When Clients Asked to Put a Toe in the Water, Alcott Took the Plunge

Late last year, Alcott HR Group, a Farmingdale, N.Y., middle-market firm that provides human resources outsourcing services, decided that it was time to help its clients address their HR challenges overseas, so it formed an alliance with a European partner and opened an Alcott office in the Netherlands.

In essence, Alcott’s European expansion strategy is in many ways similar to those of the small to medium-size clients that it serves. Having deferred its entry into Europe long enough, Alcott determined that it preferred to first test the waters with a local partner rather than start by building its own operation overseas.

“With our customers, what we often find is that a firm that has a unique product and is doing well here in the U.S. believes that it could do just as well over in Europe, so they want to test the market, and in these cases, it’s often not about doing $1 billion. It may just be a couple of million, so we now have an office that can help them test the waters,” explains Lou Basso, who says that 25 years made it more than about time for the $300 million firm to put its own toe in the water.

Back in 1987, when Basso cofounded the firm with partner Barry Shorten, the two men were pioneers inside a business realm that would later become known in HR professional circles as a Professional Employer Organization (PEO).

“It was a new concept. And people would ask us, ‘What do you mean, you are going to take over my staff? What do you mean you will be the employer of record?,’” explains Basso, who says that Alcott’s growth became directly aligned with the growing complexity behind administering employee benefits and policies.

Today, Alcott has 4,500 “worksite employees” who are scattered across its client offices and another 45 “internal employees” who help to service the worksite employees of its 250 clients spread across 32 states.

“This is a real diverse group of clients. We really don’t have a vertical industry focus. You’ll find that our clients represent all industries,” says Basso, who believes that the firm has never been better positioned to pursue growth.

Among the indicators he points to are the growing employee rolls of Alcott’s clients.

“We had seen firms that had, say, 50 employees drop down to about 40 employees back in 2008, but now they’re finally back up there,” explains Basso, who says that the growing number of full-time employees in small to medium-size firms is triggering new interest around the management of healthcare costs as they relate to The Patient Protection and Affordable Care Act (PPACA), frequently dubbed Obamacare.

Companies with 50 employees are now finding themselves very often at the center of the healthcare discussion, explains Basso. In 2014, employers with more than 50 full-time equivalents (FTEs) will be subject to the pay-or-play mandates/penalties under the law.

“Obamacare has been something of a tipping point for us, as far as companies asking us for help related to healthcare issues goes,” says Basso, who says that Alcott has so far held two internal training seminars for its employees to help them better respond to healthcare-related customer queries. “Healthcare has never been simple, but it really has gone to the next level as far as complexity is concerned,” says Basso.

According to Basso, firms between 20 and 100 employees are the sweet spot when it comes to demand for Alcott’s services.

Says Basso: “These firms are not mom-and-pop shops anymore, and they have to supply decent benefits to compete, but they don’t have millions dollars to spend on HR process and systems.”