People thought Howard Nelson was crazy when he announced in 1999 that he was ending his 20-year career at BP to go work for the company’s new human resources outsourcing provider, Exult. "They were surprised that someone with a secure job with good benefits and pay would want to go work for a company with only seven people," he says.
Today, Nelson heads up international human resources outsourcing outside of North America for Hewitt Associates, which purchased Exult last year. And he has never looked back.
Over the past seven years, Nelson has worked with the likes of Sun Microsystems as well as companies in China, Indonesia, Colombia and throughout Europe. For Nelson, a career human resources executive who had gone to business school and attended every executive education class he could find, moving to Hewitt was a way of broadening his experience beyond what was possible as an in-house executive.
When most people hear about HR outsourcing deals, they think of job losses. But as competition heats up among outsourcing providers, there is a growing need for experienced human resources professionals.
Just last month, Duke Energy of Charlotte, North Carolina, signed an outsourcing contract with Hewitt Associates. Under the agreement, 100 Duke employees, mostly in human resources, will go over to Hewitt. The majority of them will stay on with the outsourcing company for six months to oversee the transition. Hewitt will then review its workforce needs, says Randy Wheeless, a Duke spokesman. Among those 100 employees are a few managers who will stay at Hewitt for the long term to help the outsourcing company get a sense of Duke’s culture and needs, Wheeless says. Duke employs 21,500 employees.
"There is a lot of prejudice in large HR organizations around outsourcing because it is considered taboo," says Duncan Mears, who in 2001 left Cable & Wireless, an international telecommunications company, to join ePeopleserve. That company was subsequently bought by Accenture HR Services. "People feel like if they ‘go over,’ they will be removed from the business, but that’s just not true," he says.
"They were surprised that someone with a secure job with good benefits and pay would want to go work for a company with only seven people."
At 37, Mears is on the U.K. executive board of Accenture HR Services, helping to determine the company’s strategy in the region. He is the client services director for British Telecom, Accenture HR Services’ biggest client.
"I spend my life working with the most senior directors at BT," he says. In this role, Mears devotes time to researching and testing the newest technology and software, something he says he would not be able to do if he had stayed in a staff position. "On the corporate side you can only afford to implement new technology every few years," he says.
Bringing in management-level people is particularly important for outsourcing companies to make the transition smoother and to understand the culture of the client company, says David Clinton, president of Accenture HR Services. When outsourcing companies bring over a team of administrative staff from their client, it is particularly important to also bring over the management structure that they had at their companies. "The worst thing you can do is transfer a lot of junior people without a manager," he says.
Outsourcing companies generally pay human resources staffers the same money they were making in-house. To encourage client-company staffers who have moved over to stay beyond the transition, outsourcing companies will sometimes offer retention bonuses. But the real incentive may be the opportunities for growth.
"How many CEOs come from the human resources department?" Clinton says. "We can provide a whole new range of career opportunities that simply do not exist at their companies."
Outsourcing providers are also on the hunt for human resources staff with expertise in specific business sectors that they staff. "There’s knowing your own company, and then there is knowing your industry," says Brian Doyle, president of HR outsourcing at Hewitt. "How you manage HR in a retail organization is very different than in a financial services company."
HRO analysts expect vendors to hire aggressively during the next few years as HRO deals continue to gain steam. Eventually, however, the time will come when being a business-focused human resources executive will become more of a requirement to survive HRO deals, rather than a competitive advantage, says Michel Janssen, principal for supplier solutions at the Everest Group, a Dallas-based outsourcing consultancy.
"If you can’t come in with a business perspective and aren’t willing to change," he says, "it won’t take but two seconds before you are weeded out."
Workforce Management, May 2005, pp. 18-20 -- Subscribe Now!