Topic: Benefits Administration Outsourcing (BAO) –Service Provider Landscape and Capability AssessmentHuman Resources Outs...
Our research offerings for global servicesSubscription information             Market Vista   The full report is included...
Table of contents                (page 1 of 2)Topic                                                                       ...
Table of contents                (page 2 of 2)Topic                                                                       ...
This report is based on two key sources of proprietaryinformation1       Everest Group’s proprietary database of over 1,1...
Overview and abbreviated summary of key messagesThis report examines the dynamics of the global BAO service provider lands...
This study offers four distinct chapters providing a deep diveinto key aspects of the BAO service provider landscape;below...
HRO research agenda                                                                                                  Publi...
Additional HRO research recommendationsThe following documents are recommended for additional insight into the topic cover...
Everest GroupLeading clients from insight to actionEverest Group is an advisor to business leaders on the next generation ...
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Benefits Administration Outsourcing (BAO) - Service Provider Landscape and Capability Assessment

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The US$6.1 billion BAO market is a consolidated space dominated by a handful of players. However, the recent healthcare reform and the strategic shift from Defined Benefits (DB) to Defined Contributions (DC) have created increased outsourcing opportunities for the service providers.

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Benefits Administration Outsourcing (BAO) - Service Provider Landscape and Capability Assessment

  1. 1. Topic: Benefits Administration Outsourcing (BAO) –Service Provider Landscape and Capability AssessmentHuman Resources Outsourcing (HRO)Market Report – February 2013 – Preview Deck Copyright © 2013, Everest Global, Inc. EGR-2013-3-PD-0839
  2. 2. Our research offerings for global servicesSubscription information Market Vista The full report is included in Global services tracking across functions, sourcing models, locations, and the following subscription(s) service providers – industry tracking reports also available – Human resources Banking, financial Healthcare Finance & accounting In addition to published services, insurance research, a subscription may include analyst inquiry, data Information cuts, and other services Procurement Cloud Vista technology If you want to learn whether your organization has a Human resources Recruitment process Global sourcing subscription agreement or request information on pricing and subscription options, Service provider Transaction PricePoint please contact us: Intelligence Intelligence – info@everestgrp.com – +1-214-451-3110 Custom research capabilities  Benchmarking | Pricing, delivery model, skill portfolio  Peer analysis | Scope, sourcing models, locations  Locations | Cost, skills, sustainability, portfolio  Tracking services | Service providers, locations, risk  Other | Market intelligence, service provider capabilities, technologies Copyright © 2013, Everest Global, Inc. 2 EGR-2013-3-PD-0839
  3. 3. Table of contents (page 1 of 2)Topic Page no.Background and methodology 6Summary of key messages 9Section I: BAO market overview 13 Summary 14 Market size 15 Service provider landscape 17 M&A activity 18Section II: BAO PEAK Matrix 2013 19 Summary 20 BAO PEAK Matrix 2013 21 Service provider assessment 24Section III: Key insights into PEAK dimensions 26 Summary 27 Context 28 Market success 29 Delivery capability – Scale 30 Delivery capability – Scope 31 Delivery capability – Technology 32 Delivery capability – Delivery footprint 33 Copyright © 2013, Everest Global, Inc. 3 EGR-2013-3-PD-0839
  4. 4. Table of contents (page 2 of 2)Topic Page no.Section IV: Areas of differentiation 34 Summary 35 Market share analysis 37 Analyses dimensions 38 – Geographic scope 39 – Industry 41 – Buyer size 42 – Process scope 43 – Technology offering 46 – Global sourcing 48Section V: Implications for key stakeholders 50 Implications for buyers 51 Implications for service providers 53Appendix 55 Glossary of key terms 56 HRO research calendar 58 References 59 Copyright © 2013, Everest Global, Inc. 4 EGR-2013-3-PD-0839
