P. 1
Outsourcing Human Resources Activities of a Multinational Company in Europe

Outsourcing Human Resources Activities of a Multinational Company in Europe

|Views: 81|Likes:
Published by tomor2

More info:

Published by: tomor2 on Aug 02, 2010
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

10/25/2012

pdf

text

original

Sections

  • ACKNOWLEDGMENTS
  • GENERAL TABLE OF CONTENTS
  • FOREWORD
  • INTRODUCTION
  • PART I. SCOPE & DEFINITIONS
  • Chapter 1. Outsourcing Overview
  • 1.1. Outsourcing Definition And Objectives
  • 1.2. Outsourcing Situations And Approaches
  • 1.3. Outsourcing Trends
  • Chapter 2. Human Resources Department Overview
  • 2.1. Human Resources Department Roles
  • 2.2. Structure Of Human Resources Organizational Activities
  • Chapter 3. Human Resources Outsourcing Overview
  • 3.1. Human Resources Outsourcing Definition
  • 3.2. Human Resources Outsourcing Specificities And Trends
  • PART II. STRATEGIC APPROACH
  • 4.1. Ongoing Competition
  • 4.2. Borderless Organizations
  • 4.3. Knowledge workers1
  • Chapter 5. Human Resources Outsourcing And The New Challenges
  • 5.1. Two Fast-Moving Trends
  • 5.2. Scope Expansions
  • 5.3. Expansions Explanations2
  • 5.4. Issues For The Outsourcing Company
  • 5.5. Human Resources New Objectives
  • Chapter 6. Human Resources Outsourcing Strategic Approach
  • 6.1. Outsourcing Decision Theory
  • 6.2. What Should Be Outsourced
  • 6.3. Advantages
  • 6.4. Drawbacks
  • PART III. IMPLEMENTATION
  • 7.1. Project Team
  • 7.2. Project Definition
  • 7.3. Internal Issues
  • 7.4. External Issues
  • 7.5. Factors determining the success
  • 7.6. Problems Likely To Occur
  • 8.1. Outsourcing Legal Actors
  • 8.2. Legal Framework
  • 8.3. Outsourcing Contracts
  • 8.4. Problems Likely To Occur
  • Chapter 9. Managing Outsourced Human Resources Activities
  • 9.1. Elements To Keep Internally
  • 9.2. Required Skills
  • 9.3. Other Solutions To Keep Control
  • 9.4. Problems Likely To Occur2
  • PART IV. CASE STUDIES
  • Chapter 10. Human Resources Outsourcing Experienced Customers
  • Chapter 11. Human Resources Outsourcing Experienced Providers
  • Chapter 12. IBM (International Business Machines)1
  • 12.1. Company Overview
  • 12.2. Major Outsourcing Provider
  • 12.3. Competitive Human Resources Organization
  • 12.4. Human Resources Services Provider
  • 12.5. Conclusion
  • CONCLUSION
  • AFTERWORD
  • REFERENCES
  • TABLE OF ILLUSTRATIONS
  • DETAILED TABLE OF CONTENTS

Hochschule Bremen School of International Business - HBSIB

University of Applied Sciences Herr Prof. Dr. Ulrich ROHR

MBA in Global Management

OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE

Master Thesis 31st July 2003

Ms. Mathilde RENAUX & Mr. Eloi MALTA-BEY

First reader: Herr Prof. Dr. Karlheinz SCHWUCHOW – HBSIB – Bremen, Germany Second reader: Herr Prof. Dr. Werner VOIGT – UPAEP – Puebla, Mexico

Directed by Mrs. Dominique CALMANT Director of Human Resources Services and Staffing IBM EMEA

…the company without borders has its heart beating in the hands of its partners…

1
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

ACKNOWLEDGMENTS
First of all, if only one person could be warmly thanked for this particularly enriching experience, it would definitely be Dominique Calmant, Director of Human Resources Services and Staffing IBM EMEA, for having supervised this master thesis, for the time she has spent with us, and for the confidence she placed in our work. We hope we have fully satisfied her high expectations, since that has clearly been our main goal throughout this project. Similarly, we would like to express our grateful thanks to Eloïse VerdéDelisle, Director of Employee Relations IBM France, whose discernment is quite unquestionably high, and who actively participated in making this partnership with IBM EMEA possible. We would also like to thank Alexandra Dudouet, Human Resources Operations Officer IBM France, for her support and her help in the whole process, as well as Mathilde Malta-Bey, for her precious literature research in the Lille III University Library, and Christopher Minnich, for his advice despite his heavy work as a student at the George Washington University Law School. Finally we surely do not want to forget our professors, tutors, and correctors, who have been involved in the whole process of our education, from kindergarten to the MBA. Thanks to them.

2
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

. . . . . Ou t sou r c in g Si t ua t io n s A nd A pp r oac he s . . H um an R e so u rce s O u t so u rc i ng S pec if ic i tie s A nd T re nd s . . . . . . . . . B o rd erl e s s O r gan i za t io n s .. . . . . .. . . . . . .. .. . . . . . . .. . .. . .. . .. . .. . . .. . . . . 2 5 2. . . . .1 . . .. .1 . . . HUMAN RESOURCES OUTSOURCING OVERVIEW . . .... 25 2 . . . .. . .. . .. . . . . . .. .. . . . . . . . .. . . . .. . . .. . . . .. . . . . . . . .. . . . 1 4 1 .. . H um an R e so u rce s O u t so u rc i ng De fi ni t io n . 12 1 . . . . .. .. . .. . . . . .. .. . . . . . .. . . .. . . . ... .. . . . . . .. . . . . . . . . . . .. .. .. . . . . . . . . . . .. . . . . . .3 . . . ... . . . . . .. . . . . . . .. .. 5 1 4 .. . . . . . . . . . .. . . . . . . . .. ..4 . . . . . . . . .. . . . . S t ructure Of Hum a n R e source s Organiz a ti onal Ac tiv i ti e s . . . . 5 3 4 .. . . . . .. .. . . . . . ... . . . .. . . . . . . . . . . . . .. .. . ... .. . . . . 3 . . . . . . . . . . . .. . . . .. HUMAN RESOURCES DEPARTMENT OVERVIEW . . . . .. .. . . . .. .... . . . . .. ... . . .. . . . . . . . . .. . . . 3 F O RE WO RD . . .. . . .2 . . . . . . . . . . . . . . ... . . . . . . . .. .GENERAL TABLE OF CONTENTS A CK N O W LE DG MEN TS . . . . . .. . . . . ... 3 8 3 . . K now le d ge w o rke r s . . . . . . . .. . . . . . Ou t sou r c in g T ren d s . . . .. . . . . ... . . . . . . . . . . . . . . . . . . . . . ... . .. ... .. . . 9 P A R T I.. . . .. . . . . .. . . .. .. . . . . . .. . . . . . . .. .. S CO P E & DE FIN I TI ONS . . . . .. . . . . .. . . . . . . . . . . . . . . . . . . .2 .. . .. . ... . .. . . .. 6 4 3 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . . .. . . . . . . . . . .. . . . .. . . ... . . . . . . . . . . . . . .. . . . .2 . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 12 1 . ... . . . . . . . .. . . . . . .. . . . . . .. . . . . . . . . . . . . . . . . . .. . . . . ... . .. . . . .. .. . . . . . . . . . . ..2 . . . . .. . . . . . . . .. . .. . . . .1 . . . . . . H um an R e so u rce s De p a rtm en t Ro les . . 4 3 P A R T I I . ..1 . . . . . . . . ... . . . ... . . . On go in g C om pet i t io n .. . . . . . . . . . .. .. . . 28 2 .. . . . . . . . . . . . . .. . . . . N TIC (New T e c hn ol o gi e s of I nfo rma t io n an d C om mu n ic a ti on ) . ... . . ... . . . . . . .. . . . . . . . . 1 1 CHAPTER 1. . . .. . . .. . .. . .. . ... . . .. . . . . . . . . . . . . . .. . . . .. . . .. . . H um an R e so u rce s I s s ue s O f T he Mul t i na ti o na l C om pa ny I n E u ro pe . . . .. . . 51 4 . . .. . . . . .. .. . . . . . . . . .. . . . . . . . . . . . . . . 2 G EN E RA L TAB L E OF CO N T ENT S . . . .. . . . . . . .. . .. .. . . . . . . . . . OUTSOURCING OVERVIEW . . . . . . 6 3 4. . . . . ... . . . . . ... . . .. . . .. . . . .. . . . . .. . . .3 . . . . . . . . . . . . . .. . . . 7 IN TR OD UCT I ON . . . . . . Ou t sou r c in g Defi n i ti on A nd Ob j ec tive s . . 38 3 . . 1 9 CHAPTER 2. .. . . .. . . .. . . . . . . . . . . . . . . . . S TR A TE GI C A P P R OA CH . . . .. . . . . . . ... . . . . . . . . . . HUMAN RESOURCES OUTSOURCING AND THE NEW COMPETITIVE ENVIRONMENT . . . . . . . . . . . .. .. .. .. . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 3 0 CHAPTER 3. . . . . . . . . .. . . . . . . .. .. . . . . .. . . . .. . . 5 0 CHAPTER 4. . . . . . . .. . . .. . . . . . .. .. . . . . .

