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ACS and ExcellerateHRO: Implications for the Benefits Outsourcing Market

by ISG

By Tony Herron, Partner, CHRO Services

 

On May 25, ACS (a Xerox Company) announced its intention to acquire ExcellerateHRO from HP. The acquisition is expected to be completed by July 1.

 

ExcellerateHRO has been for sale since early 2009. The uncertainty surrounding its future made it difficult to acquire new clients, and retaining current clients at contract renewal has also been challenging. In addition, the potential sale caused uncertainty regarding the future for existing staff. In spite of the circumstances, ExcellerateHRO has won a number of brand-name clients during this time on the strength of its refurbished technology platform, including Bayer, Fluor, Kraft, Heinz and Rite Aid.

 

 

At the same time, ACS has been one of the most dominant players in the benefits outsourcing market over the past year, winning competitive bidding processes with ArvinMeritor, Catholic Health Partners, Dana, Ford, Stanford University, State Street, and other well-known employers. It won these clients through innovation, market-changing approaches to pricing services, flexibility in its approach to service delivery and an enhanced technology platform.

 

We believe the combination of ACS and ExcellerateHRO will be a powerful force in the benefits outsourcing market and could represent a game-changing event in the mega-market. However, aside from offering some additional relocation clients and resources, we don’t think the acquisition does much to bolster ACS’ HR outsourcing (HRO) business.

 

The advantages of this acquisition include:

 

· Confirming that Xerox is committed to the benefits outsourcing and HRO markets

· Expanding ACS’ footprint in Canada and Europe and better positioning it to offer a global benefits administration solution

· Increasing ACS’ scale in all areas – implementation resources, administration expertise, clients, technology, etc.

· Making ACS a more formidable competitor in all market segments, especially the large- and mega-market

· Providing ACS a market-leading DB and H&W co-sourcing capability

· Stabilizing the ExcellerateHRO client and employee base

 

The only real downside to the acquisition is it takes a top-tier DB and H&W administration firm out of an already small service provider market.

 

Want to discuss further? Call me at 574-257-7825 or drop me a line at tony.herron@tpi.net.