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December 4, 2000

Bank Of America Outsources HR

Exult will host hr operations for The financial services firm in $1.1 billion deal

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ank of America Corp. has joined an increasing number of major businesses that are outsourcing their human resource operations. The $672 billion financial-services firm signed a 10-year, $1.1 billion deal for HR Exult Inc. to handle many of its core HR operations.

Exult CFO Doug Schurtleff says the company will be responsible for the majority of Bank of America'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.

Initially, Exult will oversee accounts payable and travel and expense transaction processing, as well as asset management services. By the end of next year, Exult will manage an upgrade to Web-based software and integrate the services it's providing Bank of America with myHR.com, Exult's self-service HR portal.

More than 600 Bank of America employees in HR, finance, and IT will be offered jobs at Exult's customer service center in Charlotte, N.C., where Bank of America is based. Bank of America expects to see more than a 10% reduction in HR division costs. In addition, Bank of America financial services will be offered to Exult customers, including BP Amoco PLC and Unisys Corp., via its HR portal.

As part of the deal, Bank of America has taken an equity stake in Exult, which had sales of $4.9 million last year. The deal also gives Exult a foothold in the financial services industry, which is very receptive to outsourcing, says Gartner senior analyst Rebecca Scholl. This is the first time Bank of America has approached HR with an outside partner. "The creativity of the deal gave us both what we were looking for," says Mary Lou Cagle, senior personnel executive for Bank of America. She says Exult's management team and the ability to develop a portal led Bank of America to choose Exult.

Giga Information Group senior analyst Kazim Isfahani says, "HR has always been rife with inefficiencies. You're taking a risk" with a company the size of Bank of America. But Cagle says the benefits outweigh the risks.

"We see this deal as the opportunity to Web-enable our workforce," Cagle says, "to increase process effectiveness, to realize additional revenue through our preferred provider relationship, and guarantee cost savings."