Introduction

Benefits Administration Outsourcing (BAO) is one of the most mature markets within single-process HR outsourcing (SPHRO) that continues to show robust growth even in the economic downturn. However, the maturity of the market varies significantly across different regions and benefits programs. Regions outside North America, though still in the early phases of market development, have started opening up to BAO to realize multiple objectives. From a supplier perspective, the competitive intensity is intense, especially in a mature market such as the U.S. Established suppliers are trying to increase their market share and build new capabilities through various organic and inorganic routes. At the same time, there are some new suppliers still entering the marketplace with new delivery and technology models.

In this research study, we analyze the BAO market across various dimensions. We focus on:

• Market overview and key business drivers
• Buyer adoption trends
• Current transaction characteristics
• Supplier landscape
• Implications for buyers and suppliers

Scope of analysis

• All BAO contracts where at least one of the following core benefits area is included – Health & Welfare (H&W), Defined Benefits (DB), and Defined Contribution (DC), as a stand-alone outsourcing service with buyer employee size of 3,000 or more
• Global focus: North America, Europe, Asia Pacific, and Latin America
• All industries
• 20+ suppliers that have signed at least one BAO transaction. Suppliers covered include ACS, ADP, AON, Capita Hartshead, Ceridian, Charles Schwab, Empyrean, ExcellerateHRO, Fidelity, Hewitt, Infosys, ING, J.P.Morgan, Mercer, Morneau Sobeco, Patni, Secova, Towers Watson, Vanguard, Workscape and Xafinity

Content

This research report provides a comprehensive coverage of the BAO market and analyzes it across various dimensions such as market overview and key business drivers, buyer adoption trends, transaction characteristics, and supplier landscape. It also identifies key implications of the research findings for buyers as well as suppliers. Some of the findings in this report, among others, are:

• Compared to other areas of HR outsourcing, the BAO market exhibits wide variance in market maturity across different regions
• Prevalence of outsourcing of core benefit areas varies by geography. DC is most prevalent from a global perspective
• There are multiple key drivers behind BAO; cost reduction and compliance gained prominence in the current economic environment
• North America is the most dominant adopter of BAO. However, during 2009-10 adoption within Europe increased
• Technology is bundled in almost all BAO deals. Inclusion of contact center and vendor management varies based on the core benefits area in scope
• The BAO supplier landscape remains dynamic. A wave of consolidation continues in the market as several significant acquisitions were announced in 2010
• No single supplier leads the market across multiple BAO areas. Leaders, based on share in terms of deal signings or participants managed, across various benefits areas are different