News of the deal, with an estimated value is $1.1 billion, didn’t surprise industry observers. In a separate contract announced this year, the London-based global consumer products company tapped Accenture to take over its European information technology operation, and rumors were that HRO would be next.
But what surprised experts was that a deal of this scope and size—spanning 206,000 employees in 100 countries—didn’t include benefits administration. The deal includes recruitment process outsourcing, payroll, performance management and learning.
"Benefits administration is usually a big portion of deals of this size," says Yankee Group analyst Jason Corsello. "It seems like a lot of money, especially since it doesn’t include benefits."
Although Unilever and Accenture are not commenting on the value of the deal, IDC estimates that it’s the biggest deal yet on an annual basis. With an estimated value of $1.1 billion for seven years, it beats DuPont’s deal with Convergys, which was valued at $1.1 billion over 13 years.
Given the complexities of benefits administration in Europe, where each country has its own laws and procedures, Unilever decided to stay with its current providers, says Michelle Adelman, a senior executive at Accenture. Unilever uses Fidelity Investments as its U.S. benefits administrator and a number of providers internationally, including Hewitt Associates.
"We don’t force clients to take on all the costs associated with switching benefits providers," she says.
Accenture often comes across potential clients who are happy with their benefits providers. In these cases, Accenture will integrate with the client’s existing provider. If the client wants a new benefits administrator, the HRO provider often teams up with third parties.
Accenture is discussing building or buying its own global benefits capabilities, Adelman says.
"Global benefits administration does not exist as a capability, but it’s one of the areas we are looking at as part of our global strategy," she says. "We have a number of global customers now and we are trying to understand the requirements and design process to determine how we can do that."
In the meantime, Accenture is spending the next 18 to 24 months helping Unilever standardize its HR processes before it makes the transition to outsourcing, Adelman says.
Unlike many HRO buyers who outsource their HR processes and then upgrade them, Unilever wants to establish standards, then have Accenture take them over.
Accenture has partnered with Arinso International in Brussels, Belgium, to provide payroll for Unilever, and with Vurv Technology of Jacksonville, Florida, to provide recruiting software.
Getting into global benefits administration is a big task for Accenture to take on, analysts say. "There is a huge barrier to entry in the benefits market," says Neil McEwen, an analyst at PA Consulting Group. "Between multiplicity of languages, privacy issues and different country laws, it requires a lot of work."
Workforce Management, June 26, 2006, p. 16 -- Subscribe Now!