Hewitt Acquires Middle-Market Health Benefits Administrator

By Staff Report

Aug. 27, 2007

Hewitt Associates has acquired RealLife HR, a Hunt Valley, Maryland-based health and welfare benefits administrator, signaling that the company is in growth mode again.

On Monday, August 27, the Lincolnshire, Illinois-based HR services provider announced the acquisition of RealLife HR, which has 85 employees and services employers with 15,000 or fewer employees.

The acquisition, although small, indicates that the HRO provider is back in the game after a few stumbles, observers say. Hewitt has spent the past several months working to revive its HRO business. In May, the company announced a new head of its HRO business, Jay Rising, to replace Bryan Doyle, who left last year.

“This shows that Hewitt is no longer in triage mode,” says Michel Janssen, managing director at the Hackett Group.

While the acquisition of RealLife is not a big one, it’s a positive sign to the market that Hewitt is being proactive.

“It’s good news that Hewitt is playing a little bit of offense here,” Janssen says. “It’s a step in the right direction.”

While the acquisition of RealLife HR allows Hewitt to offer benefits administration to middle-market clients, the company has no plans to target middle-market clients for HR business process outsourcing deals, Hewitt spokeswoman Maurissa Kanter says.

“Combining with RealLife HR enables us to move aggressively and more quickly pursue the health and welfare outsourcing midmarket,” says Craig Maloney, who was just named Hewitt’s middle-market business leader. Previously he was North American sales manager for benefits outsourcing.

Given the increasing popularity of the midmarket HRO space, analysts say they wouldn’t be surprised if Hewitt eventually expands this offering to target midmarket HR business process outsourcing clients.

“We are looking at it the midmarket space more closely and many of the other service providers are talking about going after the midmarket,” says Stan Lepeak, managing director of research at EquaTerra.

“The 15,000-employee market seems to have stuck in people’s minds,” he says.

—Jessica Marquez

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