Gary Butler, ADPAlthough revenue barely budged for Automatic Data Processing in the second quarter ended December 31, the payroll services company plans to hire 300 to 400 people during fiscal 2010, accelerating hiring that it had planned for 2011. While enterprise business is still not doing well, the company sees growth in sales to its small business customers, according to CEO Gary Butler.

"Our small business sales forces feels very good right now. People are buying again both in terms of new start ups and existing businesses," Butler said during a conference call today regarding the quarterly results.

Butler remained cautious as his organization reported that net income for the most recently ended period rose to $315.8 million, up 5 percent from $300.8 million a year earlier. Revenue for the December quarter was $2.204 billion, up from $2.203 billion in last year's corresponding period. And the improvement in earnings was largely the result of a benefit as savings from expense cutting was offset by a rise in the cost of revenue.

In normal economic times, the company would increase its sales force by 6 percent to 7 percent with the expectation of generating an 8 percent or greater improvement in revenue at the beginning of a fiscal year. Despite the fact that ADP's enterprise business isn't picking up, with the small business up turn, "We think it’s time to turn back to the traditional module," he said. That means hiring both in the telesales and outsides sales force in order to have the employees up to speed before fiscal 2011 begins on July 1.

For the recently ended quarter, Employer Services revenue dropped by 2 percent for the quarter, while payroll and payroll tax filling revenue were off by 7 percent and the number of employees on clients' payrolls dropped by 5 percent. Dealer Services, which derives revenue from the automobile industry, also saw some improvement, although that business remains in difficult circumstances.

With the improvement in U.S. auto sales, Butler said, "We’re not calling it a trend, but it feels a heck of a lot better than the declines of the last couple of years."

Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
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