While HRO Europe Magazine is mostly concerned with the activities of HRO buyers and HR leaders, we also take note when providers make moves that make a difference. This issue, a couple things caught our eye. First is Randstad’s big buyout in the Netherlands, and the second is ACS and its new focus behind European SVP Brian Stones, whose HRO career advice is well worth heeding.

by Jay Whitehead

We at HRO Europe have always taken note when Andy Verstelle calls. Andy, a Dutchman who spent the majority of his career at ARINSO, recently moved to Randstad, the Netherlands’ largest private employer with more than 80,000 weekly employees there. While at ARINSO, Andy helped us land a cover story last year on ISS, the building services company. So when he moved over to Randstad, we kept track of him, knowing that wherever Verstelle goes, he works hard to make things happen.

Verstelle is a big football fan who I happened to visit this past June in Randstad’s Amsterdam offices immediately after the Dutch made a respectably late exit from the 2006 World Cup.  At the time, his desk was festooned with Orange paraphernalia, and his conversation was filled with sports analogies and wistful references to the Netherlands’ much-feared striker Ruud Van Nistelroy.  As a trained journalist, I could sense back then that Verstelle had some news, but that he was unwilling to share it then.   

So on August 17, when he emailed me a fresh-off-the-press notice about Randstad’s pending acquisition of PinkRoccade HR Services for €65 million, I called him immediately to get the behind-the-scenes story.

The deal between Randstad and Getronics, PinkRoccade’s parent, will close in the fourth quarter, but the letter of intent was reported widely on the European news channels and already had received much blessing from regulators and shareholders. Bottom line, the deal is highly likely to close on schedule and will have little immediate impact on Randstad’s bottom line. But the deal’s price got my attention. So I asked why Randstad paid 2x revenues.

“To start with, PinkRoccade has an 80 to 90 percent market share in payroll and HR services for the public education market in the Netherlands,” Verstelle said. “That is a very large share in a sector of the economy that is also large.”

Another factor was the technology that comes along with the company.

“Getronics invested in a new payroll technology platform, a new engine for the Netherlands, which also applies to other countries as well,” Verstelle explained. “That whole platform comes over, lock stock, and barrel. To build such a system now would take years and might even cost more than we paid for the whole company.”

And then there are all the people. More than 200 of Pink’s employees will come over to Randstad.

The colorfully named PinkRoccade is the modern version of a company that started more than 40 years ago to serve the government sector in the Netherlands. The company’s early start has given it advantaged access and experience in Holland’s government market, which has proven to be a cement-strong competitive advantage over other firms fighting for this business. “Competitively, PinkRoccade is a rock, very hard to crack” Verstelle said.

So competitively speaking, I asked Verstelle, where does PinkRoccade put Randstad in the Dutch payroll market?

“Just about seven million Dutch get pay slips,” Verstelle explained, “and just under five million are served by the ‘big four,’ who are Raet, ADP, LogicaCMG, and Randstad. Right now, Randstad is €137 million in HR solutions revenues, and with our fast growth and the PinkRoccade acquisition, we will be nearly €200 million by the end of 2006. This puts us as the largest HR solutions provider in the Netherlands and either the No. 3 or 4 payroll provider.”

On the brand management side, I asked Verstelle what the company intended to do with the PinkRoccade name. As I asked the question, I knew the answer. After all, Randstad is one of the world’s most recognized and well-managed brand under leader Frans Cornelus. Verstelle confirmed that over time, the brand name would become Randstad, although the people, clients, and technology will all remain in place. As we concluded, Verstelle made me promise to mention that the acquisition was the biggest ever in the HR solutions area in the Netherlands. I reminded him that the Netherlands is a small country.

“Yes,” he said, “but remember that what happens first in the Netherlands soon happens all over Europe, and sometimes the world.”

That’s the kind of statement that reminds me why I always return Andy Verstelle’s calls.

ACS’ SECRET WEAPON
When Brian Stones joined ACS as European SVP, he brought nearly three decades of IT services experience and 10 years working as a self-described “insane corporate entrepreneur” at Ernst & Young.

“I have been cursed with the insanity to be willing to go out and create something new for big companies. At E&Y, I created the global client consulting operation and made it a separate business from the accounting operation. That was high-risk, high-reward work. I acquired some scars and hard knocks, which, fortunately I believe made me wiser.”

Stones said ACS’ efforts in FAO and HRO are all about extending the client relationships from the U.S. into Europe.

“The focus is on the marquee names we have,” Stones said. “We’re very particular on the deals with the current customer base. Motorola is a global deal, very much a part of the Europe equation because we serve them on every continent. It was a huge step forward for us.”

A key aspect of the accelerated integration of this international account into ACS’ operation was the retention of the majority of Motorola’s incumbent HR shared-services staff. “These highly skilled domain experts became the backbone of the resources for Motorola and for the extension of our whole line of business,” Stones said.

In HRO, ACS’ main publicly disclosed customers are Motorola and GM Europe. Some other clients in Europe, Stones admitted, have union-related reasons for staying stealth. In FAO, ACS serves GM Europe out of Barcelona, as well as another six ITO European customers. The company also served between 20 and 25 clients in a number of business process point solutions. Examples include a mailroom for an investment bank, paper ticketing for Air France, and customer billing for the air courier companies.

Stones emphasized three aspects of the modern European HRO market. First, European organizations nearly always use a shared-services experience before they go HRO.

“Often, that shared-services phase breaks down the institutional barriers across lines of business or countries to unlock cost savings and break down inefficiencies,” he observed. “But inevitably, there’s always disappointment in shared services, both institutionally and cost savings.”

Second, Stones noted, “The new European business reality is that clusters of seven or eight geographic teams will all work on a problem, usually in English. It’s a massive step change over five years ago. There is lots of cultural converging around one or more business projects, especially the younger generation. There is still a lot of meaning in sovereignty, but there is less association with being German or Scottish. The genie is out of the bottle, and the new reality is multi-cultural and customer-focused.”

Third, Stones sees bellwether, big-company announcements making the difference in the market. He noted that major HRO provider companies such as ACS only pursue clients where the scale is large enough to support a complex multi-country, multi-process operations. “The provider community is finding its respective sweet spot,” he said, “and this is ours.”

As we wrapped up our talk, Brian Stones, a man with a BPO resume spanning three decades, left me with four pieces of career wisdom that applies to everyone in the HRO space.

First, he says, is the willingness to take managed risks. “Be bold,” he urged emphatically. “We vastly over-estimate the fear of being punished for an innovative idea or taking a risk. Be confident in articulating what we should or should not be doing.”

Second is doing a ever-better job of communicating to internal and external team members. “It is a huge mistake,” Stones claimed, “to only distribute information on a need-to-know basis.”

Third is the large return in sharing across cultures, which does not mean that English-speakers try to change others to be more like us. It means being open to the amazing wealth of innovation and strength inherent in a multi-cultural workplace focused on a common purpose.

Fourth, Stones advised, focus hard on your retained organization. What is it that you’re keeping hold of, and what is holding it together? Avoid murky responsibilities and accountability. Shared responsibilities are often the cause of a lot of duplication. And focus huge efforts on good governance.

“Start working on your governance model as you begin sourcing, going through implementation and beyond. Governance is something you can almost not spend enough time getting right.” Thanks for the reminder, Brian.