  5. 5. This report is based on two key sources of proprietaryinformation1  Everest Group’s proprietary database of over 1,100 BAO deals (updated Service providers covered in detail in the analyses annually)  The database tracks the following elements of each BAO deal – Buyer details: Including industry, size, and signing region – Deal details: Including TCV, ACV, term, start date, total participants managed, and the primary pricing structure – Scope: Process coverage and geographic coverage – Technology ownership and maintenance – Global sourcing2  Everest Group’s proprietary database of operational capability of 10 BAO service providers  The database tracks the following capability elements for each service provider – Major BAO clients and recent wins – Overall BAO revenue, total number of participants managed, and number of BAO FTEs – BAO clients split by H&W, DB and DC, geography scope and coverage, industry, headquarter location, and buyer size – BAO service suite, delivery locations, and level of offshoring – Benefits-related technology capability – Recent BAO-related developments (investments and partnerships)The analyses in this report are presented at two levels Overall market analyses that highlight the overall market composition/dynamics The current market trends are based on deal activities in the last five yearsThe sample size varies for different analyses based on the deal detail availability Note: We continuously monitor the market and update the above list to include emerging service providers such as Businessolver and EmpyreanConfidentiality: Everest Group takes its confidentiality pledge very seriously. Any information we collect that is contract specific will only be presented back to the industry in an aggregated fashion Copyright © 2013, Everest Global, Inc. 5 EGR-2013-3-PD-0839
  6. 6. Overview and abbreviated summary of key messagesThis report examines the dynamics of the global BAO service provider landscape and its impact on the BAO market. It gives an overview ofthe market and analyzes how the service providers differentiate themselves. Based on the comprehensive Everest Group PEAK Matrix, eachof the 10 BAO service providers are segmented into Leaders, Major Contenders, and Emerging Players. Additionally, it provides key insightson the individual PEAK dimensions and implications for buyers and serviceSome of the findings in this report are: 1 BAO market  Benefits Administration Outsourcing (BAO) market grew at a healthy pace of 13% to reach US$6.1 billion overview in annualized revenue in 2012. We expect the market to accelerate further in 2013-2014  H&W providers will face capacity constraints as a wave of new deals hits the market before the PPACA start date. Providers who invest in capacity expansion will be better suited to cater to the huge surge in demand during 2013-2014 2 BAO PEAK Matrix  Everest Group classifies 10 BAO service providers on Everest Group Performance | Experience | Ability | 2013 Knowledge (PEAK) Matrix into three categories of Leaders, Major Contenders, and Emerging Players 3 Key insights into  Top quartile performers across each PEAK Matrix dimension are compared with others to identify PEAK dimensions differentiating strategy and operational capability 4 Areas of  BAO providers need to be on their toes to address the changing needs of buyers, They differentiate differentiation themselves along multiple dimensions – geographic scope, industry, buyer size, process scope, technology offering, and global sourcing  The recent healthcare reform has underscored the importance of health insurance exchanges. While most service providers are still defining their HIX strategy and their target markets, a few have already invested in a private HIX Copyright © 2013, Everest Global, Inc. 6 EGR-2013-3-PD-0839
  7. 7. This study offers four distinct chapters providing a deep diveinto key aspects of the BAO service provider landscape;below are four charts to illustrate the depth of the reportEverest Group PEAK Matrix – 2013 BAO market standing Delivery capability – Scale: Although top quartile performers are High 75th percentile larger than their counterparts in their scale of operations, they have Leaders not been able to take full advantage of economies of scale 75th percentile Fidelity Major Contenders Xerox Aon Hewitt Top quartile performers Average number of MPEs per FTE Towers Watson Mercer Others Market success ADP Numbe r of 25th percentile ING Businessolver deals Secova Numb er of Top quartile Others Empyrean MPEs performers Emerging Players Low Top quartile performers by scale Low 25th percentile High BAO delivery capability Service provider 1 Service provider 2 Service provider 3 Service provider 4 (Scale, scope, technology, and delivery footprint)Areas of differentiation among service providers BAO service providers’ approach towards Health Insurance Exchange (HIX) Geographic BAO providers’ approach towards HIX solution coverage For internal BAO clients For other clients Global Industry Service providers have either partnered or Service providers utilize their internal IT sourcing invested in developing their own HIX for expertise and domain knowledge to create Areas of their H&W clients. an exchange differentiation  This HIX solution is a multi-carrier  This HIX solution can be a single- or exchange, which can be accessed by multi-carrier exchange Technology Buyer the participants  Service providers may also provide offering size additional services, such as voice-based customer support, along with the HIX Process solution scope States Brokers Consultants PayersSource: Everest Group (2013) Copyright © 2013, Everest Global, Inc. 7 EGR-2013-3-PD-0839
