American Airlines Outsources HR To IBM

American Airlines has turned over its human resources management operations to IBM under an outsourcing agreement valued at $217 million, IBM announced Friday.

Under the seven-year deal, IBM will provide American Airlines with a range of HR services for 88,000 workers in the United States and Canada, including training, recruitment, and call center support.

Additionally, IBM will team up with Mercer HR Consulting to help manage the airline's health and benefits programs.

Officials at American Airlines, which in 2006 earned a profit for the first time in five years, said in a statement that the deal gives it "state-of-the-art tools and processes that will enhance our employees' access to, and use of, HR services."

U.S. companies are increasingly handing off routine HR services to outsourcers in an effort to tap new technologies and achieve cost savings. IDC says the market for HR business process outsourcing services will grow at compound rate of 16% per year until it reaches $18.9 billion in 2010.