The US$6.1 billion BAO market is a consolidated space dominated by a handful of players. However, the recent healthcare reform and the strategic shift from Defined Benefits (DB) to Defined Contributions (DC) have created increased outsourcing opportunities for the service providers.

1. Topic: Benefits Administration Outsourcing (BAO) –
Service Provider Landscape and Capability Assessment
Human Resources Outsourcing (HRO)
Market Report – February 2013 – Preview Deck
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EGR-2013-3-PD-0839

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3. Table of contents (page 1 of 2)
Topic Page no.
Background and methodology 6
Summary of key messages 9
Section I: BAO market overview 13
 Summary 14
 Market size 15
 Service provider landscape 17
 M&A activity 18
Section II: BAO PEAK Matrix 2013 19
 Summary 20
 BAO PEAK Matrix 2013 21
 Service provider assessment 24
Section III: Key insights into PEAK dimensions 26
 Summary 27
 Context 28
 Market success 29
 Delivery capability – Scale 30
 Delivery capability – Scope 31
 Delivery capability – Technology 32
 Delivery capability – Delivery footprint 33
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4. Table of contents (page 2 of 2)
Topic Page no.
Section IV: Areas of differentiation 34
 Summary 35
 Market share analysis 37
 Analyses dimensions 38
– Geographic scope 39
– Industry 41
– Buyer size 42
– Process scope 43
– Technology offering 46
– Global sourcing 48
Section V: Implications for key stakeholders 50
 Implications for buyers 51
 Implications for service providers 53
Appendix 55
 Glossary of key terms 56
 HRO research calendar 58
 References 59
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5. This report is based on two key sources of proprietary
information
1
 Everest Group’s proprietary database of over 1,100 BAO deals (updated Service providers covered in detail in the analyses
annually)
 The database tracks the following elements of each BAO deal
– Buyer details: Including industry, size, and signing region
– Deal details: Including TCV, ACV, term, start date, total participants
managed, and the primary pricing structure
– Scope: Process coverage and geographic coverage
– Technology ownership and maintenance
– Global sourcing
2
 Everest Group’s proprietary database of operational capability of 10 BAO
service providers
 The database tracks the following capability elements for each service
provider
– Major BAO clients and recent wins
– Overall BAO revenue, total number of participants managed, and number
of BAO FTEs
– BAO clients split by H&W, DB and DC, geography scope and coverage,
industry, headquarter location, and buyer size
– BAO service suite, delivery locations, and level of offshoring
– Benefits-related technology capability
– Recent BAO-related developments (investments and partnerships)
The analyses in this report are presented at two levels
 Overall market analyses that highlight the overall market composition/dynamics
 The current market trends are based on deal activities in the last five years
The sample size varies for different analyses based on the deal detail availability
Note: We continuously monitor the market and update the above list to include emerging service providers such as Businessolver and Empyrean
Confidentiality: Everest Group takes its confidentiality pledge very seriously. Any information we collect that is contract specific will only be presented back to the industry
in an aggregated fashion
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6. Overview and abbreviated summary of key messages
This report examines the dynamics of the global BAO service provider landscape and its impact on the BAO market. It gives an overview of
the market and analyzes how the service providers differentiate themselves. Based on the comprehensive Everest Group PEAK Matrix, each
of the 10 BAO service providers are segmented into Leaders, Major Contenders, and Emerging Players. Additionally, it provides key insights
on the individual PEAK dimensions and implications for buyers and service
Some of the findings in this report are:
1
BAO market  Benefits Administration Outsourcing (BAO) market grew at a healthy pace of 13% to reach US$6.1 billion
overview in annualized revenue in 2012. We expect the market to accelerate further in 2013-2014
 H&W providers will face capacity constraints as a wave of new deals hits the market before the PPACA
start date. Providers who invest in capacity expansion will be better suited to cater to the huge surge in
demand during 2013-2014
2
BAO PEAK Matrix  Everest Group classifies 10 BAO service providers on Everest Group Performance | Experience | Ability |
2013 Knowledge (PEAK) Matrix into three categories of Leaders, Major Contenders, and Emerging Players
3
Key insights into  Top quartile performers across each PEAK Matrix dimension are compared with others to identify
PEAK dimensions differentiating strategy and operational capability
4
Areas of  BAO providers need to be on their toes to address the changing needs of buyers, They differentiate
differentiation themselves along multiple dimensions – geographic scope, industry, buyer size, process scope,
technology offering, and global sourcing
 The recent healthcare reform has underscored the importance of health insurance exchanges. While most
