pin outs often have a difficult time transforming themselves from an in-house division to a BPO provider. Understanding the location of dangerous shoals helps prevent ship wrecks and increases the odds of survival.
Companies are choosing a variety of routes to launch a new BPO firm. There’s more than one way to achieve the same end; the variations are many. The result is the same: the creation of an outsourcing vendor that takes total ownership of a specific process, performing the work at a lesser cost and with more competency than its buyers could do in-house.
2000 was the year of the BPO mega deals. BPO deals are getting larger and we will see more of that, says Tom White, global managing partner for BPO outsourcing at Arthur Andersen (AA), a Big 5 accounting firm based in Chicago, Illinois. These outsourcing contracts ranged from $350 million to over $1 billion. And they were long range contracts, spanning a decade. The mega deals included: General Motors (GM) with Arthur Andersen BP Amoco with Exult, PricewaterhouseCoopers and Arthur Andersen Nortel with PricewaterhouseCoopers Bank of America with Exult White says AA’s contract with GM was unique because it was the first time a vendor concluded a finance and accounting contract that brought 17 different countries together in one shared services center. Employees at AA’s shared services center in Barcelona, Spain had to centralize the languages and cultures of those countries into a seamless BPO process.
The emergence of the pure play BPO provider was one of the biggest developments in the BPO world during 2000, observes Mark Hodges. Hodges, a vice president of corporate development for Exult, a human resources (HR) BPO provider based in Irvine, California, defines pure play providers as companies that were founded to do nothing but BPO. Their tunnel vision focus on outsourced processes distinguishes them from other outsourcing providers like EDS and CSC, old school providers who do everything including BPO, explains Hodges. Pure play BPO providers include LeapSource in Phoenix, Arizona, and SourceNet in Houston, Texas. Exult, which uses Web-based technology to take over the entire HR process, is another. We are the human resources department for global 500 companies, says Hodges.
If there was one single event in the outsourcing world that characterized the year 2000, it was the megadeals that were consummated in the business process outsourcing (BPO) space. Last year BPO vendors inked six landmark deals. They are: Arthur Andersen with General Motors Cap Gemini Ernst & Young with Ontario Power Generation Exult with Bank of America PricewaterhouseCoopers and Exult with BP Amoco PricewaterhouseCoopers with Nortel Networks Spherion with American Association of Retired People…
If you got married and wanted to change the beneficiary on the company-provided life insurance, you had to take a trip down the hall to the human resources department to make the switch. If you were getting divorced in a community property state, your attorney needed to know how much your 401(K) plan was worth because your spouse is going to get half. And, while you’re down at the HR office, you might check and see how much your stock options are worth today.
The objective of the new outsourcer, Exult, is a truly colossal undertaking. Founded in November 1998, the company aims to become the entire human resources (HR) department for all the Global 500 companies. Typically, each of those companies currently has 200-500 people working in their HR departments.
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