The market for HR outsourcing is hotting up with two big players announcing their move into the sector last week.
BT and Andersen Consulting said they were forming a company to provide HR services to Britain’s biggest employers.
Subject to clearance by European competition authorities, the new company – e-peopleserve – will be up and running in the next few months.
It will target private and public-sector organisations to provide electronically-based HR administration first in the UK, then globally.
The aim is to take on the bulk of the function seeing through the employment life cycle from recruitment to retirement and freeing up companies to concentrate on their core business.
E-peopleserve will be the first UK supplier big enough to provide services to the largest companies, and its first client will be Andersen Consulting itself.
BT’s plans to sell HR services were first revealed by Personnel Today last year when the company formed a separate business to supply its internal market (23 September, 1999).
This is the first major development in private sector outsourcing since BP Amoco announced a £370m deal with American company Exult six months ago.
Anne Minto, HR director of Smiths Industries, said it is a significant event for HR. “Two big blue-chip companies would not come together to do this unless there is a market for the services they are providing,” she said.
“The bottom-line test is how efficient and effective it can be at a remote location and how expensive it’s going to be.”
She added that companies with one central location are more likely to be vulnerable to outsourcing than those spread over many sites as they need fewer strategic people.
Terry Gorman, president of Socpo, said local authority HR could be threatened by such a big player as Best Value is forcing it to look for the best deal for the public.
This week, Lloyds TSB announced a deal with Centrefile to outsource the payroll for 90,000 employees in the UK. Some 51 Lloyds TSB staff have transferred to Centrefile and the new arrangements begin next month.