.. . . 9 1 7 . . . . . . . . . .. . . . . . . . 1 0 3 8 . . .. . . . . . . . . . . ... 121 4 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . . .. . . . .. . 88 CHAPTER 7. . . . I M P LE ME N TA TI ON . . . . . . . . . . . . . . . Fa ct o rs de te r mi ni n g t he s uc ce s s . . .. .. . .. . . . . . . . . . 8 3 6 . . . .. .. . . Ou t sou r c in g Dec i s io n Th eo r y . . .. . . . . . ... . . . . ... . . . . . . . . . . .. . . . . . . .. . . . . 7 3 CHAPTER 6. . . ... .. 102 8 . . . . Two Fa s t . . . . . . . . 1 0 1 CHAPTER 8. . . . .5 . . . . . . . . . . . . . . . . .. .. . . . . . . ... . . . . . . . . . . . . . . .1 . .. . . . . . . . . . MANAGING OUTSOURCED HUMAN RESOURCES ACTIVITIES . 77 6 . . .. ... . . . . . . . . . . .. . . . . . . . . . .. . . . . . .. . .. . .. .. . ... .. . . . . . . .. .. . . . . . . . . . . . . . . . . . . . . MANAGING THE HUMAN RESOURCES FUNCTIONS OUTSOURCING PROJECT . . .. . . . . . . . . .. . . . . . . .. . . . . . . ... Ou t sou r c in g L ega l A c to r s . . . . . . .. . . . . . .. .. . . . . . . . .. . . . . . . . . .. .. .. . . . . . . P ro b lem s Li ke ly T o Oc cu r . . . . .. . . . . . .2 . . . .. . . . . . . . ... . . . .. . . .. .. . . . . . . . . . . . . .. .. . . .1 . . . . . . . . . . ... .. . . . .. . .. . . . . . . . . . . .. . . . . . . . . . . . .. . . . .4 . . . . . . . . . . . . . . . . . . . .. .. . . . . I n te rna l I s s ue s . . 1 0 2 8 . . . . . .. . . . . . .. . .. . . .. . . . . . . . . . . . . 1 0 0 7 . . . . . . . . Ex te r na l I s s ue s .. . . . . . 6 6 5 .. . . . .. 6 9 5 .. . . . . . . . .. . . .. . . . . . . . .. . .. . . . . . . . .4 . .. . . . .. . . . . . . .CHAPTER 5.. . . . . . . . . . .. . . . . . . . .. . . . . . .. . . . .. . . . . . .. . . . . .. . . 8 9 7 . . . . ... . . .. . . . . . . . . . . . . . . .. . . .. .. . . . . . .. 9 3 7 . . . . ... . . . . . . . . . . . . ... . .. D r aw ba ck s . . .. . . . . . . . . 89 7 . . . . . . . . . ... . . . . . . . . . . . . . . . ... .. . . . . . .. ..2 . . . . . . . . . . .. . . . . . . .. . . . . . . . .. . . . . . . . . . . . . . . . . . .. . . . ... . . .. . . . . . .. . . . .3 . . . . . .. .. ... . P ro j ect Te am . . . . .. . . . . . . 8 5 6 . . .. . . . .. . . . . .. . . . . . Ou t sou r c in g Con t r ac t s . . . .. . Wh a t S ho u ld Be O u t so u rc ed . . . . .. . . . .... . . . . . . . . . .. . . . . . .. . .. ... . . . . .. . .. . . . ... . .3 .. . .3 .. . .. . .. .. . . . . . .. . .. .Mov ing T re nd s . .. . . . . . .. . . . . . ... . . . . . . . .. P ro b lem s Li ke ly T o Oc cu r . . . . . . . . . . . .. . . . . . . . . . . . . . . . .. . . . ... . . . . .. . . .. . . . . .. . 8 6 P A R T I I I . . . . . . . . . . .2 . P ro j ect D ef in it ion . . . . . . . . Ex p ansi o n s Ex p la n a ti on s . . . . . . . . . .. . . . .. . . .1 . .. . . .. .. . . . . . . H um an R e so u rce s N ew Ob j ec t ive s . . . ... . . . . . . .. .. . . . . . . . . . . . . . . . . .. . . .. . . . .. .. ... . . . . . . . . . . . .. .. 6 9 5 . . .. . .. . .. ... . . . . . . . .. . . ..4 . . . . . . . .1 . . . . . . . .. . . . . .. . . . .. . . .2 . . .. .. . . . . . . .. .. . . . . . . S co pe Exp a n si on s . . . . . 7 2 5 . . . . . . . .. I s s ue s Fo r T he Ou t s ou r ci n g Co mp a ny .. . . A dv an t a ge s . . . . . . .. . . .. . . . ... 1 2 0 CHAPTER 9. . . . . .4 . . . . .. . . . .. . . .5 . ..6 . . . HUMAN RESOURCES OUTSOURCING STRATEGIC APPROACH . . . . . . HUMAN RESOURCES OUTSOURCING AND THE NEW CHALLENGES ... . . 66 5 . . . . .. . . . . . ..3 . . . . . . . . . 1 1 1 8 . . . . . . . . . . . ... . . . ... . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 90 7 . . . . . . . . . . . . . . Le g al F r a mewo rk . . . . . LEGAL ASPECTS OF A HUMAN RESOURCES OUTSOURCING OPERATION . . 7 7 6 . .

. . . . . . . . . . . . . . . . . . . . . . . . H U M A N R E S O U R C E S O U T S O U R C I N G E X P E R I E N C E D C U S T O M E R S . . . . . . . 1 5 0 1 2 . . .3 . . . . 1 5 9 1 2 . . . . . . . . . . . . Comp a ny Ov e rv iew . . . . . 1 3 8 C H A P T E R 11. . . . . . . . . . . . . . Ot he r S ol u ti on s To K ee p Con t r ol . . . . . . . . . . . . . . . . . . . . . . . . . . H R O P rov i de r s P ro po s i ng A n I n te g ra t ed So l uti o n I nc l udi n g T h e Wh ol e Ra n ge Of H um an Res o u rc e s P ro ce s se s . . . . . . .2 . . . . . . . . . . . . . . . . R eq u i re d Sk il l s . . . . . . . . . . . . . . . . . . Com p an ie s T h a t H av e O u t so u rc e d T h e i r T r a n s ac t io n al A c t iv i ti e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comp e ti t ive Hu m an Re so u rc e s O rg a n iz at io n . 1 2 3 9 . . . . . . . . . . . . . . . . . . 2 . . . . . . A Co m p a ny Th a t H a s O u t so u rc e d S o m e O f I t s H um an R e so u rce s P r oce s s e s: K e ll og g Fo od s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 . . . . . . . . . . . . 1 2 9 1 0 . . . . 1 6 7 A FT ER WO RD . . . . . .5 . . .1 . . . . . . . . . . . . . . .3 . . 1 6 9 T A B LE O F IL L U ST RAT IO N S . . . . . . . . 1 2 8 C H A P T E R 10. . . . . . . . . . . . . . . Companies That H ave Outsourced A ll Of Their H uman R e so u rce s Bu s i ne s s P ro ce s se s Ex ce pt M an a ge r i al On e s . . . . . H U M A N R E S O U R C E S O U T S O U R C I N G E X P E R I E N C E D P R O V I D E R S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IBM (I N T E R N A T I O N A L B U S I N E S S M A C H I N E S ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5 2 1 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P ro b lem s Li ke ly T o Oc cu r . . . . 1 4 2 1 1 . 1 6 5 C ON C LU SIO N . . . . . . . . . . . . . . . . . . . 1 . . . . . . . . . . . . . . . 1 2 9 1 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4 8 1 2 . . . . . . . . 1 8 1 D ETA I LED TAB L E OF CO N T ENT S . . . . . . . . . . . . . . .1 . . . 1 4 8 1 2 . .2 . . . . . . . . . . . . . . . . . . . . . . . . . 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HR O P rovi de rs S p ec ial ize d In Som e H um an R e so urce s F u nc t io n s O u t so u rc in g Se rv ic es . . . . . . . . . . 1 2 1 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 5 P A R T IV. . . . . . . . . . . E le men t s T o K e ep I n te r na l ly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Co nc l u si on . . . . . . . . . . . . . . . . . . . . . . . . H uma n Re s ou rc e s S e rvi ce s P rov id er . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 . . . . . . . 1 4 2 11. . . 1 8 2 5 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . . Ma j or O ut s ou r ci n g P r ovi de r . . . . . .9 . . . . . . . . . . . . . . 1 4 3 C H A P T E R 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CAS E S TU DIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 4 9 . . . . . . . . . . . . . . . . . . . 1 6 8 R EF EREN CES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 . . . . . . . . . . . 1 3 6 10. . . . . . . . . . . . . . . . . . . . . .

. . . . .D EC LA RA TIO N S . . . . . . . . 1 9 5 6 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

concepts are always welcomed to provide a better understanding of a trend or a practice. p 201 7 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . In other words.FOREWORD When we chose the topic of our master thesis in December 2002. As the Vice President and Business Transformation Executive IBM Systems Group. on an individual basis (the employee).”1 It is always hard to deal with the outsourcing approach. Outsourcing. in fact. At the time Dominique Calmant agreed to supervise our work. if indeed it was not already so challenged at the outset. Moreover. as it suffers most of the time from an extremely bad reputation. Indeed. and on the other hand. Harper Business 2001. our shared idea was to explore the outsourcing concept. Of course. Jamie Hewitt. outsourcing brings closer together identity and action: one identifies with what one does. but the empirical method is what finally differentiates between a strategy that is merely feasible and one that can actually produce an efficient competitive advantage. outsourcing an activity is always primarily understood as getting rid of the fellow employees of the concerned activity. It quickly turned out that a conceptual approach alone was not enough as such a practice was already clearly in the pipelines of several multinational companies. summed up: “What looks good on paper doesn’t necessarily work in the real world. Michael Hammer and James Champy. we could not imagine how fast our theoretical work would be severely challenged by the reality of facts. since it is precisely the people who feel victimized by this approach who 1 Reengineering the Corporation. as far as Human Resources activities are concerned. starts from an ideal way of imagining the community: collective interdependence and individual recognition. We quickly found out that the outsourcing world is refreshingly far removed from that instinctively dark view of the practice. the Human Resources field is all the more concerned by the unpleasant connotation of the outsourcing strategy.

