Help With Human Resources

More companies are turning to third-party providers for HR services; tech managers need to pay special attention to privacy and security concerns.
Northrop Grumman's IT staff will play a big part in managing the program. Wootan has an internal IT manager assigned to his group who acts as a benefits CIO, he says. "We're focused on how we get the information in our systems to [Towers Perrin] in an orderly fashion while maintaining data integrity," he says.

Most vendors are crafting Web-services-based architectures to pull employee data, minimizing the need for infrastructure changes at the customers' sites. For example, EDS uses messaging software from Tibco Software Inc. to create a services-oriented architecture through which it connects with customers.

Services vendors are partnering with specialist firms to boost their HR capabilities. Computer Sciences Corp. and Aon Corp. entered into an alliance last year to provide a broad range of HR services, including payroll and benefits management, recruitment, training, and performance management. "Aon has the capabilities around HR consulting, and we have the capabilities around transaction processing and application outsourcing," says David Michelson, CSC's director of business-process-outsourcing strategy solutions.

Geographic expansion is another reason to outsource HR functions. Entering a new market takes knowledge of local employment law, payroll-tax regulations, benefits rules, and the like. Global experience is a big reason Accenture won BT's business. "As we grow into more countries, they're able to match that," Lewcock says.

UPS likely will need help integrating data on employees in Asia into its HR portal as it expands in booming markets such as China. "If our current providers can't do it, then it's something we'll evaluate," Sheridan says. UPS's IBM WebSphere-based employee portal,, extends only to workers in its Western operations. Data for workers in China and other Asia-Pacific countries resides in a proprietary Web-based system, and the information "is almost manually transferred into a database," says Neil Brawley, UPS's HR-systems manager.

At least two major companies have asked EDS to provide outsourced-HR services to support expansions into China, says Steve Bohannon, EDS's VP for HR services. "We have to go there, and we're anxious to do so," he says. EDS is close to launching an HR-services center in China to be operated through the Towers Perrin joint venture.

Both global and local business imperatives make turning over human-resources functions to third parties more and more appealing. Business-technology managers must be involved to make the most of the opportunities.