NGA Named Leader for Payroll BPO Services by NelsonHall

© NelsonHall 2015 1 May 2015
Licensed for distribution
NEAT EVALUATION FOR NGA HUMAN RESOURCES:
Payroll BPO
Market Segments: Overall and Multi-Geography
This document presents NGA Human Resources with the NelsonHall NEAT vendor evaluation
for Payroll BPO (Overall and Multi-Geography market segments). It contains the NEAT
graphs of vendor performance, a summary vendor analysis of NGA Human Resources in
Payroll BPO, and the latest market analysis summary for Payroll BPO. An explanation of the
NEAT methodology is included at the end of the document.
The vendors researched are: ADP Employer Services, Aon Hewitt, Capita, Ceridian, CloudPay,
Genpact, HP, Infosys, MidlandHR, NGA Human Resources, SD Worx, SGWI, Sopra, and
Talent2.
NEAT Evaluation: Payroll (Overall Market Segment)

NEAT Evaluation for NGA HR: Payroll BPO
NEAT Evaluation: Payroll
(Multi-Geography Market Segment)
Buy side organizations can access the Payroll BPO NEAT tool and view the Overall market segment
here and the Multi-Geography market segment here.

Vendor Analysis Summary for NGA Human Resources
Overview
NGA Human Resources now provides HR services and payroll services to ~6.5m employees
across 106 countries in 33 languages. Its HR services include:
• HR administration services
• Payroll services
• Multi-process HRO (MPHRO) services
• Benefits administration services
• Learning services
• Recruitment services.
NGA Human Resources' global headquarters are in Hemel Hempstead, U.K. Regional
headquarters are: U.K. and Ireland (Hemel Hempstead), EMEA (Brussels), Americas
(Jacksonville), Asia (Singapore) and Australia (Melbourne). It also has local presence in a
number of countries in Africa, including South Africa.
Financials
NelsonHall estimates NGA HR's FY 2013 revenues for payroll only services to have been
$311m, up 7% y/y from 2012.
Exhibit 1
NGA HR: Estimated Payroll (only) Services Revenues, FY 2013
Region ($m)
North America 53
EMEA: 223
Rest of Europe 30
Asia Pacific 25
Latin America 10
NelsonHall Estimates
Almost all (~99%) of its MPHRO contracts include payroll, and revenues generated from the
payroll services embedded in MPHRO are estimated as another $121m, bringing total
payroll related service revenues to $433m in FY 2013.
NGA HR reports that growth in payroll outsourcing is greater than other parts of the
business such as consulting and HR outsourcing. Workday and SuccessFactors service
readiness are a growth area, as NGA HR offers a payroll service integrated with these HR
technologies. NGA HR also offers HR application management services to support both
OnPremise (SAP/Peoplesoft) and cloud systems (Workday/SFSF).

Strengths
• Experienced teams that have worked together to support multiple large organizations
(with >80k employees) since the mid-1990s
• Ability to drive efficiencies from an end-to-end process (not just the outsourced part of
the processing). NGA HR supports 100% of employee services with self-service where
they are on the euHReka platform. The Payroll Exchange allows viewing of payslips for
non-euHReka payroll services; for the euHReka customers NGA HR can also measure
the percentage uptake. This assists project teams in assessing change management
requirements and targeting efforts to areas of highest need
• Ability to support with self-service (including a HR self-service role for euHReka), with a
case management technology. Self-service functionality in euHReka is richer than the
standard SAP self-service offering; NGA HR has invested in building the euHReka user
experience since 2004, and euHReka can be accessed from the internet without the
need for a SAP portal. This overcomes the technical hurdles of rolling out the system to
multiple countries with different corporate networks. The myHRW case management
technology allows payroll service customers (including those not on euHReka platforms)
to use a single case management system, across the HCM and payroll systems
• Significant language capability (over 23 tier 1 languages supported, with 33 languages
available). Over 30 languages supported through speech and technology
• Established delivery centers providing global and regional support across countries. The
Buenos Aires center was first established in 1999, and the Manila center in 2006
• In-house capability to deliver local payroll in 33 countries
• Large clients in Europe and the U.S. including Du Pont, Sodexho, Astra Zeneca, State
Street, Tesco, Sainsbury's, Solvay and Barclays. Ability to renew contracts with legacy
Convergys clients including Florida and Texas states, which includes payroll scope for
large U.S. populations (over 300k employees), although they are wider MPHRO
contracts
• First Workday payroll service integrations are live, including Zoetis, McGraw and AIG,
Whole Foods
• System integration capabilities and proprietary platforms (i.e. ResourceLink and
Preceda for regional/single country) that can be purchased on a standalone basis or
with HR BPO
• Strength of the ResourceLink Aurora product to apply flexible configuration, particularly
around working patterns; this supports the retail industry well, as well as customers
with employees on irregular and night shift hours
• References in processing large volumes (>10k employees), particularly for weekly
payroll processing in the U.K
• Ability to support MPHRO as well as payroll outsourcing.