As the modern organization is made of the “brains” of the people who compose it. as a business strategy includes processes.constitute the essential “raw material” of Human Resources. Finally. but in exchange for a relative loss of control of its identity. once and for all fulfilling the vision of the modern company that has its “brain” performing in the “brains” of its partners. People are the kinds of resources that not only need to be managed to achieve their best results. 8 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . an organization that uses them. if it outsources its Human Resources activities. and a culture that shares them. an information technology system that supports them. on a collective basis (the company). it must surely realize more than ever that it may of course secure its success in this way. but also need to be convinced that these results are optimized. one identifies with both what one does for the others and what one has done by the others. one can say that outsourcing Human Resources activities of a multinational company is all about assigning those activities to the people that understand them best and implement them most effectively. In other words.

but is inevitably facing on the other hand the tangible and remarkable European integration process that impacts its business more and more as a whole. to finally come to an overview of the Human Resources activities outsourcing industry. That is indeed exactly what this whole master thesis is about. we thought four main parts would be necessary. The Multinational Company in Europe finally. allowing it to take advantage of the market to a much greater extent than the market dictates to it. we step back a little. because it specifies to whom and where our thesis applies in particular. Outsourcing. We then begin with key points of the business environment that lead to such an approach. as far as the outsourcing phenomenon and the Human Resources department practices are concerned. because a company set up throughout Europe is still on the one hand necessarily a multinational company. in order to understand the underlying stakes of a Human Resources outsourcing strategy. Human Resources. because we found quite fascinating the fact that still too many managers have at the same time a hard time defining the real essence of the Human Resources department of their own company and nevertheless blindly support the fact that Human Resources management is absolutely necessary to their success.INTRODUCTION Outsourcing Human Resources Activities of a Multinational Company in Europe. We chose to start. The outsourcing strategy stands somewhere between customer relationship management and strategic alliances. In order to clarify and encompass as much as possible the meanderings of our topic. because we have been rapidly convinced that it is one of the best way to understand and drive businesses of the future. After extensively laying out the needed scope and definitions of our thesis. with taking stock of the situation. following with the 9 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . in the first part.

and then sharing experiences of some of the first providers of such a service. and finally ending with a clear vision of what is really meant by a Human Resources outsourcing strategy. In the end. the fourth and last part supports our analysis with several topical case studies. 10 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .description of the new challenges faced by Human Resources departments. Finally. that is to say. our focus is on the IBM Europe case. we describe and analyze the different steps involved in putting into practice such a solution. highlighting the specificities of the European environment. first of all describing Human Resources outsourcing strategies of some multinational companies around the world. the third part present the different practical key issues resulting from the implementation of such a Human Resources outsourcing strategy. Next to fill in the theory with more pragmatic details. a case that we have been given the chance to follow quite closely since July 2001.

as far as the outsourcing and Human Resources department practices are concerned. in the end. we would like to offer here a useful picture of the phenomenon taking stock of the situation.PART I. This introductory section is designed to serve as an icebreaker and is intended to demonstrate that the outsourcing trend is not just a short-lived fashion sustained by trendy consulting firms. It is important to define precisely what is understood by the terms we use. Moreover. our aim is to encompass the substance of the thesis. SCOPE & DEFINITIONS In this first part of the work. to provide an overview of the Human Resources outsourcing industry. in order. but an important consideration for Human Resources departments that has nothing at all to do with minor operations. 11 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .

Outsourcing Overview The term “outsourcing” is currently frequently used in the business world. whereas outsourcing is based on an obligation of results. to having externally done what could be internally done. Outsourcing Definition And Objectives 1. We will take some time here to figure out what exactly hides behind “outsourcing”. To the contrary. Cameron. Freeman and Kim S. It must also not be confused with downsizing. its situations and approaches. an outsourcing strategy consists in a real transfer of activities from the clientoutsourcing company to the providing outsourcing company (also called provider or outsourcer). Most of them would reduce outsourcing to subcontracting. Outsourcing definition Outsourcing is.1. giving the responsibility and the management of an activity to an external supplier (manufacturing activities) or provider (service activities). which implies an obligation of means. but very few managers know in fact exactly what is hiding behind this concept. It is nevertheless 1 “Organizational downsizing: a convergence and reorientation framework”. efficiency. or finally to resorting to a specialist. its definition and objectives. and finally its trends. Marcia S. in simple words. Organization Science.1 In this case. which consists in increasing productivity. The downsizing strategy is a consequence of the redefinition of a company’s core business. to core business recentering. It is different from subcontracting. which cannot be amalgamated to an outsourcing strategy. a group of activities is totally abandoned.1. whereas the outsourcing strategy follows from a strong will to refocus on its core business. instead of doing it internally.1. 1. 4. 1993 12 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .Chapter 1. and competitiveness by reducing the size of a company.

insurance. Michael Hammer and James Champy. change management. Therefore. risk management. 1997 Reengineering the Corporation. The complexity of the issues that arise in connection with outsourcing projects varies depending upon many different factors requiring numerous areas of expertise to be tapped into. and a perfect and essential knowledge of the environment involved. but one should watch out for possible future harmful consequences. finance. and on the other hand to reduce at the same time (directly or indirectly) the costs of this activity.interesting to notice that 23% of downsizing operations result from outsourcing operations. the savings are direct. which consists in the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical.1. project management. they cannot be assimilated to outsourcing strategies. service.1 Another confusing practice is reengineering. even if it sometimes leads to it. 1 American Management Association. on the one hand. Harper Business. p 35 2 13 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . and speed. quality. Main objectives of an outsourcing strategy The main objectives for a company when it outsources some of its activities are. and ideally finding the optimum point. Even while all these related practices might be part of a whole outsourcing operation. such as cost.2 Reengineering must certainly not be assimilated to outsourcing. to improve the quality of the (outsourced) activity thanks to a new expertise that was not internally available. but most of the time outsourcing requires balancing the pros and the cons of a certain level of quality for a certain level of cost.2. One would obviously try to combine quality improvement with cost reduction. 2001. and if only the costs are reduced. at least the net result for the company has to improve as well. if only the quality improves. information technology. such as tax. contemporary measures of performance. 1.

Different kinds of outsourcing operations A] Different outsourcing situations Two fundamental characteristics distinguish the different situations involving outsourcing: • The prior existence of the activity inside the company. • Exploiting business advantages of the outsourced activity. pp 67-80 14 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Volume 97. 1.1. if the venture is successful. maximizing both its outsourcing strategy and its investment. Summer 1998. three kinds of strategic intents usually drive the decision to outsource: 1 • Improving the outsourced activity’s operations. thus generating new revenue and services that will be sold to others and. whatever the type of outsourcing approach or situation one has. By crossing these two criteria. • The proximity of the activity to the core business. Outsourcing Situations And Approaches 1.2. Sloan Management Review. Anthony DiRomualdo and Vijay Gurbaxani.Companies sometimes want to take advantage of this new outsourced activity to create the new business opportunity themselves. • Increasing the outsourced activity’s contribution to the global performance of the company. Number 4. Finally. one obtains a typology of the four main possible outsourcing situations: 1 Inspired from the article “Strategic intent for IT outsourcing”.2.

p 10 15 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . but is on the other hand far removed from the core business. “Disintegration” stands for the transfer of the concerned activities from the client-company to the provider-partner. 2001. this one consists in outsourcing activities close to the core business. Here arises the problem of initiating an outsourcing strategy or not. b) Traditional outsourcing with disintegration In this situation. Jérôme Barthélemy. The client-company outsources and has actually always outsourced this activity as it is permanently needed for the business.Illustration 1: The four types of outsourcing situations1 a) Traditional outsourcing This kind of outsourcing situation applies when a non-sensitive regular activity is concerned. but activities that were nonetheless formerly internally managed. c) Strategic outsourcing with disintegration In contrast to the two first situations. Dunod. In this case. one deals as well with non-sensitive activities. the outsourcing strategy can 1 Stratégies d’Externalisation.

Philippines. since a provider-partner is offering an expected quality of services. consisting in outsourcing to a provider located in countries such as Ireland. Village Mondial. Malaysia. in this case. Leslie Willcocks. it will damage their domestic industry as outsourcing is a huge international 1 “L’externalisation maîtrisée des systèmes d’information”. L’Art de l’entreprise globale. or too strategic. and there is no real need to transfer anything. or India. Mexico. Leasing is in fact the alternative to disintegration. B] Different outsourcing approaches As an example. and other developed countries that if they limit the extent to which information technology is outsourced. but it can also freeze the company. 1999 16 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Hungary. e) Outsourcing with assets leasing We may also add this fifth situation. assets remain the property of the outsourcing company. Israel.create a competitive position. This option usually occurs when assets are too specific.S. It is interesting to know that India recently warned the U. It is nevertheless unlikely that a company would lease assets of an activity that was not inside the company before. d) Strategic outsourcing The last main outsourcing situation occurs when the regular activity is also close to the core business and when it is already outsourced. The question of how to renegotiate the partnership conditions is then asked. Leslie Willcocks distinguished recent approaches to IT outsourcing1: • Offshore outsourcing. In other words. too expensive. Egypt. in which a company willing to outsource an activity but unwilling to transfer its assets to the provider simply leases these assets.

consisting in giving the client-company the possibility to acquire shares of the providing company. C] Different uses of outsourcing a) Automotive outsourcing These constitute the first layer of activities addressed by outsourcing. or other such organizations in Germany and in the rest of the developed world. • Diverse outsourcing operations. Habib Beary. avoid the transfer of jobs outside their borders. 12th June 2003 “Protectionism hits the outsourcing industry”. BBC News Online. consisting in fixing the revenue of the provider according to the value it really creates. • Co-outsourcing. consisting in reducing one’s dependency on a unique provider by contracting with several of them.S. Per Sayer and Marc Ferranti. the PCG (Professional Contractors Group) in the U.. Gillian Law. it is very easy to determine the objectives that the provider should reach. under the pressure of lobbying groups such as the MUNCI (Mouvement pour une Union Nationale des Consultants en Informatique) in France. governments are considering proposals to curb growth of offshore outsourcing in order to. over outsourcing”. 15th April 2003 17 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . consisting in fixing the provider’s revenue to a percentage of the revenue the provider generates. • Outsourcing with equity. Because they are characterized with repetitive tasks.movement resulting from globalization. in the end.2 • Value-added outsourcing. according to certain conditions. Info 2 World.K. • Subsidiary outsourcing.1 Nevertheless. consisting in the creation of a spin-off. John Blau. These activities often and administrative/operative 1 “India warns U.

specialized in outsourcing. Feeny. we can distinguish four main advantages of outsourcing: 1 “The Value of Selective IT Outsourcing”. this solution seems to be the most successful.2. total outsourcing. 1. pp 13-25 18 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Sloan Management Review. b) BPO (Business Process Outsourcing) i/ Selective BPO This solution consists in outsourcing only those parts of a department that are the most distant from the core business. Outsourcing advantages A lot of institutes and authors. Leslie P. which is still rare. the provider is considered more as a real partner than as a simple service seller. Spring 1996. In this case. Lacity.2. Willcocks and David F. c) Total outsourcing Finally. consists in outsourcing the entire department. ii/ Total BPO This solution consists in outsourcing all processes of a given function or department.1 With this solution. Number 3. thereby guaranteeing a fully integrated management of the different processes. list its numerous benefits. Mary C. but are not really the value-added generating vector. companies can focus their financial resources on the most important parts of the targeted department.represent a non-negligible part of a business function. The objectives given to the provider are crucial to the overall strategic results. they can also keep their strategic components internal to the company. and according to practical experience so far. Among all these. from the bottom line all the way to the management. Volume 37.

