Exult, a human resources (HR) outsourcing vendor, faced a dilemma that is becoming increasingly common in the business process outsourcing (BPO) world. Exult’s global 550 customers are outsourcing their HR operations to the Irvine, California pure play provider. Currently, Exult has HR 18 processes in its Web-based e HR offering. One of those offerings is international assignment services. Exult offers this expatriation service but lacked the technology for it.
Exult had three choices for the missing expatriate administration technology component. “Should we buy, build or partner?” Mark Hodges, vice president of strategy and marketing, asked rhetorically.
First, Exult looked at the capital it would have to invest if it had to purchase the expatriate software or write its own code. The BPO provider didn’t want to commit its own development staff to reinvent this technology if it already existed commercially. Then the vendor calculated the time and management attention required to select either of those options. “We wanted to move quickly,” adds Hodges. Although the cost and the people were issues, speed to market was the deciding factor. “It was clear we had to look for a partner,” recalls Hodges.
Searching for the Right Partner
The search began for the right mate. Exult wanted a partner whose business would be complimentary, not competitive. The BPO provider ruled out “anyone whose interests were not aligned with ours.” That ruled out other BPO providers who outsource the entire HR function. Exult also wanted a provider whose software worked on the Web.
Deloitte & Touche (D&T), the Big 5 accounting firm, has developed an international assignment practice. On February 27, 2001 the two companies entered into a strategic alliance allowing Exult to integrate D&T’s GlobalAdvantage software into its Web-based services. “We don’t have to create an expatriate practice from scratch,” points out Hodges.
British Petroleum (BP) will be Exult’s first buyer to be able to use Exult’s new ex-pat services. Robyn Sweet, senior director of service delivery for Exult, says BP has one of the largest expatriate populations — about 3,000 executives. She estimates by the end of this year every BP expatriate will have access to the using the D&T software through Exult’s service offering. “We like to think of this as ‘D&T inside’,” explains Sweet.
Exult plans to roll out the expatriate service in phases. It has started first with the U.S. and then added the U.K., tackling the rest of the world in the third phase. Exult has access to D&T implementation consultants to assist Exult’s clients in migrating to the new Web-based service.
If domestic relocations are tricky, international reassignment increases the degree of difficulty by tenfold. Say a business executive who has spent the last five years in Brazil gets transferred to Germany. The D&T program:
- Calculates all income tax implications.
- Determines the visas required.
- Figures out the cost of living and foreign service allowances applicable to the post.
- Arranges for the appropriate medical exams.
- Provides house hunting help and school selection assistance for the family.
“We’ve become the outsourcing delivery channel for this software,” says Sweet. Adding this application to Exult’s service center offering “creates a more effective cost model” for buyers.
Why the Agreement Works for Both Partners
She says D&T was a willing partner because the accounting firm “did not want to create another Exult.” Instead, the established BPO provider provides a new channel of distribution for D&T. Sweet points out expatriate HR services is not D&T’s core business; it has been providing the service solely because its clients have needed it. “We will leverage their expat practice and make it a business in its own right,” she says.
The arrangement calls for D&T to refer HR customers to Exult. “The agreement reduces their marketing costs,” adds Sweet. Next year the two companies “intend to explore other areas of collaboration that can benefit from the technology and consulting expertise both companies bring to HR,” says Sweet.
Lessons from the Outsourcing Primer:
- Companies can buy, build or partner when they seek a new solution.
- When speed to market is critical, finding a strategic partner is the fastest way to solve the business challenge.
- Collaboration on one project often leads to other avenues for joint attention and opportunity.
- Strategic alliances can lower marketing costs for both partners.
- Alliances often create new delivery channels for each partner.