| Case study: P&G hands over payroll to IBM |
| Last year global consumer packaged goods giant Procter and Gamble signed a 10-year, US$400 million business transformation outsourcing (BTO) deal with IBM which saw it outsource its HR function, including payroll, to IBM. IBM now supports nearly 98,000 P&G employees in about 80 countries, providing services such as payroll processing, benefits administration, compensation planning, expatriate and relocation services, and human resources data management. "P&G wanted to get the benefit of the competition that is out in the marketplace, and get more bang for the buck," says IBM's Asia-Pacific partner for human capital management Bill Farrell. "They treated each function as a separate business case and judged suppliers on their individual competency in that area," he says. "For instance, the key players in outsourced payroll might be able to provide more than a one-type-fits-all company," he adds. According to Farrell, organisations are increasingly making their outsourcing decisions based on market capability for each separate function. "The main reason for outsourcing business processes is cost reduction and the improvement of services, and the realisation that for organisations like P&G, HR, payroll, accounts, and so on, are not core sources of expertise," he says. "By working with one organisation, P&G gets better information and compliance-based reporting from one source, from around the world, on global trends," says Farrell. "Doing it this way means organisations also don't have to invest in new technology, but ask us to bake it into the business case -- they get outsourced services and new technology out of the deal," he says. Under the deal, IBM is also providing application development and management of P&G's HR systems with P&G's existing SAP software. About 800 P&G employees were offered employment with IBM.
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This article was first published in Technology & Business magazine.
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