ADP 2006 Annual Report Download - page 12

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Building on strong momentum from fiscal 2005, Employer Services (ES) is focused on capturing new market
opportunities, accelerating sales and revenue growth, and expanding the client base through superior product
offerings supported by World Class Service.
LARGE MARKETS AND OPPORTUNITIES
ES provides leading HR, payroll, time and labor management, and benefits administration solutions to employ-
ers throughout the United States and in major markets around the world. The markets we serve are large and
growing. Each offers the opportunity for future growth and we have a very broad range of proven products and
services to address the needs of virtually every size employer.
EXCELLENT INTERNAL GROWTH
In fiscal 2006, ES revenues increased 10% year over year. We added over 26,000 net new ES clients. Traditional
payroll and tax filing revenues grew 7%, the highest growth level in four years. Our “beyond payroll” product rev-
enues in the United States grew 15%, led by higher growth solutions such as our Professional Employer
Organization, Time and Labor Management Services, Tax Credit Services, Flexible Spending Account
Administration Services, and Screening and Selection Services.
New business sales, representing annualized recurring revenues anticipated from new orders, increased 13%
year over year, with particular strength in National Account Services, TotalSource®, and GlobalViewSM. Client
retention once again reached an all-time high; ES clients stay with us longer, approaching an average of almost
10 years, based on revenue life cycle. This retained revenue stream is important to our margins because existing
clients are more profitable than new clients, where there are offsetting selling and implementation expenses.
ES is committed to accelerating sales and revenue growth through expanding our salesforce, improving sales
productivity, and growing alternate channel sales.
WELL-FOCUSED BPO SERVICES
The fast-growing HR BPO (business process outsourcing) market represents a compelling growth opportunity
for ADP. There is increased demand from employers across all markets for broad, integrated solutions.
Unlike traditional outsourcing that emphasizes single-application processing, HR BPO focuses on the outsourc-
ing of integrated, multiple processes – such as payroll, HR, and benefits and related administration, including
compliance and employee call center support. BPO services also generate three-to-ten times the revenue of
clients that simply outsource individual applications.
ES is well suited to grow profitably in the HR BPO marketplace. We offer a suite of broad-based solutions for
companies of all sizes, with product and service components that are highly valued by our clients. Our scalable
proprietary platforms deliver unparalleled domain expertise in payroll, time and labor management, benefits,
HR, and money movement, as well as proven delivery and process-focused best practices. Combining these
core offerings with the administration of payroll and HR relieves our clients of back-office tasks and allows
them to focus their resources on running their business.
Employer Services