Thomas Cook Signs $400 Million Outsourcing Contract With Accenture

The contract includes managing the travel agency's SAP system and network services, plus many of its accounting and HR functions.

Mary Hayes Weier, Contributor

November 5, 2007

2 Min Read

Travel agency Thomas Cook has signed a $400 million outsourcing contract with Accenture for management of software applications and technology infrastructure, plus finance, accounting, and human resources services.

Accenture will perform services for the $17-billion-a-year travel company through a shared services center in the United Kingdom, but also will use personnel in other countries throughout the world. Much of that will likely come from India, which Accenture expects to be its largest geographical unit by year's end. Bermuda-based Accenture announced earlier this year plans to increase its India-based head count by 8,000 people to 35,000 by 2008, compared with 30,000 people in the U.S.

The $400 million contract replaces an earlier one that the companies signed in 2002. The new contract was structured to help Thomas Cook integrate a range of functions, which it acquired in June, to its existing outsourced operations.

The new contract calls for Accenture to manage Thomas Cook's SAP ERP system, its network and technical services, handle accounts payable and receivable, and administer HR and payroll services to Thomas Cook's U.K. employees.

Further details of the contract weren't released. But in a recent interview with InformationWeek, Pankaj Vaish, a managing partner at Accenture who's based in India, said there's a growing trend in contracts for accounting and HR services to include both the savings from lower-cost labor plus a performance measure. That's leading to outsourcing contracts based less on the input -- number of hours worked -- and more on the output.

So if Accenture is handling bill collections for a customer, for example, the contract might include a percentage based on driving the typical accounts receivable cycle from 30 days to 25 days and on the resulting improved cash flow, he said.

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