P&G picks IBM in $400m HR outsourcing deal

Consumer products maker Procter & Gamble has signed a 10-year, $400m (£249m) employee services outsourcing deal with IBM.

Consumer products maker Procter & Gamble has signed a 10-year, $400m (£249m) employee services outsourcing deal with IBM.

IBM said it will provide payroll processing, benefits administration, travel and expense management, and other human resources services to some 98,000 worldwide employees of P&G under the contract. The services will be provided through P&G's existing SAP software and employee web portal. 

About 800 P&G employees will be offered jobs with IBM's Business Consulting Services division under the deal. There will be no layoffs. 

The contract is scheduled to begin 1 January, when IBM will take operational responsibility for three P&G service delivery centres in Costa Rica,  Newcastle, and Manila, as well as other staff members in more than 25 other countries. The workers will be integrated into IBM's existing global network of Business Transformation Outsourcing service centres. 

The deal is the third of four that P&G has planned for its operations. In May, P&G signed a 10-year, $3bn IT services outsourcing contract with Hewlett-Packard, and in June, the company signed a five-year, $700m facilities management outsourcing deal with real estate management business Jones Lang LaSalle. 

Damon Jones, a P&G spokesman, said the deals will help the company reduce costs and increase the level of services by working with companies that specialise in different areas. "It gives us access to a greater pool of innovation," Jones said. 

The fourth outsourcing component will come next year when P&G will hire a suplpier to take on its accounts payable and purchase order management. 

Last year, P&G was in a series of negotiations with several companies, including Electronic Data Systems, to outsource much of its IT operations. Eventually, it chose to end talks with a single supplier and look at a multisupplier approach to its outsourcing. 

Todd R Weiss writes for Computerworld

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