NelsonHall assessed all vendors against their ‘ability to deliver immediate benefit’ to buy-side organizations and on their ‘ability to meet client future requirements’. The overall NEAT report placed NGA Human Resources at the top on both dimensions, confirming the company as a leader in Payroll BPO. NGA's position as a market leader has been consistently acknowledged by NelsonHall as well as other analyst and advisory firms over the past years. This NEAT graph shows NGA's position in the segment 'Employee Experience'.

1. NEAT EVALUATION FOR NORTHGATEARINSO:
Payroll BPO
Market Segment: Employee Experience Improvement
This document presents NorthgateArinso with the NelsonHall NEAT vendor evaluation for
Payroll BPO (Employee Experience Improvement market segment). It contains the NEAT
graph of vendor performance, the latest market analysis summary for Payroll BPO, and a
summary vendor analysis of NorthgateArinso in Payroll BPO. An explanation of the NEAT
methodology is included at the end of the document.
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2. NEAT Evaluation for NGA: Payroll BPO (Employee Experience Improvement)
Payroll BPO: Market Summary
Challenges & Success Factors
Proven capability still tops vendor selection criterion but due to buyer needs to reduce cost,
pricing has become vital, followed by:

Strength of technology

Multi-country delivery capability

Quality of service

Relationship
Key vendor challenges are:

Continued client cost

Reduction and provision of multi-country payroll
Payroll critical success factors include providing evidence of success which will help alleviate
change management concerns, thereby reducing outsourcing fears and expediting the
slowdown in outsourcing decisions. Payroll critical success factors must include cost savings
for the mid-market and multi-country payroll for the large market clients.
Outlook
Payroll outsourcing growth is estimated to be 3.8% CAAGR from 2013 - 2017

Growth is solid across all regions, but highest in Latin America followed by Asia Pacific
and EMEA. Compliance becomes increasingly important to reduce risk by ensuring
adherence to ever-changing tax laws and regulations, for both domestic and multicountry payroll

Full payroll BPO, which represented ~15% of the total payroll outsourcing market in
2009, rose to ~19% in 2012, and is expected to be ~20% by 2014 as buyers seek the
full benefits of BPO, while also continuing to seek the benefits of SaaS only,
particularly for SMB organizations
Multi-country payroll continues double-digit growth as MNC's look to standardize and
consolidate onto one global platform with one vendor for consistency of process,
technology and service for increased efficiency

Partnering grows to 2/3 of vendors by 2014 for delivery in countries they do not
operate
The mid-market which represents ~46% of the total payroll outsourcing market today
continues high growth due to demand for platform-based payroll estimated to be ~50% of
the total market by 2015 as providers continue to launch new offerings to take advantage of
this growth opportunity.
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3. NEAT Evaluation for NGA: Payroll BPO (Employee Experience Improvement)
Market Size & Growth
The payroll outsourcing market, though mature, was able to grow 3.4% in 2012 despite
sluggish economy and low job growth. Global payroll outsourcing expected to reach
$16.2bn by 2017. Currently, the estimated market size is $13,490m, with North America at
$9.612m and EMEA at $3.150m
North America, including U.S. which comprises 94% of North America, continues to
dominate market size, with Latin America and Asia pacific seeing the highest growth. Higher
growth in Europe in 2013-2017, due to demand for multi-country payroll buyers look to
consolidate multiple payroll systems and ensure compliance with local country laws.
Payroll outsourcing continues to be most mature in the U.S., followed by the U.K., and
Continental Europe, driven by demand for reduced cost and multi-country coverage.
Payroll outsourcing activity led by manufacturing, financial services, public sector and retail
and consumer services sectors with strongest increases in demand coming from financial
services and retail/consumer services.
Buy-Side Dynamics
Cost reduction is by far the predominant driver why clients continue to outsource payroll
followed by standardization by single vendor and consolidation to a single platform.
Cost remains top driver for mid-market and national clients while demand for multi-country
payroll replaces cost as the top driver for MNC's.
Cost savings and multi-national payroll coverage are top benefits obtained by clients from
outsourcing payroll. While resistance to change and fear of loss of control continue to be
the main inhibitors to payroll outsourcing, with lack of business case and the possible need
for client redundancies of concern.
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4. NEAT Evaluation for NGA: Payroll BPO (Employee Experience Improvement)
Vendor Analysis Summary for NorthgateArinso
Overview
NorthgateArinso offers three different levels of payroll outsourcing services. As defined by
NorthgateArinso these services range from payroll processing to comprehensive HRO.

Level 1: Processing services: NorthgateArinso provides the system support including
the system, application, software and maintenance

Level 2: Managed services: In addition to system support NorthgateArinso provides
payroll administration in terms of payroll validation and payroll management services

Level 3: Comprehensive outsourcing: In addition to the above services NorthgateArinso
provides data input, employee contact and time management.
NorthgateArinso has ~9,000 total employee's including ~2,000 payroll SME's globally, with
additional personnel supporting payroll from other functions including from product
development, consulting, systems development, integration and testing.
Prior to the acquisition of Convergys, NorthgateArinso was operating from nine HR service
centers and Convergys had ten. The company’s consolidated these service centers,
eliminating Katowice, Poland and Budapest, Hungary, while adding a center in Kuala
Lumpur, Malaysia. Centers were eliminated to reduce costs while Malaysia was added to
support growth of off-shoring and provide language capability that includes: English,
Japanese, Bahasa, Thai, Mandarin, Tagalog, Hindi, Tamil, Simplified Chinese, Korean,
Cantonese, and Spanish. In September 2012 an office in Tokyo, Japan was added to expand
NorthgateArinso's Asian capabilities.
Originally more of a mid-market provider in the U.K., NorthgateArinso targets organizations
of different sizes, from under 500 employees to multi-national large clients such as
AstraZeneca which has 65,000 employees in 100 countries. Outside of the U.K. NGA focuses
on the enterprise market segment, with employee sizes of 5,000 and above. The breakdown
of NorthgateArinso's clients by size is:

