Fidelity Investments is known for being tight-lipped about its business. Despite a high profile as one of the country’s largest mutual fund managers, the privately held firm isn’t bound by the same disclosure laws governing public companies, so it doesn’t have to discuss customers, contracts or profits if it doesn’t want to.
And therein lies the rub for Fidelity’s growing HR outsourcing business. On one hand, analysts put the $10 billion Boston company among the industry’s top five multiprocess HR outsourcers—some place it among the top three. On the other hand, at a time when HR outsourcing is booming and competitors such as Hewitt Associates, Accenture and Affiliated Computer Services tout their experiences to anyone who’ll listen, Fidelity has been conspicuously quiet.
Cathy Veinbachs, senior VP for business development at Fidelity Human Resources Service Co., which runs the firm’s HR outsourcing business, acknowledges that it has been "the unassuming giant in the room." But that’s changing.
"You’ll never see us advertising on TV. You will start to see a little bit more of us as the pace of activity in the marketplace picks up," Veinbachs says.
If there’s any doubt Fidelity is serious about the HR outsourcing business, consider this: In May, Abigail Johnson, daughter of Fidelity Investments chairman and CEO Edward "Ned" Johnson III and his apparent successor, took over management of Fidelity Employer Services Co., which oversees its HR outsourcing unit.
Though unassuming, Fidelity hasn’t been idle. It currently provides two or more HR services to about 100 clients with 10,000 or more employees each, including IBM, General Motors, Fleet and the ABB Group, a Swiss conglomerate. That’s enough to rank Fidelity third among outsourcing vendors based on employee lives covered, total transactions and total contract value, behind Hewitt and Accenture, according to a March report from Everest Research Institute, a Dallas outsourcing researcher.
And the company is starting to talk about its status, says Michel Janssen, managing director at Everest Research, "because they realize that being the silent provider in this market isn’t a good thing."
Two of Fidelity’s newest clients are Bank of America and BASF, both of which left their original outsourcing partners to work with the company. Veinbachs expects to see more switching of allegiances as the first wave of outsourcing contracts signed five and six years ago come up for renewal. Don’t assume that because a client has been working with a vendor for a couple years, all the problems have been smoothed out, Veinbachs says.
"If a vendor took over and started to do data cleanup, there may still be a fair amount of that to do. Or if a vendor took over existing systems as is and didn’t get to (transforming them) in the first contract, there’s that too," she says.
While Veinbachs says Fidelity’s recent contract wins are testimony to the company’s ability to do just that, others wonder whether clients with legacy human resources IT systems built around standard PeopleSoft or SAP operating systems will be interested in shifting to Fidelity, which built its own software architecture.
Workforce Management, September 2005, p. 53 --Subscribe Now!