IBM cleans up with $400m P&G deal

IBM has won a $400m business process outsourcing deal for the human resources function of consumer goods giant Procter & Gamble.

As part of the global 10-year deal IBM will support 98,000 P&G employees with payroll processing, benefits administration, compensation planning, expatriate and relocation services, travel and expense management and HR data management.

Application development and management of P&G's HR systems, including the company's global SAP system and staff portal will also be handled by IBM.

Around 800 staff will transfer to IBM as part of the deal, which is expected to start from 1 January next year when IBM will take operational control of three HR shared service delivery centres in Costa Rica, the UK and the Philippines.

P&G is aiming to reduce HR costs and improve services through a transformation of the function and technology integration, according to Filippo Passerini, P&G's global business services officer.

Analyst Ovum Holway predicts the BPO market, which it classes as the outsourcing of a vertical business function such as HR or finance, will grow from £3.5bn in 2001 to £10bn in 2005.