NorthgateArinso Acquisition of Convergys HR Outsourcing Business – What Impact Will This Have on the Market?
Alan Hopwood, EquaTerra Client Executive
When two strong HR outsourcing (HRO) providers are brought together, what does the sum of the parts look like? Firstly, the merged company will have a better balanced global presence as NorthgateArinso (NGA) had yet to develop a real presence in the North American market where Convergys HR is strongest. The combination also increases the range of client size. While Convergys HR has worked hard to take on and deliver to some of the largest multi-national clients, NGA has grown up from dealing with mid-sized companies.
Convergys brings a strong pedigree in contact centre management, while NGA is historically more known for technology than services. On top of the capability for SAP systems integration, which is also a characteristic of Convergys, NGA brings its innovative EuHReka solution and its ability to be offered as multi-tenant SaaS. We should also not forget the extent of Convergys’ experience with PeopleSoft and NGA’s proprietary ResourceLink offering for single country clients.
So what will the impact on the market be? By whichever measure you take, there will be an addition to the top tier of broad-scope global HRO providers. Any multi-national company interested in buying HR services from a single provider will have NGA on their list. The North American market has a provider with both local credibility and a new range of technical solutions.
And the big questions? Will NGA be able to keep their current client base satisfied and manage the merger of two large organisations with their own traditions? And will it manage to deliver the capability from the legacy companies across its markets?
I think the prospects look good. The early comments from NGA are about looking after the current clients first and being cautious about changes, which should allow the benefits to be delivered – gradually.
I am very interested to see how this acquisition shakes out in the industry. We have seen a lot of these deals look good on paper, but some of the clients get lost in the mix and end up moving on to greener HR outsourcing pastures.
I would agree that the key measure of Northgate Arinso’s success will be client retention and satisfaction. Clients who do not have robust governance processes in place are the most likely to “get lost”. We would advise clients to invest even more in managing the relationship over the next year or so.
I agree with you, Alan. I think that the first year should be spent building up the relationship between the client and the outsourcing company, otherwise, they would probably end up going different directions. They need to be in tune with each other in order to effectively deliver customer satisfaction.