Challenges
• The acquisition of Arinso in 2007 has supported larger contract signings such as
AstraZeneca; however the services are not fully aligned in terms of service definitions
(bureau, fully managed) and service levels (in terms of IT). These misalignments are still
evident six years later, and can bring additional risks to service delivery where the
different business units are engaged
• euHReka talent functionality will not be developed further, however developments to
support payroll and workforce administration will continue in euHReka. This could leave
a number of payroll service customers with an aging talent system
• Brand awareness could be improved, especially in the U.S.
• Lack of end-to-end support for U.S. payroll, with reliance on partners to support tax
filings
• Lack of case management solutions for the ResourceLink customers today; U.K.
customers on ResourceLink do not have a high visibility of service tickets, except
through service reports which are provided to them periodically. This is typical for many
payroll vendors, as very few provide online service status, and this could be alleviated
by the proposed developments in myHRW, as mentioned above
• Lack of an "HR profile" for U.K. self-services in the product ResourceLink Aurora.
Managers and employees have access to information, but the HR community is not
offered a web access to employee details
• Some large U.K. customers are still on old Unipay payroll systems. The longer NGA HR
leaves these customers on older systems that do not provide effective reporting, the
greater the likelihood that they look for alternatives. Furthermore, the business case for
moving systems is difficult to make if it is a payroll only scope. However, NGA HR
recently migrated one of its large U.K. payroll customers, Sainsbury's, from Unipay to
ResourceLink
• The ability to support so many HR system integration projects as well as HR-payroll
interfaces brings advantages, however it can also be confusing to customers who are
not sure which systems are appropriate for their needs. Where NGA HR offers multiple
platforms, customers can easily get confused. NGA HR faces the challenge of resourcing
teams who can demonstrate expertise in multiple products, to help customers assess
the most appropriate technology stack.
Strategic Direction
In 2014, NGA HR is refocusing its business on payroll, and is positioning and investing in its
payroll services offering as a priority over developing additional talent based services. The
key payroll-related initiatives being undertaken include:
Payroll integration initiatives:
• Continuing development for the payroll exchange technology, to improve efficiencies in
interface management, reporting, and transition times
• Workday specific integration to be further developed with joint activities such as
evaluating web services solutions; NGA HR plans to have the connecter certified in 80
countries by 2014.

Payroll process efficiency initiatives:
• Building scale in global centers (e.g. Manila) by driving more activities into the centers
and putting processes and measurements in place to manage consistency of delivery
across centers
• With the help of centralization, increasing automation and quality initiatives using
CMMI, Six Sigma and Lean principles. Sunexo is a product that is being used to support
delivery teams on an online portal used internally at NGA, to monitor and report payroll
status. It enables central monitoring and tracking of payroll status and early
identification of exceptions based on standard payroll processing milestones, and is
being rolled out further across internal payroll teams over 2014. The Sunexo tool
supports visibility and standardization of performance reporting.
In addition, NGA HR is aiming to improve payroll service delivery through better integration,
by adding payroll data localizations to the euHReka system. The company is also working on
mobile and workflow initiatives, including:
• Process enhancements technology services: service center tools. The NGA HR service
management technology, HRW, is being rolled out as an NGA HR standard
• Enhancing payroll systems by addition of self-services via mobile for all applications
• Expansion of ResourceLink, Preceda, and Moorepay functionality and usability, with a
single mobile app technology common to all products.
Sales initiatives include:
• Completing rollout of rebranding in 2014, moving to NGA Human Resources
(abbreviated to NGA HR), rather than NorthgateArinso. NGA HR positions this brand to
reinforce the human resources priority of the business and it is designed to formalize
the term "NGA"
• Keeping the global sales team as a standalone global organization to enable strong
customer focus and support multi-region/global contracts
• Building stronger relationships with Workday partners, e.g. Workday sales and SAP sales
• Maintaining greatest focus on sales efforts for the larger payroll markets (U.S. and U.K.)
and large organizations whilst increasing attention on mid-market (down to 1k
employees) in countries where NGA HR has a presence. SME will be only by targeted in
the U.K., IE, Africa, Australia and New Zealand.

