Hewitt Inks HR BPO Deal With TXU

May 21, 2004 (PLANSPONSOR.com) - Hewitt Associates has signed an agreement with TXU Corp to provide human resource business process services outsourcing (BPO) for the energy firm.

Through an agreement with Capgemini Energy LP, Hewitt will provideHR operations, strategy, design and administration to all of the Dallas-based energy firm’s U.S. employees. Capgemini Energy will provide information technology, call center, billing, supply chain and accounts payable, and finance and accounting services to TXU.

Per terms of the 10-year deal, Hewitt will responsible for approximately 150 of TXU’s HR employees. Additionally, the Lincolnshire, Illinois-based consulting firm will initially use TXU’s existing technology to operate, manage and provide services for all areas of HR the firm is providing outsourcing services for.

Monetary terms of the contract were not disclosed.


The deal appears to be in line with other HR BPO deals inked over the last couple of years, includingIBM’s 10-year, $400 million deal with Procter & Gamble; and The City of Copenhagen’s five-and-a-half year, $43 million deal with Accentureand AT&T’s seven-year pact to outsource human resources and payroll services to Aon Corporation(See Cover: Take It Away ).In particular, the Hewitt, TXU relationship resemblesMotorola’s 10-year, $650 million deal with ACSin which ACS hired 650 Motorola employees (See The Bottom Line: Outsourcing for Savings and Profit ).

BPO deals appear to be paying off as well, at least on corporate finances.A Towers Perrin survey of companies that have adopted broad-scale HR outsourcing in the last four years found that more than three-quarters – who collectively represent 90% of all current major HR BPO arrangements – said they had met short-term cost-saving goals, with 37% citing “complete success” on this important outcome.Long-term cost cuts are beginning to emerge as well, although 56% of the group said it was too soon to tell how by how much and just 37% overall cited some success on this front.

Yet, while BPO arrangements appear to be saving money, Towers found the deal have not necessarily beenthe be-all panacea some users might have expected. For example , while six in 10 said the ability to eliminate transactional work helped them refocus on more strategic activities, just 11% cited hitting a home run in terms of results. Only 35% cited improvements in service quality beyond what they felt they could have achieved on their own. Of the 57% who said they were changing manager and employee behavior – and moving toward increased self-service – a scant 15% cited full success (See HR Outsourcing Not an Overall Panacea ).