Small market of <500 employees: 10%

Mid-market of 500-15,000 employees: 50%

Large market of >15,000 employees: 40%
NorthgateArinso is seeing increased growth coming from the mid-market and from transAtlantic contracts covering both U.S. and European operations.
NorthgateArinso is trying to expand its footprint in the U.S. where in 2012 new leadership
appointments were made.
With its payroll service offering, chemical manufacturing, pharma and finance have been
strong sectors, due in part to their international presence and need to scale. Pharma and
energy, in oil and gas have shown increased interest.
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5. NEAT Evaluation for NGA: Payroll BPO (Employee Experience Improvement)
Financials
Fiscal year (FY) 2012 (the year ended April 30, 2012) revenues for NorthgateArinso were
£550m, ($850m). NorthgateArinso does not report its revenues by service line, but
NelsonHall estimates calendar year (CY) 2012 payroll revenues to be £168m (~$265m) with
payroll revenues by country and region as below. Payroll BPO is 66% of total payroll
services.

Europe 45%, with U.K. accounting for 64%

North America 36%

Rest of World 19%, with APAC 70% and Latin America 30%
By NelsonHall rankings, NorthgateArinso is the fourth largest payroll vendor globally, the
third largest in Europe and the largest in the U.K.
Strengths
Global delivery and multi-country capability, operating in 35 countries, delivering payroll
services in 111 countries and tracking legal compliance in 130 countries
Ability to win sizeable mid and large market clients, including multi-nationals, for both
single service and MPHRO contracts
Ability of NorthgateArinso's SAP based euHReka platform to provide multi-country payroll
services and euHReka OnDemand to provide talent management as a SaaS solution with or
without payroll BPO. ResourceLink Aurora can provide HR and payroll services on the same
platform and clients have their choice to access it via OnDemand, OnPremise or Zerofootprint.
Challenges
Creating awareness of recently signed contracts that have not yet been announced,
including multi-country clients
In addition to competition from large MPHRO providers, payroll specialists including
CloudPay and Safeguard World International have been winning a high number of multicountry payroll contracts
Competition from major payroll providers that can also offer RPO provided with payroll.
Strategic Direction
NorthgateArinso is defining itself as an HR business-platform-as-a-service (BPaaS) business
enabled by technology, process, and domain expertise. NorthgateArinso continues to
standardize its services and processes including users on a shared process on SaaS or Cloud
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6. NEAT Evaluation for NGA: Payroll BPO (Employee Experience Improvement)
ERP. NorthgateArinso is also developing an internal system called ScopeHR, which will
standardize and automate the production of all key BPO/BPaaS information and documents
to make solution selection more efficient.
Workday will continue to be a key partner as a channel for multi-country payroll where
clients already include U.S. based financial, publishing and retail organizations.
Outlook
Though NorthgateArinso has not won any recent multi-country contracts, given the
company's global capability and experience, including provision of payroll services to
AstraZeneca in 100 countries across four continents, NelsonHall believes NorthgateArinso
will win multinational contracts again in 2013 as the demand for multi-country payroll has
increased.
NorthgateArinso will also continue to grow in the SMB market, including with agoHRa, for
companies with up to 500 employees per country.
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7. NEAT Evaluation for NGA: Payroll BPO (Employee Experience Improvement)
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-toSource 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 1, 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 2, 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.
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8. NEAT Evaluation for NGA: Payroll BPO (Employee Experience Improvement)
Exhibit 1: Ability to Deliver Immediate Benefits: Assessment Citeria
Assessment Category
Assessment Criteria
Payroll BPO Offerings
Range of payroll processes covered
Multi-country reporting service
Payroll BPO Delivery Capability
Delivery capability in support of U.S. payroll
Delivery capability in support of U.K. payroll
Delivery capability in support of Continental
European 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
Willingness to take over client payroll operations
Scale of large company presence (more than 15K
employees)
Scale of mid company presence (500 -15K
employees)
Customer Presence in Payroll BPO 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 World
Payroll Benefits Achievement
Level of cost savings achieved
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Level of cost savings achieved
Ability to deliver on-going and one-off process
improvement
Proportion of policies priced on an outcome basis
Perception of T&Cs and value for money
Support for new country entry
Proven support for M&A activity
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9. NEAT Evaluation for NGA: Payroll BPO (Employee Experience Improvement)
Exhibit 2: ‘Ability to meet client future requirements’: Assessment criteria
Assessment Category
Assessment Criteria
Ability to meet client future requirements
Perceived suitability to meet future client needs
Mechanisms in place to deliver client innovation
Partnership approach
Achievement of delivery innovation
Perceived impact of benchmark & roadmap
methodology
Payroll BPO Market momentum
Rating according to NelsonHall
'Ones-to-Watch' Financial Performance Index
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