3. Outsourcing Trends While discussing his project of a “company without factories”. 2002 19 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . as such an operation is often felt as a betrayal of the employees.• Cost reductions on the outsourced activities.3. The report emphasizes the fact that outsourcing is becoming a critical competency for most large companies. 1. companies would do more to prepare employees for the change. The most important factors are: • Underperformance. but many said they would do things differently.2. Serge Tchuruk. • Refocus on core business activities. • Losing know-how and skills. the French CEO of Alcatel. Notably. particularly the greater responsibility placed on workers to manage their benefits. nine out of ten companies surveyed said they would outsource again if given the choice. says David Dell. • Dependency. Outsourcing risks The same commentators assess numerous risks of such an operation. which have to be considered and balanced before taking the decision to outsource. publicly announced what all the specialists had 1 HR Outsourcing Trends. according to the last report from The Conference Board1. The Conference Board. • Improvement of the company overall performance. “HR departments are not yet good at this”. 1. • Social risk. Lisa Gelman and David Dell. In the end. • Improvement of the outsourced activities’ performance.

these providers are restructuring or expanding their service to accommodate the growing demand for outsourcing services. pp 11-12 20 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . with their own name products or services that were entirely made by external providers. One can already see that a successful outsourcing strategy consists in a profitable sharing of the different companies’ 1 “L’externalisation. Harvard Business Review. and therefore systematizes outsourcing practices. July 1992 3 “Business Process: Consider Outsourcing”.3 Finally. Thomas Kiely. Patrick J. it also allows companies to concentrate more of their financial and managerial resources on valuable activities. but it is mainly used in that sphere to deal with peripheral activities such as restoration. This necessity encourages companies to transfer some of their business resources (equipment and employees) to an external provider in order to lighten their balance sheet and increase their profitability. or care-taking.been claiming: globalization forces companies to refocus on their core business. gardening. 29th August 2001 Intelligent Enterprise: A Knowledge and Service Based Paradigm for Industry. In the end. in the hope of reducing costs. companies are nowadays more interested in gaining direct value for shareholders.1 Outsourcing is a classic phenomenon since the 1950s as far as production activities are concerned. James Brian Quinn. un mouvement de fond”. whereas the original aim of an outsourcing strategy was to reduce costs. gaining efficiency. Free 2 Press Publishing. and improving the level of service. Les Echos. The outsourcing trend is of course not completely new as applied to service activities2. In parallel. May-June 1997. Miliotis. cleaning. In fact. the outsourcing of activities that are critical to the good functioning of the company are relatively innovative and is no longer considered as a last resort for companies with financial difficulties. On the other hand. companies are taking a hard look at their business processes to assess which areas would best be performed by an outside provider. in other words on their core business resulting from their core competencies. It is no more unusual to see well-known brands labeling.

Les Echos. 1. security. Alain Perz. payroll. the European market will reach $52 billion in 2003 and will concern ever more different kinds of activities. which gives in the end a maximum value-added to companies that are part of the network.1. after-sales services. the European market reached $40. Global evolution of outsourcing According to a study by Dun & Bradstreet and The Outsourcing Institute. In comparison. and other similar activities that are closer to the core competency.2 billion in 1998. Illustration 2: European outsourcing practices in 19981 Outsourcing is nowadays very well developed and accepted for activities such as office management. Moreover. and office maintenance. 21st October 1998 21 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . at a time when the American market reached more than $160 billion.3. according to forecasts. 1 “L’irrésistible montée de l’externalisation”. the outsourcing phenomenon developed rapidly during the last few years. IT.core competencies. It is also increasingly implemented (but is not very developed yet) for logistics.

S. which obviously implies huge amounts of money that are not directly linked to HR management processes.. B] External factors a) Supply pressure Ever more qualified actors are appearing on the market and expanding little by little the global opportunities for companies to outsource.2.2. 1997 22 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Factors favoring these booming outsourcing trends This increase would not have been so important without a certain number of external and internal factors. Whereas before they were limited to small contracts signed with different providers.S. administrative services and Human Resources activities (see 3.. it is important to emphasize that. A] Internal factors A company performance is nowadays measured by the value that it creates and delivers.3.In the U. Moreover. but rather to pension financing.2.) are those that are the most commonly outsourced. pension fund management costs are included in HR budgets. and almost no longer by its revenue or by the increase of its market share. they are now complex ones dealing with a whole function assigned to a single provider. b) Development of information technology Another main enabler for such an increase is the development of new 1 American Management Association. Nevertheless. in the U. 1. a 1997 study1 dealing with outsourcing practices involving 619 companies showed that 94% of American companies outsource at least one activity.

A good example of this occurred in 1989 when Kodak outsourced its IT department to IBM. it can consider a possible outsourcing of the concerned activity. companies compare their performance (internal costs. it will try to “play the same game”. Indeed.4. For Buyers’ Eyes Only”. Moreover. 1. productivity. Everest Group. Main BPO providers There are no real exemplars yet.3. This risky tendency can also be seen within a single company when one department is outsourced and thereby others follow in turn. more and more complex operations can be processed thanks to the circulation of large amounts of information at a very low cost. Big competitors followed this example based on the assumption that such a big company must have conducted an in-depth analysis before taking such a decision.technologies and particularly of information technologies. d) Mimicry Finally. and if a company selects a “company-yardstick” that is a specialized provider.). The “company-yardstick” is usually a model company in its area. Damon Rosenhan. and the costs of communication with providers (see 4. but three distinct groups of competitors:1 1 “Building a Case for BPO-Part 2.3. If a company selects a “company-yardstick” that is its competitor. c) Benchmarking By benchmarking. it is no longer necessary to use specific production assets. technologies) to one or several “company-yardsticks” for each part of their organization. mimicry plays a very important role as far as outsourcing behaviors are concerned. which allow a decrease in the costs of coordination between companies. September 2002 23 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .

SourceNet. which took advantage of market opportunities to acquire BPO organizations and supplement their IT consulting expertise with business process consulting expertise: IBM (which acquired PwC Consulting). Creditek. • Traditional Outsourcers. which used capital infusions and technologies to specialize themselves in a single area for which they have strong value-added but limited delivery capacity: Exult. EDS. Cap Gemini-Ernst & Young. Equitant. Deloitte Consulting. • Venture capital funded niche players.• Big 5 players or their spin-offs. OPI/PMG spin-off. and CSC. 24 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . which built upon their traditional consulting strengths to enter the BPO market: Accenture. ACS.

Indeed. It insures overall consistency in decisions taking.1. that the company acts in the interests of employees by giving them opportunities to advance their careers.1. conversely.1 2. we found it useful to make in parallel a point on the actual state-of-the-art Human Resources department organization in most multinational companies in Europe. His solution: reengineering and outsourcing.1. It finally prevents one part from playing its own game to the detriment of the other. Human Resources Department Overview After having polished the outsourcing phenomenon. Human Resources Department Roles The Human Resources department supports interactions between managers and employees. that employees bring as much value-added as possible during their stay in the company. Number 1. 2. 60% of the department value-added results from strategic activities that only represent 10% of the costs generated by the department. Organizational roles Organizational roles can be classified in the two following categories: • Human Resources management. and on the other hand. 60% of the costs generated by the HR department concern traditional administrative activities of the job while representing only 10% of the department value-added. Spring 1997 25 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . on the one hand. It determines the rules of the game in situations where employees and companies accept not to spend their whole professional path together but just a part of it. Dave Ulrich. It makes sure. including HR support to business 1 Human Resource Management. We can distinguish two different roles within the HR department: the organizational ones and the operational ones.Chapter 2. Volume 36. according to Spencer.

the HR organization could be drawn as following: 26 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . All employee relations’ issues occurring in any company are nowadays mostly organized by country regulations. • Legal obligations including employee relations and well-being programs. Both roles are in fact involved in the HR process as far as they are responsible for the day-to-day HR management. and according to the two organizational and operational role distinctions above. Even though it does not and cannot belong to the HR department. people management is absolutely essential to HR management as a whole. the public face of the HR department. including company managers.1. including industrial relations managers (HR local specialists).3. 2. on the other hand. even if large companies try to homogenize them globally. and if personnel management is as operational as people management is. 2. • Personnel management. Personnel management is.1. it is nevertheless completely part of the HR department.2. Operational roles Operational roles can be in turn divided into the two following categories: • People management. Human Resources organization If a “shared services center” also called a “HR services center” is included in the HR organization. locally and operationally speaking.and HR design & delivery.

Implement HR programs using knowledge specific to individual business units. HR roles could be. Develop global HR programs and adapt them to business unit specifications. ~ Provide responses to specialized issues. Creates HR efficiencies across the organization. Processes transactions. Resolves customer administrative issues. • HR business partners: ~ ~ Define and meet the unique needs of the customer. as needed. 27 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . • HR functions experts: ~ ~ Exhibit functional expertise. described as following: • HR services center: ~ ~ ~ ~ Administers corporation-wide programs.Illustration 3: HR Organization This organization model illustration underlines the distinction between the main HR actors. at a more detailed level.

