BT and Accenture have signed a landmark deal for global HR business process outsourcing, which will help create a global delivery model for full-service HR deals for many major global enterprises over the next couple of years.
Research from the Yankee Group shows that BPO is now firmly entrenched within the telecommunications sector. Accenture has secured itself $575 million over 10 years in the largest-ever contract renewal for HR BPO services. Accenture extends the length and geographic scope of the original 5-year contract signed in August 2000. BT evaluated some alternative competitive BPO offerings as part of the contract negotiation, but ultimately decided to retain and extend its partnership with Accenture HR Services for a further decade. The arrangement puts Accentures market share in the HR BPO space at 16%just a percentage point behind current market leaders Hewitt Associates.
Two of Europes incumbent telecom operators, BT and Telecom Italia, have now adopted HR BPO services, and both of them partner with Accenture HR Services. Globally, communications providers such as Nortel, Lucent and Avaya are also outsourcing their HR processes to companies such as Convergys, Hewitt and ACS. It is only a matter of time before the majority of telecom companies follow BTs example, with a wave of global BPO contracts in the telecom sector over the next 18 months.
BT and Telecom Italia are ahead of the game. Both players have recognized the need to strip out operational expenditure from their business mix and took the decision to streamline business process with a BPO strategy, says Philip Fersht, Yankee Groups lead software and services analyst. Moreover, they are now recognizing many of the business benefits that can be realized by embracing the HR transformation processes spurred through outsourcing to a third-party provider.
BTs renewal for HR services validates further the HR BPO decision, especially as they are one of the early protagonists of adopting third-party HR services. As Europes incumbents struggle against the declining nature of fixed markets, they will be monitoring what kind of savings BT has made. For example, Dutch incumbent KPN is the latest to announce a further round of redundancies running to 2,250 job losses in 2004 out of a total of 13,000 at its fixed-line telephone services division, where two-thirds of KPNs workforce is employed, and we wonder if a BPO strategy could be in the cards.
Source : The Yankee Group
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