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The most hectic activity was visible in human resources outsourcing, as the sector witnessed nine acquisitions and at least fourteen contracts being signed in the first quarter of this year (January to March 2007).
The ValueNotes Outsourcing Practice has released its newest publication - the ValueNotes Outsourcing DealTracker - a monthly resource for mergers and acquisition activity, venture capital and private equity deals, as well as contracts in the business process outsourcing and knowledge services space. The analysis below is based on select trends based on the data for the last quarter (January to March 2007).
The most hectic activity was visible in human resources outsourcing, as the sector witnessed nine acquisitions and at least fourteen contracts being signed in the first quarter of this year (January to March 2007). As opposed to this, in the last quarter of 2006 (October to December), there were only two acquisitions and six contracts.Recruitment and payroll were the most popular services outsourced, even as larger companies in this space - Kelly Services, Hewitt and UnicornHRO - chose to acquire smaller, focused companies providing recruitment and payroll services.
Acquisitions
Kelly Services, a US based human resources company made two acquisitions in this quarter - Talent Technology in the US and Tempstaff Kelly in Japan. The acquisition of the latter is in line with Kelly's strategy to expand in the Asia Pacific markets. The other interesting deal was Equifax's acquisition of Talx Corporation for $1.4 billion. Talx provides employee verification and payroll services to its clients.
Acquisitions in the Human Resources Space
| Acquirer |
Target Company
|
Location
|
Target company's services
|
Deal Size
|
Equifax, Inc.
|
Talx Corp. |
USA |
Employment verification and human resources / payroll services |
$1.4 bn
|
UnicornHR
|
Bonnecaze, McLeroy, & Harrison |
USA
|
HR benefits, payroll processing, etc. |
NA
|
| Terra Nova Acquisition Corporation |
ClearPoint Business Resources
|
USA
|
Workforce management solutions
|
NA
|
Gevity
|
HRAmerica
|
USA |
Employee administration, recruitment, payroll processing, etc. |
$10 mn
|
ADP
|
Intuit's payroll division
|
USA |
Payroll services |
NA |
Kelly Services
|
Talent Technology |
USA |
Recruitment, and executive search solutions |
NA
|
Kelly Services
|
Tempstaff Kelly |
Japan |
Employment, recruitment, HR consulting and outsourcing services |
NA
|
| Primeserv Group |
Staff Dynamix |
South Africa
|
Recruitment solutions across a range of verticals
|
NA
|
| Hewitt Associates |
Adelaide Consulting |
Italy |
Compensation, actuarial and benefit services |
NA
|
Source: ValueNotes Outsourcing DealTracker - Quarterly Analysis of M&As (Q1 2007)
Contracts
The contracts side saw not just HR specialists / focused companies, but also multinationals such as Accenture, ACS and IBM winning HR outsourcing deals. The largest contract (declared) was awarded to IBM for $217 million, for the duration of 7.5 years.
Some of the HR outsourcing contracts this quarter
| Buyer |
Vendor
|
Services outsourced
|
Value of contract
|
Tenure
|
GlaxoSmithKline
|
Affiliated Computer Services (ACS) |
Consolidation of various HR services including payroll processing and benefits administration, employee and manager self-service portals and integrated online tools
|
$171 mn
|
10 years
|
Kimberley Clark Corp
|
Accenture |
Recruitment, payroll administration, workforce reporting, employee data management, and training and development
|
NA |
7 years
|
| American Airlines |
IBM
|
Recruitment, training, call center and other HR support services
|
$217 mn
|
7.5 years
|
| Boeing |
Kenexa Corp |
Talent acquisition and retention solutions for employees, along with data collection, analysis and reporting services
|
NA |
4 years
|
| GSL UK |
MidlandHR
|
HR payroll and administrative services along with data management
|
$2.3 mn
|
5 years
|
Source: ValueNotes Outsourcing DealTracker - Quarterly Analysis of Contracts (Q1 2007)
Most of the activity witnessed this quarter in the human resource space has been in the US. Companies in the US are grappling with cost pressures and the trend towards outsourcing non-core activities (such as payroll and benefits management) continues unabated. Further, some of the largest HR contracts this quarter have been part of a larger restructuring strategy within organizations. We believe that there is more action likely in the human resources space this year. Watch this feature for further updates.
For more about deals this quarter, CLICK HERE
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