R&H to outsource human resources operations

Rohm and Haas (R&H) says it has signed a seven-year contract to outsource its worldwide human resource (HR) services to Affiliated Computer Services (ACS; Dallas). Terms were not disclosed. The deal will result in the elimination of approximately 80 positions in North America, or about 26% of R&H s total North American HR department, R&H says.

Several positions will also be eliminated in France, but the company did not disclose the exact number. Most job cuts will be made in the first quarter of 2005, R&H says. The company says it expects to have its HR functions fully transferred to ACS by mid-2005.

Under the deal, ACS will administer R&H s HR IT platforms and related technology tools, as well as provide technology to support compensation planning, performance management, and leadership development, R&H says. ACS will also handle payroll services, recruitment support, and relocation services in North America, and payroll services in France.

ACS specializes in business process outsourcing (BPO) services, which include HR services. The company says its customers include several chemical and pharmaceutical firms, but it would not disclose which ones. ACS says a typical HR outsourcing contract can save a company as much as 20%-45%/year.

Analysts say outsourcing certain business processes including HR, procurement, and financial and accounting functions to IT consultants and service providers is growing in popularity as companies seek ways to reduce operating costs. The BPO services sector grew 8% worldwide last year to $405 billion, according to market research firm IDC (Framingham, MA). The sector is expected to grow at 11%/year, to reach $682.5 billion in 2008 as companies strive to reduce costs further, IDC says.

Procter & Gamble signed a 10-year, $400-million contract last year to outsource its HR functions to IBM Business Consulting Services (Somers, NY) P&G also outsources its IT operations to Hewlett-Packard.