In a long-awaited move, Johnson & Johnson announced Tuesday, May 29, that it has signed an HR outsourcing contract with Convergys, marking one of the largest HRO deals to date.
The Cincinnati-based HRO provider estimates that the 10-year contract is worth $1 billion. That puts it slightly behind the 2006 Unilever/Accenture HRO contract in terms of size, says Lisa Rowan, an analyst at IDC. That deal also was valued at $1 billion, but the contract term was seven years.
“This has been a long time in the works and is great news for the industry,” Rowan says.
Johnson & Johnson had been doing its due diligence for an HRO provider since January 2006. In an interview with Workforce Management in November 2006, Kay Foster-Cheek, vice president, human resources, said the New Brunswick, New Jersey-based pharmaceutical company wanted to enable its 2,000 HR managers to be more focused on contributing to the strategic business of their markets.
A spokeswoman for Convergys declined to provide further detail, but analysts say the deal will include a number of HR processes and geographic locations. Johnson & Johnson has 121,000 employees in 57 countries.
“This puts Convergys in the big league with IBM and Accenture,” says Neil McEwen, managing consultant at PA Consulting, adding that “given the size and decentralized nature of Johnson & Johnson, this is going to be a big challenge for Convergys.”
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