CWS 3.0: May 2, 2012

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Why Your Suppliers' Deals Should Matter

ManpowerGroup (NYSE: MAN) announced a new $400 million RPO deal with the Australian Defence Force last week, but that’s not the only large staffing deal where information has gone public.

Capita plc signed a deal earlier this year with the British armed forces for a “recruiting partnering project” at £44 million (US$68.9 million) a year for 10 years.

TrueBlue Inc. (NYSE: TBI) reported that a project with Boeing, its largest customer, continues but is expected to wind down. Computer Task Group Inc. (NASD: CTGX) reported revenue from IBM, its largest customer, edged down in the first quarter after it renewed the deal in the fourth quarter.

“Whenever you see large deals, you want to understand how they affect you as a buyer in terms of resources,” said Bryan Peña, vice president of contingent workforce strategies and research at Staffing Industry Analysts.

“Understanding your resource requirements relative to the market is important,” Peña said. Some large deals can constrain even the largest company. “You want to make sure you continue to get the level of support and service that you expect from your suppliers.”

To show how rare deals of this size are, there were only 11 managed service provider (MSP) deals greater than $300 million in size during 2010, although there were 43 vendor management system (VMS) deals in 2010 that were greater than $300 million in size. The data comes from Staffing Industry Analysts’ 2011 VMS and MSP Supplier Competitive Landscape report.

Here’s a roundup of reports on several staffing deals:

ManpowerGroup (NYSE: MAN) signed a new recruitment process outsourcing contract with the Australian Defence Force worth at least $400 million over five years, the staffing firm announced last week.  ManpowerGroup calls it the largest RPO partnership in the world. The deal can be extended for 10 years.

The Defence Force includes the Australian Navy, Army and Air Force. ManpowerGroup first partnered with the agency in 2003.

The RPO operation is managed from its own headquarters  in a ManpowerGroup facility located in Canberra, the capitol of Australia. “This is a joint and collaborative headquarters which comprises senior managers from both ManpowerGroup and the client, as well as numerous back-office support staff and capabilities,” according to ManpowerGroup. The deal also includes 16 national recruiting centers. Some 20,000 to 40,000 candidates are processed annually.

ManpowerGroup will recruit for more than 300 different job types for permanent and part-time officers, sailors, soldiers and airmen and airwomen. Specialist roles such as engineers, technicians, doctors, legal professionals and pilots are also included.

The Defence Force Recruiting contract covers marketing, recruiting operations, medical and psychological assessments and the coordination of selection boards and employment offers.

ManpowerGroup will also manage two subcontractors as part of the deal: Corporate Health Group Defence, for the provision of medical testing and assessment; and Hewlett-Packard, for the delivery of IT-related services.

Capita plc signed a “recruiting partnering project” deal with the British armed forces valued at £44 million (US$68.9 million) a year for 10 years. The U.K.-based firm announced the contract on March 13.

Capita will handle the process for recruiting soldiers and officers as well as provide an information technology platform to underpin recruitment for the Royal Navy, Army and Royal Air Force. The army will retain ownership of recruitment policy, entry criteria and assessment standards.

Capita will partner with advertising agency JWT for recruitment marketing and Kenexa Corp. (NYSE: KNXA) to support the assessment process.

The deal will allow more than 1,000 military recruiters to return to the front line.

“We will bring our extensive resourcing experience to the army and tailor it to provide a modern approach which will improve contact between recruiter and potential recruit, reduce the time and cost to enlist and reduce training wastage,” Capita Chief Executive Paul Pindar said when the deal was announced.

TrueBlue Inc., a Tacoma, Wash.-based industrial staffing firm, reported that revenue from Boeing, its largest customer, will decrease but said it still totaled approximately $29 million in the first quarter, according to a conference call with analysts.

“That has been a big project that lasted a little bit longer than Boeing wanted it to,” TrueBlue President and CEO Steve Cooper said in an April 25 conference call with analysts. “At this point in time, the project we are working on … still has a pipeline to it and a run rate to it, but it is starting to work its way down. I know we have said that for a few quarters, but I think that the signal is that it is not a long-lasting project.”

Cooper said 40 percent to 50 percent of TrueBlue’s business now comes from large accounts. That’s up from less than 10 percent five or six years ago.

Computer Task Group Inc. (NASD: CTGX), a Buffalo, N.Y.-based information technology service and solutions provider, reported its largest customer, IBM, accounted for $28.4 million in revenue during the first quarter, down slightly from $28.7 million in the first quarter of 2011.

IBM renewed its deal with CTG in the fourth quarter of last year for three years until Dec. 31, 2014.

The deal had revenue of $116.5 million for CTG in 2011.

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