People interest dimension. The people interest should conduct managers to observe good day-to-day HR management practices.1. • Corporate HR: ~ Guides the development and implementation of HR strategy.2.~ Define HR strategy at the business unit level. and to consider employees’ desires without losing sight the business unit organization. Structure Of Human Resources Organizational Activities 2. Key Human Resources functions To explain our idea. ~ ~ Ensures customer satisfaction of entire HR functions. and economic imperatives. • Industrial relations managers (HR local specialists): ~ Manage and administer local specific programs with input from corporate HR and from HR functions experts. Black and Mouton. Manages executive facilitation and coaching. • Company managers: According to the managerial grid of Blake and Mouton. there are two important dimensions for managers1: ~ ~ Manufacturing interest dimension.2. we enumerate the main organizational HR functions 1 The managerial grid. 1964 28 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . needs. 2.

• Employee services administration. • Employee development. • HR support to business. • Compensation. • Industrial relations. 2.as follows: • Payroll administration. • Well-being programs (health and safety). • IT systems and HR data management tools. motivating. All these activities represent both the whole employee life cycle and the HR roles expressed through attracting. • Employee relations. • Benefits.2.2. Activity types crossing HR functions 29 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . and retaining employees. • People management. • Talent management (recruitment and staffing). • HR policy and planning.

Les Echos.3. Maurice Thévenet. Summer 2002 30 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .Illustration 4: Activities crossing HR functions Illustration 4 above demonstrates how each HR function is composed of different activities. from automotive ones to managerial ones. The European labor market and intercultural management issues 1 A] Figures The E.1. (European Union) contains today more than 370 million 1 “Y a-t-il un marché du travail européen?”. This table provides a clear vision of all the different types of activities involved in the HR management of almost any medium or large-sized company in Europe (See 4. 2. for organizational vocabulary definitions).2.U.3. Human Resources Issues Of The Multinational Company In Europe 2.

inhabitants from 15 different countries, all sharing the same labor market. In January 2004, 10 other countries will join the union, raising its total population to more than 450 million. For the moment, the E.U. countries sustain more than 150 million jobs. As you can see in the following illustration, unemployment is not homogeneously spread throughout Europe, but seems to reflect instead the remaining differences in terms of social policies among the E.U. members. It is to hope or even more to expect that the European integration, and especially the social one, will guarantee fair competition inside the E.U. labor market.

Illustration 5: Unemployment in the EU, % of workforce in December 2002 and December 2001, seasonally adjusted1

1

Industrial

relations

developments

in

Europe

2002,

EIRO

&

E.U.

Commission,

p

29,

http://www.eiro.eurofound.eu.int * September 2002, ** October 2002, *** November 2002

31
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

Illustration 6: Fixed-term work in E.U. member States1

B] Trends
While many differences still characterize the different European countries’ legal systems and cultures, multinational companies tend to adopt a homogenized approach as far as workforce management is concerned. It is interesting to note that national education authorities throughout Europe have been working hard these last ten years to harmonize the European diploma system in order to allow easier comparisons across European borders. Students, as well as employees, are now organized in Europe-wide unions in order to efficiently face Europe-wide issues. Even while mobility inside Europe is not yet very significant (it stands currently at less than 1.5%), multinational companies clearly use one single recruitment and career management strategy for the whole of Europe. As confirmed by 303 multinational companies in Europe, European integration is one of their most

1

Industrial

relations

developments

in

Europe

2002,

EIRO

&

E.U.

Commission,

p

55,

http://www.eiro.eurofound.eu.int * Population between 15 and 74, ** Population over 15, *** 2000 data

32
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

challenging missions in terms of HR management.1 Integration on a European scale means that multinational companies apply the same answer to the same problem wherever it arises in Europe. As an example, remuneration is also based on performance across Europe and 360° manager assessments are systematically implemented. Thus, optimists would attribute this result to European integration whereas others would simply cite the globalization process.

Illustration 7: Average collectively agreed pay increases, 2001 and 2002 (in %)2

Despite these developments, legal social systems are still very different from one another and multinational companies are fully expected to apply the local law. For instance, in Germany, the labor laws encourage collective bargaining, thereby avoiding state intervention, whereas in France the state is a major actor in the social life inside companies, and whereas in England

1

Comment évoluent les stratégies de rémunération en Europe, a Towers Perrin Study, January 1998 Industrial relations developments in Europe 2002, EIRO & E.U. Commission, p 34,

2

http://www.eiro.eurofound.eu.int * Average of 18 countries, ** Average of 16 countries for 2001 and average of 15 countries for 2002, *** Average of 12 countries for 2001 and average of 11 countries for 2002

33
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

a different cultural approach.int * 2000 figure. 1 L’Europe des ressources humaines. stereotypes are still too stubborn.eiro.eurofound. Cazal and Jean-Marie Peretti. which is also faced by universities. p 36.eu. Editions Liaisons. each country has a different way to cope with it. Despite significant efforts to educate and inform workers.1 Another example is the working time negotiations: while this debate is taking place almost everywhere in Europe. ** 2001 figure. Illustration 8: Average collectively agreed normal weekly hours. Commission. 1992 Industrial relations developments in Europe 2002. D. 20022 Some of the most complex problems faced by HR departments are intercultural issues. *** Average of 18 countries 34 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .employer-employee bilateralism (excluding the state) is the rule. C] Challenges The European labor market is confronting four main challenges that HR departments must imperatively cope with: • Skills: this particular challenge.U. EIRO & E. 2 http://www.

the one that leads to great success in the end if mastered. Commission. the Social Policy Protocol and Agreement attached to the Maastricht Treaty (which came into force in 1993) and 1 Industrial relations developments in Europe 2002. defending common interests resulting from a complex common association. 2. three stages can be distinguished as far as concerns the evolution of social dialogue across European industries.3.eiro. An ever more organized social dialogue in Europe A] The European social integration process Since 1985. as they are very easy to notice. in other words. the social partners embarked upon a dialogue.eu.refers to the development of system of reference for evaluating skills on a Europe-wide basis in order to gain time and efficiency in domains such as recruitment and career development.eurofound. EIRO & E.1 First in 1985 when. • HR organization: more efficient in a more complex environment and more flexible in a more demanding environment. Jacques Delors. • Social capital: legal and geographical unity is not enough to guarantee a shared culture.int 35 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . probably the key challenge. multinational companies need to participate in the European social integration as European social actors. More and more groups of workers will be clearly transnational.U.2. at the initiative of the President of the European Commission. the challenge is here to imagine innovative ways to manage this new type of diversity. • Diversity: too much importance is given to national cultural differences. http://www. the first step towards creating a “European bargaining area”. and as the key to their success. Then.

young people. temporary agency work. telework. lifelong learning. in December 2001.subsequently incorporated into the Amsterdam Treaty gave rise to the second stage. with at least 150 employees in each of them. health and safety. equal treatment for men and women. A European legal frame is also rapidly appearing in various fields such as: worker consultation and information. mobility. Finally.U. gender equality.dir/QR000914. part-time work. restructuring.htm 36 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . undeclared work. harassment.info-europe. the social partners’ joint contribution to the Laeken European Council was a crucial step for the social dialogue. the ECS (European Cooperative Society). enlargement. 600 companies have so far implemented their European Works Council. with a clear objective to harmonize national laws. etc. opening up a third stage of independent European-level dialogue.web/document. working time. in which the social partners reached and implemented agreements by means of Council Directives on the following issues: parental leave. Since 1994. http://www. industrial relations. stress at work. etc. reaching an overall headcount of more than 1. and fixed-term contracts. Companies concerned are at least set up in two or more European countries. Centre d’Information sur l’Europe. European social partners intervene on various subjects such as employment.fr/europe. protection of employees in the event of insolvency of their employers. E. 23rd April 2003. racism. disability. a European Directive obliges multinational companies in Europe to inform and consult employee on certain management decisions. ageing workforce. 1 Dialogue dans l’entreprise: consultation des travailleurs et comité d’entreprise européen. social dialogue. B] European Works Council 1 The setup of a European Works Council aims to improve the social dialogue between the employer and its employees throughout Europe.000 employees Europe-wide.

business health. 37 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . restructuring.The European Works Council is dedicated to employee consultation and information as far as concerns Europe-wide issues such as employment. outsourcing. mergers and acquisitions. etc.

1. Human Resources activities 3.Chapter 3.2. Human Resources Outsourcing Definition 3. It consists in managing some HR processes directly on the Internet. Managers and employees can access tools and information at any time from any intranet access point.2.).1. and the Human Resources department organization on the other hand. Human Resources Outsourcing Overview Now that we have seen what is to be understood by outsourcing on the one hand. Human Resources outsourcing levels A] Self-Service (e-HR) This first step in HR outsourcing is increasingly developed in Europe. we may now enter this chapter trying to get a better overview of the Human Resources Outsourcing phenomenon itself. Self-Service strategy is mainly applied in Europe for the four following processes: 38 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .1.1. 3. Defining outsourcing Outsourcing Human Resources activities is giving a provider the management of part or all HR functions we listed earlier (see 2.1.

p 5 39 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Illustration 10: HR Self-Service: resource reallocation on higher added-value activities2 1 Le management des Ressources Humaines en Europe: les professionnels RH doivent développer de nouvelles compétences face aux défis du e-business. as it is represented in the illustration here below. p 5 2 Le management des Ressources Humaines en Europe: les professionnels RH doivent développer de nouvelles compétences face aux défis du e-business.Illustration 9: The four processes that are mostly managed by Self-Service in Europe1 This use of new technologies indeed allows the HR department to spend less time on administrative tasks and more on value-added services. November 2000. PricewaterHouseCoopers. November 2000. PricewaterHouseCoopers.

