by providing flexible solutions that significantly impact their recruitment function with results. Our recruiting culture and passion to succeed on every assignment is unparalleled in the industry and always assures that our client’s goals are achieved.

Executive Search and Management Recruiting from InSearch Worldwide. InSearch Worldwide has built a Management Recruiting solution on 20+ years in the executive search industry. Our solution is designed to meet each customer’s need for either senior-level professionals or individuals with qualifications that are difficult to identify in the marketplace. When you choose InSearch Worldwide for your executive search needs, you’re working with a team with specialized expertise in the following:

• Attracting pivotal talent on a global basis
• Actively sourcing passive job seekers
• Providing a positive candidate experience
• Recruiting across major functions (HR, Technology, Marketing, Operations, Legal, Finance, etc.)

Distinctive Capabilities

Allegis Group Services^® Inc., an operating company of Allegis Group^® Inc., provides human capital and workforce management solutions to customers in a wide range of industries across the globe. Our offerings include Managed Services (MSP), Recruitment Process Outsourcing (RPO), Executive Search and Consulting Services.

Whether you’re looking to optimize the use of your contingent workforce program, outsource your organization’s recruitment needs or want to analyze key market trends to better serve your business needs, Allegis Group Services can help. Through distinct service offerings, we employ industry best practices and our experience to assist our customers in maximizing the efficiency and effectiveness of their workforce programs.

Allegis Group Services at a Glance

• Year founded: 2001
• Revenues: AG 2010 revenue- $6.4B
• Employees: 524
• Service lines: RPO, MSP, Executive Search, Consulting Services
• Headquarters location: Hanover, Maryland
• Locations of global delivery centers (active on six continents): London, Toronto, Frankfurt, Bangalore, Beijing

For More Information

Telephone: 877-247-4426
www.allegisgroupservices.com

Awards and Recognitions

• GM Supplier of the Year ‐ 2011 (GM Award Video)
• Microsoft Premier Vendor Status ‐ 2010
• Rockwell Collins Presidents Award ‐ 2009

Antex International is headquartered in Geneva, Switzerland and was founded in 2005 by the Italian-based group Fis Antex as a response to the growing demand of its multinational clients for multi-country-service capabilities. In November 2010 Antex International opened a shared-service center in Chisinau, Moldova and, starting in 2011, expanded its services to Greece and Cyprus.

Antex International closely follows industry best practices and provides its clients with cost-efficient and high-quality support services. Our flexible approach allows us to adjust our services to the individual needs of each client while maintaining a high level of process proficiency. Our optimized service delivery model provides our clients with the infrastructure depth, professional integrity and client service level maturity that you expect from your outsourcing partner.

Service Lines

Payroll outsourcing – Antex International allows your organization to achieve more coherence and effectiveness in its payroll administration processes. Clients benefit by taking advantage of our larger processing scale, language capabilities, local infrastructure and other resource-focused capabilities. Our multi-country payroll outsourcing service utilizes an integrated service delivery process while providing our clients with a single user interface and centralized project management.

HR Services – Rather than viewing HR Administration outsourcing entirely as a cost-cutting initiative, Antex International’s philosophy is to search for ways to support our clients that not only take control of the in-scope processes but also transform these processes and underlying technologies if needed. We take an end-to-end view of the function, looking for optimization opportunities and operational efficiencies.

Time and Attendance Management – Antex International’s time and attendance systems, combined with shared centers assistance, support clients during all T&A process phases (including end-user technical assistance). Our time and attendance recording systems are Web-based and vertically developed, allowing our clients and their employees a simple and effective full-service solution required for effectively facilitating time and attendance processes.

