Feeds

Hewitt takes HRO lead with Exult acquisition

That's human resources outsourcing to you

  • alert
  • submit to reddit

Designing a Defense for Mobile Applications

Hewitt's acquisition of Exult for $691m sees it taking the lead in the nascent human resources outsourcing sector. The deal will put Hewitt ahead of traditional IT services giants such as IBM Global Services, Accenture, Affiliated Computer Services, and EDS, which are rapidly moving into the HRO sector.

The takeover is a significant move in the rapidly evolving HR BPO sector. Exult is the pioneer of the HR BPO market, and has secured major deals with Fortune 500 names such as BP, Bank of America, Prudential Financial, Vivendi, Universal Music, and Circuit City.

The merged business will have an existing base of clients serving some 600,000 employees from 21 companies in HRO, and in total 18 million people across 300 companies in the area of benefits outsourcing. Hewitt's skills in HR consulting will also give the combined business a further 2,300 clients.

Hewitt expects total revenue to increase by approximately 35 per cent in 2005 to $3bn, and revenue from outsourcing to jump 50 per cent. Exult expects revenue in 2004 to grow to between $575-600m, an increase of between 20-25 per cent on 2003. Exult's reliance on a small number of key accounts looks to have been a key factor in precipitating the sale. In April 2004, Exult suffered the high-profile loss of part of its flagship contract with Bank of America to rival Fidelity Investments in April. The loss dealt Exult a body blow. It said that billings would fall $25m in 2005, and up to $75m by 2006 as a result, and Exult's share price slumped 22 per cent in the space of one day.

Another major factor is the emergence of global IT services giants in the HRO space. In recent months, IBM Global Services, Accenture, ACS and EDS have won significant HRO deals, targeting the same potential client list as Exult.

HRO is one of the fastest growing sectors within business process outsourcing. However, the market remains in its infancy, and there are opportunities for many of the start-ups like Exult to be bought out as the industry matures.

Source: ComputerWire/Datamonitor

Related research

Datamonitor: BPO: the star of FSI spending growth in 2003 (BFTC0804)

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
Apple fanbois SCREAM as update BRICKS their Macbook Airs
Ragegasm spills over as firmware upgrade kills machines
Attack of the clones: Oracle's latest Red Hat Linux lookalike arrives
Oracle's Linux boss says Larry's Linux isn't just for Oracle apps anymore
THUD! WD plonks down SIX TERABYTE 'consumer NAS' fatboy
Now that's a LOT of porn or pirated movies. Or, you know, other consumer stuff
EU's top data cops to meet Google, Microsoft et al over 'right to be forgotten'
Plan to hammer out 'coherent' guidelines. Good luck chaps!
US judge: YES, cops or feds so can slurp an ENTIRE Gmail account
Crooks don't have folders labelled 'drug records', opines NY beak
Manic malware Mayhem spreads through Linux, FreeBSD web servers
And how Google could cripple infection rate in a second
FLAPE – the next BIG THING in storage
Find cold data with flash, transmit it from tape
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.