  8. 8. HRO research agenda Published CurrentTopic Release dateAchieving Best-in-Class BPO – Secrets Unveiled February-2012Is BPaaS the Right Model for You? April-2012Multi-Process Human Resources Outsourcing (MPHRO) Annual Report 2012: Continued Reinvention June-2012Multi-Process Human Resources Outsourcing (MPHRO) – Service Provider Landscape and Capability Assessment July-2012Multi-Process Human Resources Outsourcing (MPHRO) – Service Provider Profile Compendium August-2012Multi-Country Payroll Outsourcing (MCPO) – No Longer a Pipe Dream October-2012Multi-Country Payroll Outsourcing (MCPO) – Service Provider Landscape and Capability Assessment November-2012Benefits Administration Outsourcing (BAO) – The Horse is Ready to Bolt December-2012Multi-Country Payroll Outsourcing Service Provider Profile Compendium December-2012BAO Service Provider Landscape and Capability Assessment February-2013BAO Service Provider Profile Compendium Q1-2013Crating Value through Analytics in HRO Q1-2013HRO Annual Report 2013 Q1-2013HRO Service Provider Landscape and Capability Assessment Q2-2013HRO Service Provider Profile Compendium Q2-2013 Copyright © 2013, Everest Global, Inc. 8 EGR-2013-3-PD-0839
  9. 9. Additional HRO research recommendationsThe following documents are recommended for additional insight into the topic covered in this report. The recommended documentsprovide either additional details on the topic or complementary content that may be of interest:1. Benefits Administration Outsourcing (BAO) Annual Report 2012 – The Horse is Ready to Bolt (EGR-2012-3-R-0810); 2012. This research provides comprehensive coverage of the BAO market and analyzes it across various dimensions such as market overview, regional trends in North America & Europe, buyer adoption and solution trends, and service provider landscape. It also provides predictions for the 2013 BAO market2. Multi-Country Payroll Outsourcing (MCPO) – No Longer a Pipe Dream (EGR-2012-3-R-0755a); 2012. This report provides a comprehensive coverage of the MCPO market and analyzes it across various dimensions such as market overview, key business drivers, buyer adoption trends, solution characteristics, and service provider landscape3. Multi-Process Human Resources Outsourcing (MPHRO) Annual Report 2012 – Continued Reinvention (EGR-2012-3-R-0698a); 2012. This research provides comprehensive coverage of the MPHRO market and analyzes it across various dimensions such as market overview, key dynamics, buyer adoption and solution trends, and service provider landscape. It also provides predictions for the 2012 MPHRO market4. Is BPaaS the Model for You? (ERI-2012-10-R-0667); 2012. This research aims to compare Total Cost of Ownership (TCO) of Business- Process-as-a-Service (BPaaS) solutions with the traditional BPO using a comprehensive financial model and creates a comprehensive framework to evaluate BPaaS sourcing For more information on this and other researches published by Everest Group, please contact us: Rajesh Ranjan, Vice President: rajesh.ranjan@everestgrp.com Arkadev Basak, Senior Analyst: arkadev.basak@everestgrp.com Shruti Agrawal, Senior Analyst: shruti.agrawal@everestgrp.com Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Phone: +1-214-451-3110 Dallas, TX 75240 Email: info@everestgrp.com Copyright © 2013, Everest Global, Inc. 9 EGR-2013-3-PD-0839
  10. 10. Everest GroupLeading clients from insight to actionEverest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helpingGlobal 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With afact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use anddelivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practicalconsulting, original research, and industry resource services, Everest Group helps clients maximize value from deliverystrategies, talent and sourcing models, technologies, and management approaches. Established in 1991, Everest Group servesusers of global services, providers of services, country organizations, and private equity firms in six continents across all industrycategories. For more information, please visit www.everestgrp.com and research.everestgrp.com.Dallas (Corporate Headquarters) Toronto India / Middle Eastinfo@everestgrp.com canada@everestgrp.com india@everestgrp.com+1-214-451-3000 +1-416-865-2033 +91-124-496-1000New York Londoninfo@everestgrp.com unitedkingdom@everestgrp.com+1-646-805-4000 +44-207-129-1318Stay connectedWebsites Twitter Blogswww.everestgrp.com @EverestGroup www.sherpasinblueshirts.comresearch.everestgrp.com @Everest_Cloud www.gainingaltitudeinthecloud.com Copyright © 2013, Everest Global, Inc. 10 EGR-2013-3-PD-0839

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