Expense Management – Our expense management technologies and service processes support a highly collaborative and proactively supported commercial offering that includes:

• Managing the entire business travel process through a single on-demand service
• Utilizing world-class proprietary Web-based technologies to enhance work flows and process responsiveness
• Eliminating traditional paper-based and first generation electronic expense refund procedures
• Simplifying and optimizing company transport and travel management processes

Distinctive Capabilities

• In-country presence, expertise and client support
• Proprietary processing application which is localized and supports data consolidation across the region
• Highly developed collaboration and service delivery tracking tools
• Secure and business-continuity resilient delivery model

Your Company at a Glance

• Year founded: 2005
• Revenues : 78M
• Employees : 700
• Service lines: Payroll, HR Administration, Time & Attendance Management, Expense Management
• Headquarters location: Geneva, Switzerland
• Locations of global delivery centers: Lisbon, Portugal; Madrid, Spain; Paris, France; Athens, Greece; Milan, Italy

For More Information

Telephone: +41225087058
E-mail: info@ai-emea.com
www.ai-emea.com

Case Studies

• Things to Consider when Choosing Global Payroll Outsourcing Services
• http://www.crowehorwath.net/crowe-horwath-global/news/Crowe_Horwath_International_Appoints_John_Stewart_International_Tax_Director.aspx

Now that is changing on the RPO front. Many of the service providers are forming strategic alliances with RPO service providers on other continents. The goal: to provide buyers with better candidates faster because of their deep contacts in and vast knowledge of specific local markets.

“For years outsourcing buyers wanted a global solution, but it was only a catch phrase for RPO service providers,” says Randy Gulian, CEO of allegistalent². “Today buyers can actually get a global solution.”

Sue Marks, CEO of Pinstripe, says successful recruiting is by definition local. Local may mean city to suburban, state to state, country to country or region to region. Partnerships such as her firm has with OchreHouse “give buyers the benefit of an integrated process, cultural fit, technology, and metrics coupled with local expertise and talent channels. Today there is a competitive race for top talent. Companies can’t hire the best talent if their service provider has a generic solution with no local ties and doesn’t know the local customs.”

“Global outsourcing buyers want a consistent candidate experience and uniform reporting from one global brand,” adds Bruce Morton, Executive Director of allegistalent². He says these buyers want consistency, “which is hard to get from a multiple of partners.”

U.S. RPO service providers that are leading this trend include allegistalent², Pinstripe and OchreHouse, and SourceRight Solutions and Hays plc, among others. Here is the story of how these alliances developed and what they can do for outsourcing buyers.

“Two years ago you could cobble together a solution with different providers in different regions,” says Gulian. “Buyers won’t accept that today. They want one provider, one message, and a standardized candidate experience.”

allegistalent²

Talent² started in 2004 in Asia as a search firm and eventually it extended its services to RPO, becoming the first RPO in Asia Pac, according to Morton. “We noticed we were missing out on some local deals because the decision makers were elsewhere,” says Morton. He estimates 70 percent were in either the United States or the UK. “That got us thinking. We wanted to both protect our business and grow our market in Asia. We had to either grow our own or find a partner,” he recalls. “Allegis Group Services was the natural choice.” Allegis Group Services is the RPO and MSP division of the Allegis Group, one of the largest privately held recruitment firms in the world.

Allegis Group Services and Talent² had some global clients in common. And because Allegis Group Services had already built a relationship with Andrew Grant, the Managing Director on the Talent² side, they formed a partnership in 2010 to cover the globe.

In their first outing together, they bid for and won together possibly the largest multi-continent RPO deal bid out last year. It was an all- encompassing engagement for one of the largest financial services companies in the world. They formed the global implementation team with members from both Allegis Group Services and Talent² and deployed over 150 recruiters across the globe to manage the engagement.

“Our RPO business was pretty global already,” recalls Gulian, “but the obvious hole for us was APAC, so deciding to work with Talent² was easy. They are the 800-pound gorilla there. And we both wanted to further expand into Europe” he says.

Morton says allegistalent²’s “U.S. learnings” from their original deal helped the firm develop more global offerings. allegistalent² now has a central global project management office. Once it gets an assignment, it adds the requisite local nuances.

Pinstripe and OchreHouse

Marks says Pinstripe’s exclusive strategic partnership with OchreHouse allows them to “meet the global needs of companies that have varying numbers of openings in many different countries.” A typical engagement, she says, would be for a U.S midmarket company that has a large number of U.S. jobs to fill and then lower volumes in 15 different countries.

