BT’s costs climb in outsourcing deal

BT’s landmark outsourcing deal with Accenture HR Services is failing to
drive down costs.

The telecom giant’s projected spend on the contract was £75m for 2002, but
additional charges have pushed HR costs up to £80m for the year. Accenture HR
Services, formerly e-peopleserve, has been providing HR administration and
processes since 2000.

Margaret Savage, director of HR strategy, policy and organisational design
at BT, said: "I am not happy that costs are going up. We were supposed to
get £5m back on our spending, but are paying £4m more."

BT is not the first company to highlight such problems. Last year BP Amoco
revealed that the cost of its HR had increased by a third after an outsourcing
agreement with Exult in 2000.

Savage told delegates at a conference in Amsterdam that much of the rise was
due to "bad behaviour" by BT line managers. "Many [managers]
thought that HR services were still being provided by an internal department.
They didn’t realise that it was by a commercial third party, and that if they
cancelled staff training, for example, there would be a charge," she said.

The HR team is currently improving awareness among managers, and increasing
their accountability.

There have also been problems with the contract itself. Accenture HR
Services has sought to impose ‘penalty’ charges for perceived increases in the
volume of the contract, while BT is demanding greater transparency in charging.

BT is implementing sophisticated metrics that the third party provider has
to meet – including performance and satisfaction measures. "Hitting the
nail with numbers has helped," said Savage at ENG’s Measuring the
Performance of HR Business Processes Conference held last week.

Savage believes the sale of BT’s 50 per cent stake in e-peopleserve has
exacerbated the problems, but is confident efficiencies will be delivered in
the future.

By Mike Broad

Comments are closed.