Outlook
NGA HR has been through a period of six years of high growth (>10%) and a number of large
acquisitions, as well as a CEO change of leadership in 2013. As a KKR owned company, the
integrations of Convergys and Arinso are completed, and greater synergies can only be
developed through further rationalization and simplification of the business to make it more
agile. An example of this has been the move to GoogleMail from Outlook.
The success of the company to date has largely been through:
• An established global service delivery network (e.g. Manila, Granada, Kochi, Buenos
Aires)
• Building and using technologies rich in self-service and automation (e.g. integrated case
management and knowledge management technology)
• Capability of technical teams to support large global projects and to deliver large scale
transformation for large clients that have difficulty changing themselves.
NGA HR is now in an environment where technologies are rapidly changing in the SaaS
landscape, bringing different dynamics to large company engagements.
With these SaaS based HR software changes of the last years, the payroll service outlook for
NGA HR is very positive, as few companies can deliver large market payrolls across borders,
and in so many countries, with integration to SaaS products such as SuccessFactors as well
as Workday. NGA's capability to support large customers (companies with >50k employees)
with large integration projects (~$100m) across a range of technologies is a strength that
will support its sustained growth in the coming three to five years. To achieve success it also
needs to finely balance its rationalization steps without stifling innovation or impacting
service.

Payroll BPO: Market Summary
Buy-Side Dynamics
The top three drivers of payroll services are:
• Cost control and cost agility
• Standardization and centralization of process, governance and technology leading to
increased efficiency, and greater visibility of information
• Compliance and risk management.
The principal benefits derived from payroll outsourcing are:
• Cost savings of 20%-40%
• Increased accuracy with measurements of ~99.5% and improved SLAs of 15% - 25%
overall
• Improved integration with standardized technology, process harmonization, payroll
consolidation, and improved HR integration, with ~20% saving on field related payroll
tasks
• Reduction in tax credits and removal of payroll risks of knowledge
• Ability to meet business changes by supporting payrolls through acquisitions and
divestures, with the ability to go live with new services within four to nine months, for
medium to large organizations
• Supporting HR system data accuracy through payroll integration delivered by the
vendors.
The main inhibitor to adoption of payroll services is client desire to maintain control over
the payroll, having invested in their own payroll team, and client perception that it can do it
better internally.
Standalone payroll services contracts average 4.3 years in length; contract terms are
increasing, as the business impact of rolling out payroll with HR and payroll self-service is
greater than in the traditional bureau or partial payroll service model.
Market Size & Growth
The global payroll services market was valued at $13,732m in 2013, expected to grow 4.9%
in 2014 to $14,408m, and forecast to grow at 5.0% per annum to reach $17,534m in 2018.
North America is the largest payroll services market with 73% revenue share, followed by
Europe, Asia Pacific region and Latin America. Growth is being driven by demand for multi-
country and for integrated HCM/payroll cloud integration. Geographies experiencing the
greatest growth are:
• The emerging economies where companies are investing (Latin America, Asia Pacific)
• Countries with aging workforces, where rather than rehire it is easier to outsource (e.g.
Japan or the U.S.)
• Countries with growing workforces (e.g. China, India, U.S., Indonesia and Brazil).

Latin America is the smallest payroll outsourcing market, yet is expected to grow the
fastest. Compliance across Asia Pacific is a key consideration driving payroll outsourcing
decisions. Mid market multi-country payroll offerings are helping market momentum across
Europe, as payroll providers expand to additional countries to support growth and client
expansions.
The largest purchasers of payroll services are retail, manufacturing/ engineering, followed
by government and defense, financial services, consumer products and services, and
pharmaceuticals. All sectors are showing solid growth.
Success Factors
The leading vendor selection criteria are:
• Payroll service references and proven expertise
• Value for money, taking into account technologies that can be bundled into the service
• Technical competence and platform
• Multi-country delivery capability to support contract expansion.
The critical success factors for payroll services outsourcing are:
• Demonstrating capability with referrals for each in-scope geography of similar
complexity
• Taking out more cost with greater use of offshoring and process efficiencies, using
process levers and measurements
• Managing client expectations of change control and supporting clients with appropriate
governance structures.
Outlook
Over the next few years:
• Traditional bureau payroll services will be replaced by BPaaS, SaaS or fully managed
service models. The managed services market is expected to represent 25% of the
payroll services market in 2014
• Use of offshoring will increase to lower costs
• Increased use of automation including the digitization of forms and documents, and
greater use of analytics including the availability of online industry benchmarks
• Further vendor consolidation as Indian providers look to build capability in Europe
• Multi-country contracts are expected to represent 12% of payroll services market,
reaching ~$2.0bn by 2018.

