Joining an increasing number of major businesses that are outsourcing their HR operations, Bank of America has inked a 10-year, $1.1 billion deal with Exult, an Irvine, Calif.-based software firm, to handle many of its core HR functions.
Exult will assume responsibility for the majority of the $672 billion bank's HR functions, including payroll operations, benefits administration, employee data records and management, and HR information services for all of the bank's 150,000 U.S. employees. Exult will also take on "life event coordination" (leaves and retirement) and policy and general benefits questions. It will also handle technology support and third-party vendor management, and will operate a full-scale client service center.
Exult's core offering, myHR, is a comprehensive, Web-enabled service designed to manage the entire HR function for large, multinational corporations. In conjunction with Exult's client service centers and centers of expertise, myHR helps promote employee self-service to manage their professional and personal lives.
"Exult will assist us in delivering innovative services and products via the Web, so that our associates can handle their HR needs at any place or at any time of their choosing," according to Steele Alphin, principal personnel executive at Bank of America.
Initially, Exult will oversee accounts payable and travel and expense transaction processing plus asset management services. By the end of the year, Exult will manage an upgrade to Web-based software and integrate the services it's providing BofA with myHR.com, Exult's self-service HR portal.
More than 600 Bank of America employees in HR, finance and IT are being offered jobs at Exult's customer service center in Charlotte, N.C., BofA's headquarters. BofA expects to see more than a 10% reduction in HR division costs. As part of the deal, Bank of America financial services will be offered to Exult customers, including BP Amoco PLC and Unisys, via myHR.com.
For Exult, the deal provides a foothold in the financial services industry, which is very receptive to outsourcing, according to Rebecca Scholl, senior analyst at GartnerGroup.
The deal was also novel from BofA's perspective. "The creativity of the deal gave us both what we were looking for," said Mary Lou Cagle, senior personnel executive for Bank of America, adding that the bank was impressed by Exult's management team and its ability to develop a portal.
Kazim Isfahani, senior analyst at Giga Information Group, said the deal holds risks for Bank of America. "HR has always been rife with inefficiencies."
But Cagle said the benefits outweigh the risks. "We see this deal as the opportunity to Web-enable our workforce and to increase process effectiveness, realize additional revenue through our preferred provider relationship and guarantee cost savings."