“ExcellerateHRO has chosen to discontinue its utility-based, multi-process HR outsourcing service offering,” the memo states. “As a result of this decision, ExcellerateHRO and its sole utility-based HRO customer—Cardinal Health—have agreed mutually to an early termination of their contract, with a target date of December 31, 2010.”
ExcellerateHRO was created in 2005 through a partnership between EDS and Towers Perrin. The firm’s announcement that it is leaving the HR BPO business comes just weeks after Hewlett-Packard, which bought EDS in May, bought Towers Perrin’s shares of ExcellerateHRO. For the past several weeks, HRO experts have speculated that HP would either sell ExcellerateHRO or exit the business altogether.
“As the integration of EDS into HP progressed, HP determined it was in its best interest to discontinue ExcellerateHRO’s utility-based, multi-process HR outsourcing service offering,” said EDS spokeswoman Annabelle Baxter in an e-mail inquiry about the memo. “This does not impact other payroll or HR outsourcing offerings currently provided by EDS, an HP company.”
Cardinal Health spokeswoman Corey Kerr confirmed that the two companies had mutually agreed to end their deal.
“We will spend the next 18 months transitioning to a new HR service delivery service,” she said. Kerr couldn’t say whether the company would look to outsource the HR services to another provider.
It’s no surprise that HP won’t pursue the HR BPO market, said Michel Janssen, managing director at Hackett Group, a Miami-based BPO consultant.
“The reality here is that this has been a very difficult market to make money in, and I cannot see HP trying to do what others have not been able to succeed at in the long term.”
HP’s announcement had some experts wondering how ExcellerateHRO is going to handle its other HR outsourcing clients that it inherited through EDS.
“My question is: Why did HP not want to take on this deal?” said Neil McEwen, managing consultant at PA Consulting. “It seems that it was either a bad contract or a deal that was going wrong.”