BP's HR outsourcing success: can it work for you? How to decide if HR will help or hinder your ®rm I n December 1999 BP gave away $600 million and responsibility for its global human resources administration and management. The seven-year contract, with then startup ®rm Exult, is the biggest HR outsourcing deal on record, and some would say it is a sign ofthe times. HR is a constantly growing area, which has to be constantly aware of the changing business world which relies more heavily on freelancers, advancements in technology and new specialist skills. As a result, companies of all sizes are now considering HR outsourcing as a viable option, and it is a big business. In 2000, revenues amassed to almost $22 billion, claiming more than 8 percent of the total amount spend on HR that year, and ®gures are predicted to rise. But that is not to say it is right for you. There are as many staunch critics of HR outsourcing as there are advoc ates, and thou gh both arguments can be persuasive, there appear to be several majo r facto rs that any ®rm should serious ly cons ider before signing a deal. Case study: BP and Exult BP decided HR outsourcing may be right for them after a fast succession of takeovers, which brought them 100,000 new employees spread all over the world and a number of con¯icting HR strategies. The organization was interested in saving money and increasing ef®ciency, and soon realized that an HR vendor may be able to cut their in-house HR costs and coordinate the syste ms in place . Exult, based in California, looks at compa nies that spread over at least ®ve countries and have over 25,000 bringing in revenue of over $10 billion a year. They say they can cut costs between 10 percent and 20 percent per year. After some debate, it was decided that the ®rms were mutually attractive. The subsequent deal made Exult in charge of running most of BP's HR processes, leaving BP with ``only the things that would require judgment and policy''. That was the ®rst wise move: Exult brought their time and expertise to all administration issues, recruitment, development, train ing and relocation but ultimately BP maint ained contro l. The second was both ®rms' approach to the working relationship. Mos t commen tat ors on out sourcing agree tha t tru st is a vit al ingredien t in the recipe for success. From day one, BP and Exult opted for an open book relationship, where BP shared all their data and Exult explained how they intended to cut costs as well as where they would make their pro®t . BP also had a get-o ut claus e should the ventu re fail, but showed supp ort fo r Exul t by investing in the ®rm. The effect was mutual trust, so both sides could get on with their job without worrying about hidden interests of the other. `` There are as many staunch critics of HR outsourcing as there are advocates. '' DOI 10. 110 8/0 967073041 053 483 0 VOL. 12 NO. 3 200 4, pp. 5-7 , ãEmerald Group Publishing Limited, ISSN 0967-0734 | HUMAN RESOURCE MANAGEMENT | PAGE 5