S. The only way one can succeed is to spend a lot of time bringing managers into the fold by demonstrating the value of the tool with transparent statistical results.outsourcing. p 1259 40 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Beth Ellyn Rosenthal. 2002. This kind of outsourcing is principally composed among of an HR services center. or HR services center a) Definition Shared services imply that services (transactional activities) are handed over to a provider. and the outsourcing company keeps all management responsibilities.1 B] Transactional HR outsourcing. BASF employees may already print their pay stubs directly from the HR intranet. managers are instinctively resistant and skeptical. April 2003. http://www.com 2 “Dictionary”. U. as well as local and corporate Human Resources specialists in-house. The outsourcer will provide all standard transactional and administrative activities.”2 As shown earlier in the part dealing with HR organization. Bloomsbury Publishing. supported by HR experts for each function and with all strategic activities done by HR business partners. The challenge is to enroll managers in the use of that tool. all transactional activities are given to this HR services center. which implies “a centralized office that handles routine administration and answers enquiries from managers and staff throughout an organization on Human Resources related matters. shared services centers.requests. 1 Converting the Managers Makes Self-Service HR Work. giving advice to employees on HR processes.As an example. Business The Ultimate Resource. Most of the time.

2002 41 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Human Resource Effectiveness Practice.. Paxton. and a reduction of processing cycle time as well as expenses. Buck Consultants. which is technologically equipped and has an immediate and accurate knowledge of local policies.1. Inc. an improvement in service.2. through the shared services function. Arthur H.Illustration 11: Shared services model1 b) Objectives The goal is that employees and managers have access to HR information. procedures and employee history. It allows an increase in quality. this strategy does not move control to corporate or to a central entity but rather creates a centrally managed organization that serves employees and businessbased HR professionals as clients.D]). Contrary to the totally HR department outsourcing (see 3. Mazor and Meredith A. C] HR processes outsourcing 1 Transforming the Human Resource Function.

Companies can decide to outsource some of their HR activities, which they do not consider as part of their competency scope, and for which they consider that it can be better and cheaper if a HR outsourcing provider manages them. They outsource all administrative and most of their HR activities to outside firms, leaving very few other activities, such as strategy and salary decisions, in-house. In this case, the provider is totally responsible for the good running of these activities, and often integrates its client’s employees (see 7.4.3.C]).

D] Totally HR department outsourcing
Another particularly integrated outsourcing solution consists in giving the management of all the HR activities with no exception to a Human Resources outsourcing provider. The provider is responsible for keeping the HR activities in accordance to and in service of the overall activity and strategy of the company, and the company is no longer responsible for any HR decision. This kind of outsourcing is nowadays mainly used in the U.S. where can be even found the premises of co-employment. Co-employment simply consists in hiring people on the basis of a three parties contract: the employee, the business partner, and the Human Resources professional. Signing this contract, the employee accepts to be under the business authority of the business partner, and agrees to depend on the Human Resources provider (also called PEO (Professional Employer Organization) in the U.S.) as far as social problems are concerned; and in the end, the three contractors assume distinct responsibilities. Co-employment is finally a good way for companies to outsource their social responsibilities to an accredited co-employment provider. In the U.S., PEO are on a lobbying campaign to obtain federal and state legislative recognition and to overcome existing laws that create barriers or additional costs for third-party administration of HR operations. State legislators have responded by appointing them as the front-line tax collector and pension-administrator with legal liability for non-compliance. In Europe, the E.U. Acquired Rights Directive and other local legislation
42
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

make effectively HR outsourcing a costly solution by leaving the outsourcing company with the ultimate burden of managing its workforce and taking financial responsibility for employee restructuring.1 It clearly prevents, for the moment, co-employment to develop in the Europe. Nevertheless, since June 2003, Bremen’s (Germany) job center PSA (Personal Service Agentur), for instance, offers co-employment contracts to local companies for a duration of nine months in order to facilitate the reinsertion of unemployed workers, as the workers are leased to the company during the nine months period. Of course, this is a social and short-term initiative, but it really looks like the start of co-employment habits in European countries.2 Moreover, in the U.K., Adecco, for instance, provides permanent employment contracts to workers that are in fact working for a third-party client-company. Adecco has the main “Admin Contract” with its clientcompany and supplies a complimentary workforce to the same clientcompany. The employee is then considered to be a contractor working for Adecco within Adecco’s client-company. The employee has an Adecco consultant responsible for all HR issues it faces (holiday, sickness, appraisals etc.) and a manager from Adecco’s client-company that is solely responsible for it for day-to-day activities in its job role. These kinds of employees are on a threemonth probationary period. Finally, as the employment contract is permanent ongoing, there is no end date. This is again some evident kind of coemployment in the E.U.

3.2. Human And Trends

Resources

Outsourcing

Specificities

3.2.1. Global overview

1

“Legal Eagles of HR Outsourcing”, William Bierce, HR Outsourcing Today, December 2002 “Zeitarbeit als Brücke auf dem Weg zum neuen Job”, Elke Gundel, Weser Kurier Online, 6th June 2003

2

43
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

A] HR outsourcing expenses trends
An article in HRO Today reported that the total volume of BPO (Business Process Outsourcing) topped, worldwide, hundreds of billions of dollars with 40% of them occurring in the United States, and with 60% concerning the Human Resources department.1 Nevertheless, it is here very important to emphasize that in the U.S., pension funds management are included in HR budgets, which obviously implies huge amount of money that are not directly linked to HR management processes, but to pension financing. To illustrate the global trend, fourteen contracts that worth more $6 billion have been concluded between 1998 and 2002.2

B] HR outsourcing trends
More than three-quarters of surveyed companies (165 companies surveyed, primarily from the U.S. and Europe), responding to a recent survey by The Conference Board3, reported that they are currently outsourcing a major Human Resources function or at least are planning to do so in the near future. Among U.S. companies that have already outsourced HR functions, two-thirds say that they fully or partially outsourced five or more functions.4

C] Reasons to outsource trends
The Conference Board survey5 found that top managers were more likely than line managers or HR executives to cite cost reduction as the impetus for outsourcing, whereas HR executives mostly cited the need for service improvements and the ability to free the in-house HR staff to concentrate on

1

“The 100 Superstars of HR Outsourcing”, Human Resources Outsourcing Today, www.hrotoday.com,

November 2002, p 51
2

Creating value through HR Outsourcing, Strategies, Opportunities, Pitfalls, Dave Connaughton

(Director Business Development Asia Pacific Region Exult), Sourcing Interests Group, Melbourne, February 2002
3

HR Outsourcing Trends, Lisa Gelman and David Dell, The Conference Board, 2002, p 4 HR Outsourcing Trends, Lisa Gelman and David Dell, The Conference Board, 2002, p 5 HR Outsourcing Trends, Lisa Gelman and David Dell, The Conference Board, 2002, p 6

4

5

44
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

and will be more required to show the value-added of their department. The new HR roles of the future are predicted to be rethinking the performance and loyalty concepts. The high technologies and the outsourcing of some activities will be the solutions for HR departments to meet these requirements.S. D] HR outsourcing future According to a survey carried out between march and may 20011 among more than 100 companies located in big fields of work worldwide (North America. Australia. by being able to focus on their core business thanks to economies of scale: 92% of surveyed companies think e-learning packages will be more used. overview A] HR outsourcing expenses trends The U. 1997 2 3 45 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . They will no longer manage equality but equity.7 billion industry in 2000 to a $58.2 B] HR outsourcing trends A study carried out by the American Management Association3 showed that 77% of the surveyed companies already outsourced some Human Resources activities. between March and May 2001 http://www. according to Dataquest Incorporation. Cubiks (a PA Group Company).dataquest. the Human Resources actors will be in 2010 more involved in deciding the company strategies (for 89% of surveyed professionals). 3. and focusing on managing skills. U. Asia). Europe.com American Management Association.S.5 billion industry in 2005.value-added services. Human Resources outsourcing market is expected to grow from a $21.2.2. and 81% of them support that e-selection tools will be widespread and will shorten time and marginal costs of the recruiting process. 1 Predicting the Workplace of 2010.

com European trends in HR Outsourcing. Brewster. http://www. C. P. Europe overview A] HR outsourcing trends In Europe.3 The diversification of HR activities outsourced is more and more important and go over traditional outsourced activities.00. shows that the most commonly outsourced processes. 3. like perks management for instance. the Gartner Group2 forecasts a future growth of 25% each year. ADP. Jean-Pierre Poinas.com/printarticle/0. J. Similarly. Peter Drucker.2. 40% of employers have increased their use of external HR services providers in the last three years. The content only is outsourced but not the container: all the “attention management” and the function itself are for the moment kept internally.3. Peter Drucker in The Economist1 strengthens this trend. June 2000 4 Ressources Humaines : l’externalisation en Europe. C] HR outsourcing future For the U. when he wrote: “Outsourcing the entire Human Resources administrative function which ten years ago barely existed. The last most commonly outsourced process is “payroll administration” with 30%.5642%7C. van Ommeren.S. even if their assignments are still very limited (recruitment of a professional for example). Mercer Research Report. are first of all “training and education” with almost 80%.. The Economist. 1 “The Near Future (Part II)”. February 2002. is now growing at a rate of 30% a year”. Cranfield 3 School of Management and William M. Philips. p 12-17 46 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .cfo. A study4 carried out among companies with more than 200 employees in 15 countries all over Europe. the use of recruiting consultants is growing: 59% of European companies outsource their “staffing and recruiting” processes.html 2 http://www.In 2001.5317. 9th November 2001.dataquest. which represents in facts a tripling of revenue in five years. Vernon and J. Agence ARCA publishing.

November 2000. the shared services center model is more and more implemented in Europe. p 4 2 “Externalisation: les solutions de BP Amoco et d’IBM”. But on the other hand. 3.4. 58% of European companies with more than 5. Les Echos. social law complexity clearly leads to ever more HR outsourcing.000 employees have implemented a shared services center.As a result. Laurence Ritter. PricewaterHouseCoopers. France overview A] HR outsourcing trends Illustration 12: French HR outsourcing market shares in 20002 a) Small and medium-sized companies 1 Le management des Ressources Humaines en Europe: les professionnels RH doivent développer de nouvelles compétences face aux défis du e-business. 28th November 2000 47 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .2. which consists in outsourcing complete HR functions and not only some activities. whereas only few companies apply the “American model”. because of particularly strong regulations and because of the decisive importance of social links. In 2000. as we will see later.1 B] HR outsourcing future The shared services solution seems to have the most predictable potential growth in the near future throughout Europe.

