The Human Resource Business Process Outsourcing Industry: The Bp-Exult Partnership

Abstract

The Human Resource Business Process Outsourcing industry (HR-BPO) represented $21.7 billion in revenue in 2000 and over 8% of total HR spending that year, an even larger proportion among large firms, and growing rapidly. Proponents argue that outsourcing will re-energizing HR: in-house, strategic functions will be staffed by highly effective contributors, and outsourced, transactional HR processes will be managed by firms for whom they are truly the core business. Others doubt that the strategic aspects of HR can be separated so cleanly from the operating aspects and are therefore more skeptical of the outsourcing trend. This paper first synthesizes the theoretical literature on make-buy to identify the contractual, technical, and strategic factors involved. I then describe the structure of the HR-BPO industry. Against this backdrop, I discuss one of the more visible recent HR-BPO deals, the agreement between BP-Amoco and the Exult.

Keywords: Human Resource Management, outsourcing