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Data Processing And HR Services Unite In $20M Deal

Automatic Data Processing wants to add Exult's HR business process outsourcing to its menu.
Automatic Data Processing Inc. pulled in about $6 billion last year building technology to automate transactions for benefits, human resources, and payroll administration. Now, through a partnership and investment in Exult Inc., the company will add HR business process outsourcing to its menu.

Last week, ADP took a 1.5% share of Exult for $20 million. Should ADP be pleased with the return on the investment, the company is entitled to add another $30 million equity, or 4% ownership of the company, within the next five years. The two companies kept bumping into each other as ADP increased its involvement in Exult's domain of expertise--Internet-based human-resources services, says an Exult spokesman. So the companies thought it best to leverage each other's offerings to recruit new customers.

Exult wants to use ADP transactional services to improve its products and will work with ADP's accounts division on processes such as payroll services, and benefits services such as Cobra administration. Exult willalso be teaming up with ADP's systems integration arm so it can help customers implement HR information systems.

Exult CEO Jim Madden says there's been a sharp increase in the demand for business process outsourcing in areas such as human resources as companies look to cut costs by moving these divisions to best practices models.

"We view this as an offering for a select number of global clients," says Russ Fradin, president of ADP Employer Services North America. The prime targets are global 500 companies.