The world of HR outsourcing may not get many people’s pulses racing, but for Malcolm Aldis, managing director of Northgate HR, it is in his blood.
Aldis has been working for Northgate and its previous incarnations for more than 25 years. He joined CMC, as it was known then, in 1982, and worked in a number of roles in the organisation.
In 1998, he took over responsibility for Northgate’s struggling human resources division, which was losing millions of pounds a year. “I knew the business and expressed several times what I thought needed to be done to turn it around, so it was handed over to me,” he said.
Aldis admitted that in his first two years in charge, it was a case of “battening down the hatches” and fixing problems that had led to unhappy customers. “The organisation was selling beyond its means, beyond the capacity of what it could deliver,” he said.
However, the light at the end of this long tunnel was the 2000 launch of its flagship software product ResourceLink, a range of HR modules that Northgate uses to provide payroll, pensions, recruitment, training and health and safety services to firms.
The company is now in rude health. Last year Northgate HR, one of five divisions of parent company Northgate Information Solutions, turned over £126m – an 11% increase on 2006, with profit up 13% to £35.3m.
In May, the company bought international outsourcing company Arinso, a move that Aldis believes will take Northgate into the big league.
“For about 18 months previously, we had been attempting to tie up acquisitions in Europe, and for one reason or another had been unable to complete any,” he said.
“When the Arinso opportunity came along, we realised the company could achieve what it wanted in one step.”
Aldis said Arinso’s reputation and clients added value to Northgate. “Just by this one acquisition, Northgate has gone from being in five countries to now being in 32. So it’s a good marriage between the two,” he added.
Earlier this month, Arinso signed a seven-year HR services outsourcing deal with confectionery giant Cadbury Schweppes.
Analysts said the agreement is significant for a number of reasons, not least that it’s one of the first large global deals that Arinso has signed as the lead supplier. Put simply, the contract will act as a springboard for the company to prove itself as a serious outsourcing player.
Analyst firm The Yankee Group predicted that the global HR outsourcing market will increase to $28bn (£13.8bn) by 2008. Aldis said Northgate would now target the huge North American market where Arinso already has a foothold.
“In June we launched ResourceLink in Canada, and [earlier this month] launched it in the US,” he said. “It’s a potentially massive market, but we are realistic enough to say it will take time to gain momentum there.”
Spreading the word
However, Aldis acknowledged there was still work to be done this side of the Atlantic to convince more organisations about the benefits of outsourcing.
“Since I took over the business in the 1990s, people have been saying HR outsourcing is the next big step, and everyone will start to outsource all kinds of business processes, but it never happened,” he said.
“There were some horror stories of early attempts, and firms decided not to be on the bleeding edge and were reticent to do it.
“I don’t think there is enough good news about the success of outsourcing,” he added. “Bad news stories make the headlines and you are more likely to read about the disasters.”
Now HR professionals are more sanguine about the benefits and are increasingly looking to shift transactional activity to a third-party supplier.
Aldis predicted that over the next decade HR teams would be more focused on planning and delivering their organisation’s strategic goals. This would give Northgate a huge opportunity to free up the function from the nuts and bolts of HR activity.
“Technology will move along to enable people to know exactly what is going on with any employee at any point in time,” he said.
“HR directors are now looking for more sophist-icated solutions, and it’s a challenge for us to develop systems and keep track with demand.”
CV Malcolm Aldis, managing director, Northgate HR
1998-present: Managing director, Northgate HR
1982-1998:Various roles, CMC
1977-1982: IT manager,British Leyland