2002. p 17 48 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .com. 40% of them outsource their HR functions.3 c) New market companies Concerning HR outsourcing in the new market companies4. already outsourced parts of their HR activities (recruitment activities for 47% of them). Ernst&Young en collaboration avec Taylor Nelson Sofres.com. 2002. whereas they are 56% for IT. p 17 3 Baromètre Outsourcing 2002. www. 1997 2 Baromètre Outsourcing 2002. 41% for distribution. and 20% in 2001. in 2002. and 38% of them plan to do so in the next two years. www.com. Pratiques et tendances du marché de l’externalisation en France.ey. Moreover. only 9% of small and medium-sized companies have already outsourced their Human Resources functions.ey. logistics and transportation and 32% for facilities management. the number of providers is very small and 1 A Coopers & Lybrand Consultants and l’Association Nationale des Directeurs Financiers et de Contrôle de Gestion (DFCG) Study. 19% in 2000. Pratiques et tendances du marché de l’externalisation en France. this study shows that only 17% of all large companies prospect to outsource HR. 2002. Ernst&Young en collaboration avec Taylor Nelson Sofres.1 b) Large companies Concerning HR outsourcing in large companies. Ernst&Young en collaboration avec Taylor Nelson Sofres. 51% for finance and administration. www. B] HR outsourcing future In France.In France. when there were only 17% in 1999. only a very few number of companies are enough structured internally and have solid and trustful information systems to be able to outsource HR activities. This trend is higher than for large companies. as 24% of these kinds of companies have.2 But on the other hand. p 21 4 Baromètre Outsourcing 2002. but it decreased compared to 2001 (56%). figures are on the one hand on a growing trend since 1999. which consists in fact mainly in payroll outsourcing (for 88% of them).ey. Pratiques et tendances du marché de l’externalisation en France.

as companies find this solution more flexible. to a loss of quality (36%). www. The chosen option in France is mostly the implementation of shared services centers.1 1 Baromètre Outsourcing 2002.com 49 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . and as they are afraid that outsourcing would lead to a loss of control (49%). Ernst&Young en collaboration avec Taylor Nelson Sofres. Companies outsource almost only. training. as for Europe.3. the shared services model allows minimizing all the outsourcing risks (see 1. 2002. to a costs increase (32%). payroll and selection processes for example. For these reasons. only specific activities are outsourced in a same department.). Finally.ey. and finally to a loss of know-how (17%). but almost never a whole function. to social problems (for 38% of them).2. Pratiques et tendances du marché de l’externalisation en France.companies are afraid to lose control on strategy and corporate vision.

We would like to give readers a good idea of the reasons why outsourcing is an unavoidable strategic solution for companies who want to lead the business game in the following decades or even more so in the following years. our aim through this second part is to show why multinational companies in Europe can simply not ignore outsourcing when the reengineering of their Human Resources functions becomes necessary. STRATEGIC APPROACH Now that we have demonstrated the real extent of the phenomenon.PART II. 50 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .

violent storms. www. The route takes them around the world. This is the most challenging and complete sailing race in the world. Adaptability is vital. p 3. It is also true that the business competition never ends. dead calm. requiring survival skills and careful planning to deal with the traps and dangers that abound. But this experience cannot in any way apply to companies since business success does not consist in fulfilling a unique.Chapter 4. clear. The challenge is to keep the company upright. or if it will blow at all. except that this race is an ongoing contest.1. As soon as 1 Transformational Outsourcing. one that companies aim to win again and again. it is not one-dimensional but multi-dimensional. Changing the course of business services. The Jules Verne sailing competition is similar to the race in which companies compete every day. and to ensure that it is sailing in the right direction. its state as well as its trends and revolutions. moving forward. 2002. Human Resources Outsourcing And The New Competitive Environment We will start to analyze in this chapter the new competitive environment in which companies move about. They are never sure which way the wind will blow. Cap Gemini. it has no clear starting point and it has no end. and ice during its quest to win the Jules Verne trophy.com 51 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .1 Indeed. We will try to understand in parallel which business environment should give rise to HR outsourcing. because they define their success by unambiguous and instantaneous victories. Ernst & Young. and lucid objective. Sport competitors can taste what it means to be the best in their chosen endeavor. 4. crossing seventeen different weather systems along the way.cgey. Ongoing Competition A sailing crew battles high seas. companies move about in the same kind of environment as do the sail boats competing in the Jules Verne race.

if any. Business is more an endless chess game with millions of participants . value-added. And all this occurs during the same race. The race example does not emphasize the fact that business competition is an arena where actors are themselves largely shaping their environment. The only really new aspect of this environment is the everquicker innovation process. In fact. In the end. more than anything else. they are likely to be successful. It only aims to focus on the very important fact that business competition is characterized by actors that are ever more aware of how to take advantage of such a competitive environment.temporary winners and temporary losers. which imposes on the one hand the shrinkage of the distance between cause and effect. of taking the advantage more than just winning. without catching it.companies collectively understand that the rules are not as easy as they seem. way before the arrival line. something is missing in the Jules Verne trophy comparison. companies would be completely blind. and that they are sometimes even partners. that today’s employees will be tomorrow’s competitors. that they are not just a problem of short-term profits but a problem of positioning. and offers on the other hand the technological tools to cope with this relative instantaneousness of information broadcast. and unfortunately. This example does not underline either the extremely decisive fact that a company’s workforce is not exclusive anymore. partners or even clients. even better. if we claimed that the success of a company was hard to define. that competitors strongly participate in designing rules. where everything is linked to something else. this description of the business competition is not quite original nor is it particularly new. it is just a question of point of view. On the other hand. companies are commonly defined by the process of generating value or. Actually. The value-added is a concept developed by Michael Porter that has the particular quality of not focusing only 52 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . and where you need to know how to know. since each stakeholder of the company is a potential distinctive reference for the definition of its success.

marketing. by administration. The value chain To analyze the specific activities through which companies can create a competitive advantage. we considered the company to be composed of “departments” (such as finance. benefits. etc.on short-term financial key performance indicators. Indeed. 4. every observed value creation process may be represented by a value chain as designed by Porter. Michael Porter identified a set of interrelated generic activities common to a wide range of companies that he named the “value chain”. similarly. it is useful to model the company as a chain creating value through its activities. and in the end the “activity” is a subfunction characterized by its type. but on the whole valuecreating process model shared by most companies. Borderless Organizations Before starting and in order to clarify our demonstration. HR. to make it perfectly clear and simple. departments have been considered to be composed themselves of “functions” (or sub-departments such as payroll. for the HR department). or by self-services. The value chain is a chain of activities that generates the value and hopefully most of the time value-added. that is either by management. In fact. (See Illustration 4) 4.). 53 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . it seems useful to specify here the definition of the vocabulary we used to describe the organization of the company. production.2.1. etc. by processing.2.

Porter identifies the support activities. which include all activities that are. Moreover. even if this person is an HR professional for instance. They directly participate in the results of the process. 1 L’Avantage concurrentiel.Illustration 13: Porter’s Value Chain1 In all value chain. Without them. but that do not. Dunod. one will spontaneously associate this person with computers. one can distinguish two different kinds of activities: • The primary value chain activities. of course. Michael Porter. It is at this point interesting to notice that company workers usually identify strongly with these activities. as they literally shape the final characteristics of the resulting value. You can tangibly feel their effect in the resulting value produced by the whole system. if one knows someone working for IBM. The primary value chain activities are fundamental generators of valueadded at the end of the whole process. we would never even expect to achieve value-added. absolutely necessary to obtain the final expected value. • The support activities. 1999 54 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . In parallel to these primary value chain activities. on the one hand.

which is actually not the case of any corporate support activity that generates valueadded for the good functioning of other internal support and primary activities. The value chain of any business organization cannot indeed be isolated from the whole context it is involved in. But they also individually constitute sub-value chains that can be themselves in turn organized like perfectly regular value chains. it is also a problem of reference. Interactions between companies’ value chains make it difficult to see the real borders between companies. permanently in contact with other value chains. this is absolutely not the case. but even more important is to identify the destination of this value-added. directly influence the final value’s identity. This means that each support activity is a value chain itself with its own support activities but also its own primary activities. The main difference with the company’s overall value chain lies in the fact that it does not exactly share the same clients. They are only there to support the primary value chain activities. The company as a whole generates value-added that benefits external clients in total respect of market laws. Of course. and that it can be differently considered according to various points of view.on the other hand. Whenever a value chain is set up. But this would mean that the support activities do not create value-added and that they only support the creation of primary activities. one may claim that even support activities of a value chain create value and probably as much as most primary activities. The virtual organization Now we introduce the concept of borderless companies or virtual organizations. The problem is that one often forgets that value is quite subjective.2. in fact. upstream as well as downstream. In fact.2. but in fact the comparison is really not apt. a good know-how of these activities is almost never a reason why a value chain is built up. Indeed. It is. its aim is evidently to generate value-added. 4. a value chain as described above is made of distinct activities that all together build the whole value chain. which makes the company part of a complex value 55 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . As a result. Support activities do create value. as they do not share the same direct stakeholders.

Dunod. A] Clover leaf The virtual corporation is also called the ”clover leaf” organization3. Collectif HEC. but the new global competitive environment encourages ever more different kinds of joint actions. p 50 Benetton ou l’entreprise virtuelle. 2001 2 3 4 56 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .1 The virtual corporation can be defined as being “composed of several companies interdependent to another. • The second one represents the specialized provider that takes charge of the resting activities. B] Alliances 4 It is therefore more than ever necessary for companies to build efficient alliances and cooperative relationships all the way to the core of their business. Dunod. its specialization allows it to be more efficient and less expensive than internal services. 3rd edition. Charles Handy. 1996 Alliances interentreprises. but bringing each their resources and skills in order to make up a specialized network. 1999 L’Age de la déraison. whether they are new or old. • The third leaf represents the whole temporary workers that participate in the reaching of the company’s targets. national or multinational. broken down into three leaves: • The first one represents the staff internal the company which is composed of high-skilled collaborators essential to the good functioning of the company. able to generate more value than the sum of its individual components”. 1997.2 The virtual corporation keeps indeed internally a hard core of strategic activities and outsources all the others. Fréry. Vuibert. legally separated.chains system. Moreover one may observe that both small and large companies are concerned. Village Mondial. and 1 STRATEGOR. entre concurrence et coopération Dominique Jolly. F. The alliance is not a new form of relations between companies.

