Capgemini/Hewitt Deal Continues HR BPO Consolidation

On 27 October 2004, Hewitt Associates announced a 10-year contract to provide HR BPO services  including workforce administration, benefits, compensation, recruiting and payroll to Capgemini in the United States and Canada.

This major outsourcing contract continues Hewitt's momentum following its acquisition of HR outsourcing powerhouse Exult earlier in 2004. This deal and other major Hewitt wins in 2004, notably with Sun Microsystems worldwide and TXU Energy, show that the company has focused strongly on business development since the Exult acquisition, and has not been tied down by integration challenges.

The agreement frees Capgemini to focus on its core offerings in finance and accounting, as well as on growing opportunities in procurement. (Hewitt has already benefited from its affiliation with Capgemini through the TXU deal, which is a partnership with Capgemini.) How the two companies will deliver BPO to the market as a whole remains to be seen. Capgemini a significant BPO player in its own right has taken its own advice by outsourcing a noncore competency to a specialist and will drop HR outsourcing from its commercial BPO portfolio. The relationship makes Hewitt a key alliance partner and will bring Hewitt into BPO opportunities requiring HR outsourcing.

This contract offers further confirmation of the ongoing trend toward partnerships and consolidation in the HR BPO market segment. Earlier in 2004, the BPO vendor Computer Sciences announced a partnership with Aon Consulting, an HR outsourcing heavyweight, and Mercer Human Resource Consulting acquired Synhrgy HR Technologies.