Hewlett-Packard Acquires HR Business-Process Outsourcer - InformationWeek
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6/22/2009
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Bob Evans
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Hewlett-Packard Acquires HR Business-Process Outsourcer

Hewlett-Packard has acquired full interest in an HR business-process outsourcing firm formed as a joint venture between EDS and Towers Perrin in 2005 and called Excellerate HRO. Now that HP's wholly owned services unit, EDS, has full control over the venture, HP is likely to become more aggressive in courting outsourcing deals in the HR sector.

Hewlett-Packard has acquired full interest in an HR business-process outsourcing firm formed as a joint venture between EDS and Towers Perrin in 2005 and called Excellerate HRO. Now that HP's wholly owned services unit, EDS, has full control over the venture, HP is likely to become more aggressive in courting outsourcing deals in the HR sector.An HP spokeswoman who offered no details told Workforce Management, "As the integration of EDS into HP progressed, HP determined it was in the best interest to have exclusive ownership of ExcellerateHRO."

The ExcellerateHRO venture has not exactly torn up the market during its four years of operation, according to Workforce Management, which said that during that time the company signed only one HR outsourcing deal - with Nestle.

The article included this overview from AMR analyst Phil Fersht: "The jury's still out on whether Mark Hurd will continue to invest in HRO, as he clearly wants to lock heads with IBM's IT business. My sense is, he'll watch the space closely for a couple of quarters and gauge whether HP should continue to play in this space or focus elsewhere to combat IBM."

It also provides further evidence that leading IT vendors are diversifying rapidly from their long-term traditional business models as the needs of their customers change and the economics of some of those models no longer make them sustainable businesses. For HP, this small but potentially significant move gives it a chance to infuse its EDS IT services arm with a new business unit that could push its way into new markets, providing much-needed new revenue streams for the company during the brutal global economic downturn.

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