Last month, Automatic Data Processing, Inc. (ADP) announced its acquisition of the well-known recruitment process outsourcing provider The RightThing®. To investigate the strategy driving ADP to bolster its portfolio with The RightThing, and to explore ADP's overall business strategy in relation to the market for talent management technology, TalentManagementTech (TMT) recently spoke with Terrence McCrossan, division vice president of strategy for ADP. Following is part one of the three-part interview.
TMT: If you could, Terrence, please bring us up to speed on ADP's acquisition of The RightThing.
Terrence McCrossan: Yes, sure. The announcement of the acquisition was made about a month ago, so we're just past that first thirty-day window. So, from a strategic perspective, certainly there are a couple of drivers for ADP.
As you've followed our business, you've seen that we've been on a very concerted path over the past 10 years to really build out the portfolio to be inclusive of much more than the payroll, for which we have been most notably known. So, you've seen us be aggressive in the marketplace, not only in the organic build-out and introduction of new product offerings, but also in the acquisition of other entities that, we think, help to bolster what is our increasingly strong human capital management position in the marketplace. And, certainly, the acquisition of The RightThing helped to continue us along that path. Not only does it help to expand our HR BPO [business process outsourcing] capabilities, insofar as our ability to offer and expand our outsourcing solutions to organizations looking for a differential model in terms of how they deliver HR services; it also helps us to do that in a highly differentiated way.
Furthermore, it allows us to continue to expand what we're doing in talent management. As we build out our HCM portfolio, we've moved very aggressively to make sure that, from a talent management perspective, we not only have all of the technology components, but also all the administrative service components that employers are looking for. It's a very good fit for us, strategically, in terms of really helping to advance that HCM position in, really, the two areas that most benefit the ADP portfolio.
TMT: What were the capabilities, specifically, that ADP wanted to expand upon, and add some depth to, with the acquisition of The RightThing?
McCrossan: Yes, let's start with our HR BPO portfolio. ADP really got into the HR BPO business about eight years ago, with the acquisition of ProBusiness Services Inc., which brought with it an aspect of managed payroll and an ability to offer fully outsourced payroll to large employers. Since that acquisition, we have pretty aggressively built out the capabilities of our BPO offering. Our capabilities on the benefits side are very wide, and as we have continued to acquire new clients and increase our presence in the marketplace, we have also begun to take on more HR-intensive tasks, as a part of that offer.
Part of our strategic planning for HR BPO was to ensure that we were including an adequate amount of HR in our HR BPO. As we looked at areas such as RPO, it looked like a very natural fit for building out the portfolio. It is a service offering that many of our clients have expressed interest in—not only from a platform point of view, in terms of automating certain processes, but also in terms of having that additional layer of administrative expertise that helps in sourcing, interviewing and screening candidates, and in recommending the right candidates for further interviewing through internal client management. And it also helps with a lot of the tracking capabilities for recruiting effectiveness, a focus of many organizations today. From an HR BPO perspective, the acquisition of The RightThing really touched on all those key components: It added more HR, it added more domain expertise, and very importantly, it added an additional, key service that many of our clients were seeking.
From a talent management perspective, I think it positions us very well, too. Over the past several years, we have been adding various applicant management capabilities to our portfolio. With the recent acquisition of Workscape, Inc., about a year ago, we added a very deep compensation management capability. We have also built, based on the Workscape platform, a very strong performance and succession management capability. We have very quickly assembled a leading talent management platform.
Again, from a technical perspective, the addition of The RightThing allows us to do is add a much deeper level of domain expertise to that picture. So, as we think about how organizations today are focused very much on bringing the right people into the organization, retaining them, developing them, and ensuring that they become and remain key performers, ADP will be uniquely positioned to provide a pipeline of personnel for them to consider during the hiring process and a robust way to track them and to assess their lifetime productivity for the business, based on the tools and administrative services that we are now able to deliver.