NEAT Evaluations for Payroll BPO
NelsonHall’s (vendor) Evaluation & Assessment Tool (NEAT) is a method by which strategic sourcing
managers can evaluate outsourcing vendors and is part of NelsonHall's Speed-to-Source initiative.
The NEAT tool sits at the front-end of the vendor screening process and consists of a two-axis model:
assessing vendors against their ‘ability to deliver immediate benefit’ to buy-side organizations and
their ‘ability to meet client future requirements’. The latter axis is a pragmatic assessment of the
vendor's ability to take clients on an innovation journey over the lifetime of their next contract.
The ‘ability to deliver immediate benefit’ for the Payroll BPO NEAT assessment is based on the
criteria shown in Exhibit 2, typically reflecting the current maturity of the vendor’s offerings, delivery
capability, benefits achievement on behalf of clients, and customer presence.
The ‘ability to meet client future requirements’ assessment is based on the criteria shown in Exhibit
3, and provides a measure of the extent to which the supplier is well-positioned to support the
customer journey over the life of a contract. This includes criteria such as the level of partnership
established with clients, the mechanisms in place to drive innovation, the level of investment in the
service, and the financial stability of the vendor.
The vendors covered in NelsonHall NEAT projects are typically the leaders in their fields.
However, within this context, the categorization of vendors within NelsonHall NEAT projects
is as follows:
• Leaders: vendors that exhibit both a high ability relative to their peers to deliver
immediate benefit and a high capability relative to their peers to meet client future
requirements
• High Achievers: vendors that exhibit a high ability relative to their peers to deliver
immediate benefit but have scope to enhance their ability to meet client future
requirements
• Innovators: vendors that exhibit a high capability relative to their peers to meet client
future requirements but have scope to enhance their ability to deliver immediate
benefit
• Major Players: other significant vendors for this service type.
The scoring of the vendors is based on a combination of analyst assessment, principally
around measurements of the ability to deliver immediate benefit; and feedback from
interviewing of vendor clients, principally in support of measurements of levels of
partnership and ability to meet future client requirements.

Exhibit 2:
‘Ability to deliver immediate benefit’: Assessment criteria
Assessment Category Assessment Criteria
Payroll BPO Offerings
Range of payroll processes covered
Extent of multi-country payroll service delivery
Multi-country reporting capability
Payroll BPO Delivery
Delivery capability in support of U.S. payroll
Delivery capability in support of U.K. payroll
Delivery capability in support of Continental Europe
payroll
Delivery capability in support of rest of EMEA payroll
Delivery capability in support of APAC payroll
Delivery capability in support of LATAM payroll
Application of payroll benchmarking and roadmap
Maturity of multi-channel deployment
Application of payroll platform technology
Application of other enabling technologies
Application of analytics
Payroll compliance capability
Willingness to take over client payroll operations
Ability to standardize payroll processes
Wider payroll service offering beyond payroll
Multi-country delivery
Customer Presence in Payroll BPO
Scale of large company presence (more than 15k
employees)
Scale of mid company presence (500 – 15k employees)
Scale of small company presence (less than 500
employees)
Scale of payroll presence in U.S.
Scale of payroll presence in U.K.
Scale of payroll presence in Continental Europe
Scale of payroll presence in rest of EMEA
Scale of payroll presence in APAC
Scale of payroll presence in LATAM
Payroll Benefits Achieved Level of cost savings achieved
Support for new country entry

Exhibit 3:
‘Ability to meet client future requirements’: Assessment criteria
Assessment Category Assessment Criteria
Suitability to deliver future benefit
Payroll BPO market momentum
Achievement of service and delivery innovation
Perceived impact of benchmark and roadmap methodology
Partnership approach
Level of focus on payroll services
Perceived suitability to meet future client needs
Perceived mechanisms in place to deliver client innovation
This report covers two out of four separate NEAT market segment evaluations for Payroll
BPO, which are:
• Overall
• Employee Experience Improvement
• Multi-Geography Payroll
• Payroll Cost Reduction.
For more information on these and other NEAT evaluations, please contact the NelsonHall
relationship manager listed below.
research.nelson-hall.com
Important Notice
Copyright © 2015 by NelsonHall. All rights reserved. Printed in the United Kingdom. This document has been licensed for distribution subject to
the Terms & Conditions of the NelsonHall NEAT Agreement. NelsonHall exercises its best efforts in preparation of the information provided in
this report and believes the information contained herein to be accurate. However, NelsonHall shall have no liability for any loss or expense that
may result from incompleteness or inaccuracy of the information provided.
Sales Enquiries
NelsonHall will be pleased to discuss how we can bring benefit to your organization. You can contact
us via the following relationship manager:
Guy Saunders at guy.saunders@nelson-hall.com

NGA Named Leader for Payroll BPO Services by NelsonHall

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NGA Named Leader for Payroll BPO Services by NelsonHall