service providers are still defining their HIX strategy and their target markets, a few have already invested
in a private HIX
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7. This study offers four distinct chapters providing a deep dive
into key aspects of the BAO service provider landscape;
below are four charts to illustrate the depth of the report
Everest Group PEAK Matrix – 2013 BAO market standing Delivery capability – Scale: Although top quartile performers are
High
75th percentile larger than their counterparts in their scale of operations, they have
Leaders
not been able to take full advantage of economies of scale
75th percentile
Fidelity
Major Contenders Xerox Aon Hewitt
Top quartile performers Average number of MPEs per FTE
Towers Watson Mercer
Others
Market success
ADP
Numbe
r of
25th percentile
ING
Businessolver deals
Secova
Numb
er of
Top quartile Others
Empyrean MPEs performers
Emerging Players
Low
Top quartile performers by scale
Low 25th percentile High
BAO delivery capability Service provider 1 Service provider 2 Service provider 3 Service provider 4
(Scale, scope, technology, and delivery footprint)
Areas of differentiation among service providers BAO service providers’ approach towards Health Insurance
Exchange (HIX)
Geographic
BAO providers’ approach towards HIX solution
coverage
For internal BAO clients For other clients
Global Industry Service providers have either partnered or Service providers utilize their internal IT
sourcing invested in developing their own HIX for expertise and domain knowledge to create
Areas of their H&W clients. an exchange
differentiation  This HIX solution is a multi-carrier  This HIX solution can be a single- or
exchange, which can be accessed by multi-carrier exchange
Technology Buyer the participants  Service providers may also provide
offering size additional services, such as voice-based
customer support, along with the HIX
Process solution
scope
States Brokers Consultants Payers
Source: Everest Group (2013)
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8. HRO research agenda
Published Current
Topic Release date
Achieving Best-in-Class BPO – Secrets Unveiled February-2012
Is BPaaS the Right Model for You? April-2012
Multi-Process Human Resources Outsourcing (MPHRO) Annual Report 2012: Continued Reinvention June-2012
Multi-Process Human Resources Outsourcing (MPHRO) – Service Provider Landscape and Capability Assessment July-2012
Multi-Process Human Resources Outsourcing (MPHRO) – Service Provider Profile Compendium August-2012
Multi-Country Payroll Outsourcing (MCPO) – No Longer a Pipe Dream October-2012
Multi-Country Payroll Outsourcing (MCPO) – Service Provider Landscape and Capability Assessment November-2012
Benefits Administration Outsourcing (BAO) – The Horse is Ready to Bolt December-2012
Multi-Country Payroll Outsourcing Service Provider Profile Compendium December-2012
BAO Service Provider Landscape and Capability Assessment February-2013
BAO Service Provider Profile Compendium Q1-2013
Crating Value through Analytics in HRO Q1-2013
HRO Annual Report 2013 Q1-2013
HRO Service Provider Landscape and Capability Assessment Q2-2013
HRO Service Provider Profile Compendium Q2-2013
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9. Additional HRO research recommendations
The following documents are recommended for additional insight into the topic covered in this report. The recommended documents
provide either additional details on the topic or complementary content that may be of interest:
1. Benefits Administration Outsourcing (BAO) Annual Report 2012 – The Horse is Ready to Bolt (EGR-2012-3-R-0810); 2012. This
research provides comprehensive coverage of the BAO market and analyzes it across various dimensions such as market overview, regional
trends in North America & Europe, buyer adoption and solution trends, and service provider landscape. It also provides predictions for the 2013
BAO market
2. Multi-Country Payroll Outsourcing (MCPO) – No Longer a Pipe Dream (EGR-2012-3-R-0755a); 2012. This report provides a
comprehensive coverage of the MCPO market and analyzes it across various dimensions such as market overview, key business
drivers, buyer adoption trends, solution characteristics, and service provider landscape
3. Multi-Process Human Resources Outsourcing (MPHRO) Annual Report 2012 – Continued Reinvention (EGR-2012-3-R-0698a); 2012.
This research provides comprehensive coverage of the MPHRO market and analyzes it across various dimensions such as market
overview, key dynamics, buyer adoption and solution trends, and service provider landscape. It also provides predictions for the 2012 MPHRO
market
4. Is BPaaS the Model for You? (ERI-2012-10-R-0667); 2012. This research aims to compare Total Cost of Ownership (TCO) of Business-
Process-as-a-Service (BPaaS) solutions with the traditional BPO using a comprehensive financial model and creates a comprehensive
framework to evaluate BPaaS sourcing
For more information on this and other researches published by Everest Group,
please contact us:
Rajesh Ranjan, Vice President: rajesh.ranjan@everestgrp.com
Arkadev Basak, Senior Analyst: arkadev.basak@everestgrp.com
Shruti Agrawal, Senior Analyst: shruti.agrawal@everestgrp.com
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