Willis Group Holdings Plc, a leading global risk advisor, insurance and reinsurance broker, and Towers Watson, a leading global professional services company, announced June 30 their plans to merge. The announcement was one in a series of recent mergers—including the acquisition of Chubb by ACE—that combines companies with complementary profiles. Willis and Towers Watson bring together global brokerage and broad risk management services with human resources (HR) and benefits consulting and outsourcing services.
A little over a week after the first announcement, Towers Watson announced it was selling its HR Service Delivery (HRSD) practice to KPMG, a global network of audit, tax and advisory firms. The HRSD practice is a small piece of Towers Watson that focuses on HR service delivery, process design and HR cloud implementations, primarily with Workday. This functionality was a less suitable fit for Willis, which led to the sale of this group to KPMG.
Like the merger that combined Aon and Hewitt in 2010 and the longstanding combination of Marsh & McLennan and Mercer, the Willis Towers Watson merger positions the new firm for the emerging global benefits consulting, administration and brokerage market—a market enlarged by the increasing need of global companies for such support as they expand their geographic footprint and work to fill the gap left by retiring baby boomers.
To attract and retain qualified workers around the world, large enterprises depend more and more on benefits and compensation programs, in their various forms in different countries, as a key competitive advantage. And changes in the market mean they increasingly prefer to work with fewer providers that can serve their needs more broadly and, most importantly, globally.
The Willis Towers Watson merger means that buy-side enterprises have another service provider with broader capabilities and global expertise to choose from. While enterprise buyers that are already working with Willis or Towers Watson separately will see very little change in the short term, they may have the opportunity to consolidate services and increase their purchasing power in the longer term. The newly merged providers give buy-side enterprises the ability to leverage relationships across geographies and between multiple service lines.
These kinds of mergers also equip companies with the enterprise data analytics they can use to significantly improve their business planning and financial return. By combining HR data on employee skill set, length of employment and retirement eligibility with marketing data on product demand, for example, companies can create specialized retention, recruiting and training programs to better meet their current and future business needs. Service providers that can help enterprises aggregate data and implement programs across a spectrum of services around the world will become immensely valuable partners.
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