The executives of Pinstripe, which is based in Wisconsin, and OchreHouse, which is based in London, met at the HRO conference in New York in 2009. Marks says there was a cultural match; even better, their operating model was the same. The two decided to go to market together to meet buyers’ global needs. “We won our first deal shortly after we formalized the partnership. We continue to add clients who need a global recruiting footprint,” she says.

Pinstripe and OchreHouse have just added a third member to their partnership: Career International to cover China.

“Our clients (and we have several now) get the depth and breadth of our global and local knowledge,” says Marks. “We know the Americas, they know Europe, and our APAC partners know their regions. We know the talent challenges and, most importantly, where the talent pools are.”

She says mature outsourcing buyers already have centralized HR processes and technology. “They’ve already done the work on the core and know what’s important.” Now they want “worldwide reach with in-country expertise.”

SourceRight Solutions and Hays

Florida-based SourceRight Solutions formed its partnership with UK-based Hays plc last March. “It is increasingly important for companies to more narrowly define who they are trying to attract,” says Rebecca Callahan, SourceRight President. Alistair Cox, CEO of Hays, adds, “As markets around the world recover, multinational companies are increasingly looking for recruiting experts to help them find the quality people they need to build their business in every country in which they operate. Our decision to partner with SourceRight Solutions allows us to meet those needs.”

How the partnerships work

Gulian says the key to success in these strategic alliances is to be sure they don’t become “a marriage of convenience.” allegistalent² found embedding executives in each other’s companies helped both standardize processes and encourage business development. Morton, for example, has moved from Sydney, Australia, to Stamford, Connecticut, to work in the former Allegis Group Services office.

In addition, the RPO holds various client and functional group meeting every other week in a different part of the globe. Executives from both organizations attend.

Gulian says it also helps to know your partner well. “Andrew Grant and I tend to be aligned in our thinking and approach. Both of us were willing to mute our egos in talking about what was the better approach or outcome for the client. There have been no disagreements on our goals, and we have both learned from each other’s approaches to a particular issue. With us, a disagreement on approach lasts for five minutes. It’s resolved and the resulting solution is better than either of us could have fashioned by ourselves.”

Our mission is to deliver cost-effective WOW services and assist our customers becoming preferred employers. This is delivered on the basis of one common system, a network of multi-client local language service centers combined with selected offshoring and nearshoring of certain back-office processes not requiring direct customer interaction.

Zalaris was founded in 2000 and has since grown to deliver a comprehensive set of services to more than 100,000 employees on a monthly basis. We have more than 300 HR professionals and SAP HCM consultants. In 2010 our annual revenue was EUR 27 million (USD 36 million). It is our goal to double our revenue by 2013.

Service Lines

• HR Outsourcing Services: Comprehensive HR outsourcing and payroll services from our local language service centers
• HR Technology Services: On-demand payroll and HR processes that run on Zalaris’s preconfigured SAP HCM smartHR platform
• HR Consulting Services: Our consultants configure your SAP HCM-powered service center infrastructure based on our smartHR template

Distinctive Capabilities

A key to our success and satisfied customers is our ability to serve our customers in local language, local culture, local competence and local presence – but with common systems and processes. Scale and cost-effective solutions are achieved through a multi-client, single-country approach rather than a single-client, multi-country approach.

Your Company at a Glance

• Year founded: 2000
• Revenues: EUR 27 million / USD 37 million (2010)
• Employees: approximately 300
• Service lines (business processes, IT infrastructure, IT applications): HR Outsourcing Services, HR Technology Services and HR Consulting Services
• Headquarters location: Oslo, Norway
• Locations of global delivery centers: Lødingen (Norway), Notodden (Norway), Stockholm (Sweden), Copenhagen (Denmark), Helsinki (Finland), Riga (Latvia) and Chennai (India).

For More Information

Tel: +47-4000.3300
Fax: +47 2202 6001
info@zalaris.com
www.zalaris.com

Certifications: Authorized SAP BPO Provider

Case Studies

• Bank and insurance
• Industrial
• Service and retail

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