In fact. a theory that sticks to reality. the Boston Consulting Group. models. Most of the concepts. task-sharing or duplication). Malone. for instance .finally wherever they are located around the globe. October 1993 57 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .by the Harvard Business School. and strategic decision tools developed since the 1950s . Nevertheless. Harper Business Publishing. Thus. we are currently clearly witnessing a certain erosion of the competitive systematic behavior. and a clear view of the independence or dependence of the companies in the fulfillment of their tasks. It seems that cooperation between companies represents according to its growing practice a serious alternative to mergers or acquisitions. An alliance is defined as a link between several companies that direct an operation. Companies with a largely outsourced value chain are also called “virtual corporations”. the choice of the best organizational approach (that is centralization. pooling their resources in order to benefit from the resulting advantages of the cooperation. remaining absolutely independent outside the context of the alliance. the construction of a competitive advantage should rely on a more efficient coordination between direct partners. C] CRM 1 The Virtual Corporation: Structuring and Revitalizing the Corporation of the 21st Century. William H.1 Their heart beats in the hands of their partners and their brain performs in the brains of their partners. an alliance in which both parties benefit from its success but not from the same part of that success. or Michael Porter. Outsourcing may now concern any stage of the value chain. This rivalry is even guaranteed by governmental organizations such as the “Conseil de la Concurrence” in France. the “Bundeskartellamt” in Germany and the “Monopolies and Mergers Commission” in the UK. Its success relies on: bilateralism. Igor Ansoff. Davidow and Michael S.rely on rivalry between companies. outsourcing stands somewhere in between cooperation and CRM (Customer Relationship Management).

Stewart. as fast as possible. Illustration 14: Customer Relationship Management evolution4 At the bottom are transactions where sellers simply sell and the buyers merely buy. The great challenge of HR outsourcing is to reach the last stage of a business relationship degree of maturity. According to him.CBIC’s (Canada Imperial Bank of Commerce) Hubert Saint-Onge depicts the stages of client-provider intimacy and the growth in human1. the client-provider’s relationship will pass several stages from the simple transactions relation to the complex partnering. The available knowledge a company has on its clients. and with time and experience. Doubleday Publishing 1999. Customization is the second level as it represents specific solutions. The fully-owned knowledge a company has accumulated through its operations. customer capital is resulting from the accumulation of both human capital and structural capital. p 158 2 3 4 58 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . structural2. At the business solutions level. Intellectual Capital. the service itself becomes secondary: the client has a business problem that needs the provider’s analysis and state-of-the-art 1 The part-owned knowledge a company disposes of through its employees. and customer3 capitals (on both side of the relationship). Thomas A.

demanding relationship. a French high-tech online newspaper. Reissue edition.3. Finally. Prahalad and Gary Hamel2 used the term core competencies to define the collective learning and coordination skills behind the company’s product lines. http://www. Thomas A. This previous concept comes actually from the elder concept of core business activities as activities that differentiate the company from others. Thomas Peters. C. “Le Journal du Net”. 11th February 2002. Waterman. K. Stewart.1 4. Harvard Business 2 Review.com 59 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .2. p 159 “The Core Competence of the Corporation”. August 1988 4 Le Journal du Net. May 1990 3 In Search of Excellence: Lessons from America's Best-Run Companies. They support the idea that core competencies are the source of competitive advantage and enable the company to generate the largest value-added. Core competencies and core business A] Definition In 1990. in a full-fledged partnership. Robert H. Doubleday Publishing 1999. commented on this classification. When Dominique Calmant. then IBM France HR Leader. In fact. she said that IBM’s best asset consists in the variety of its professions. Fabien Claire.expertise. K. but also immensely rewarding to both parties. C. Warner Books. In 2002.journaldunet. ranked IBM France as the number one high-tech company in which people most like to work. it became prominent when Tom Peters and Robert Waterman3 suggested that organizations should stick to their most profitable activities in terms of value-added creation and avoid diversifying into areas beyond their field of expertise. and offer to companies their largest ROI (Return On Investment).4 She probably had simultaneously in mind what Samuel 1 Intellectual Capital. the provider actually takes over the management of the business extension: this last level is the kind of intense. make a vital contribution to its success. Prahalad and Gary Hamel.

and finally the type of activity. The inclusion within a function or sub-value chain dimension corresponds. which activities are part of the core competencies field. the one each value chain’s leader has to define precisely in order 1 IBM 2002 Annual Report. but as it is one of the best and as it offers a great variety of professions inside its core business. people like to work for them. to the activity theme. p 14 60 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Value chain activities can be differentiated with the help of three different dimensions: the inclusion within a function (sub-department) or sub-value chain. In fact. This is indeed the most important dimension. within this great focus. they also need on the other hand to build. B] Segmentation of activities In the process of determining the core competencies of a business. At minimum. in other words IBM is specialized in and one of the world leaders in e-business on demand. one has to identify and segment the different activities that compose the whole chain. or of any system that aims to generate value-added. The degree of proximity to the strategy dimension corresponds to the degree of closeness that the activity has with strategic activities. these strategic activities become more strategic as their impact on the previously fixed corporate objectives increases. Indeed. stressed as IBM’s core business1: “All of this is what we mean by e-business on demand […]”.J. but it can be delineated even more precisely to the point of actually defining its specific role in the whole process. The value chain described above helps to understand the mechanism that is hidden behind the creation of value. a wide variety of career opportunities in order to attract the best workers and to be the best in the end. if it seems clear that companies need to be on the one hand quite obsessively specialized in order to be the best. the activity must be classified as a support or a primary activity. of a function. but it does not help to identify which parts are absolutely decisive to achieve the competitive advantage. in other words. Palmisano. as we saw before. IBM CEO. the degree of proximity to the strategy.

the activity type dimension consists in the segmentation of activities according to the four types described above. because it is important to avoid a function hierarchy. the more strategic it is. next. first. sales functions are not always more important than HR. Finally. then. processing activities. That is. which are activities that are mainly automatically done without too much need of human presence. and in the end management activities. which are activities that deal with the elaboration and the management of processes. for example. according to how high you locate the activity in the cone. In the following illustration are represented by a regular cone all activities included in a value chain. We symbolized the proximity of the activity to the core competencies in accordance with its distance to the center of the disc: the more centered the activity is on the disc. Each activity can be placed in the cone according to the three dimensions described above. related in a way to the level of competency (see Illustration 4). As we are here interested in the identification of the core competencies. automotive activities. One should notice that we deliberately choose to differentiate strategic activities from core competencies to the extent that the former are absolutely necessary but not decisive (from an identity point of view) whereas the latter really are decisive not only for the success of the company but also for the “raison d’être” of a company’s positioning: its core identity. The function of the activity is placed on the disc. And finally. which are activities that are systematic and repetitive.to maximize the resulting value-added. a priori. administrative or operative activities. 61 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . you define the activity as being part of one of the different generic types of activities seen previously. we darkened the virtual position of what are in fact the strategic activities of the value chain. which are related to strategic planning and controlling activities.

People who are responsible for the success of the value chain have to ask themselves what their core competencies are made of. This actually clearly emphasizes the fact that a core competency may arise from a support or a primary activity. but these are just basic management rules. the most important point here is to focus on the complexity of core competencies. and that a core competency may concern any type of activity. core competencies are 62 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . and especially not to define them too simply.Illustration 15: The Cone of Core Competencies One can easily see that those precious core competencies are symbolized also by a cone (the dark one). from the lowest rank to the top management. according to a single dimension. Moreover. with a noticeable higher frequency for the latter. with of course a bigger advantage for the latter. In fact. the strategic decisions can be taken with no possibility of missing their targets. that is to say the clear definition of their competitive advantage. but obviously smaller and on the upside down. Each value chain has its own cone. with its top plunged in the base of the whole activity cone. Once these core competencies have been identified. shaped in accordance with its own particular environment.

In the knowledge-based economy that characterizes nowadays’ competitive environment. key employees know probably less than 20% of what they need to know. the individual worker’s productivity makes the entire system successful. February 2002. The challenge is actually to help them catch the 80% left. on the contrary. in the traditional workforce.3. which embodied the knowledge and which was productive because it enabled individual workers to perform without much knowledge or skills. Harvard Business Review. In a knowledge-based organization. The success of every business will increasingly depend on the performance of its knowledge workforce. The critical feature of a knowledge workforce is that workers are not labor but capital. a key element to the success of a company. 4. the system must serve the worker in the knowledge workforce.not always fixed over time and strategic planning should strongly be taken into account when core competencies are defined. Whereas. Knowledge workers 1 Collaborators also represent. more important today for organizations to pay close attention to the health and well-being of all their workers than it was 50 years ago. a core competency is defined in reference to a particular purpose also called a value chain. and also that what is decisive in the 1 “They’re not Employees. as the system is more than ever inside the brains of the workers. as a consequence. They’re People”. It would be difficult to overstate the importance of focusing on knowledge workers’ productivity. Again. pp 70-77 63 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Drucker. it has nothing to do with prestige. what made the traditional workforce productive was the system. Finally. it only aims for maximum value-added. the worker served the system. of course. It is. Peter F. and the only way that organization can succeed in a knowledge-based economy and society is by managing its knowledge workers for greater productivity.

1 Finally. There was a time when people had the choice to be linked electronically or not. considering that the reality of an official scale of authority encourages managers to be more professional. Technological change accelerates overall environmental change. by offering its first contract to the new start-up and sometimes even by taking equities. On the other hand. Today. Rapid 1 “They’re not Employees. Sabine Grandadam. February 2002. contesting the hierarchical power that is inefficient in facing the chaos. The method allows the company to get rid of a noncore but still perfectly strategic competency. Les Echos. the only failure observed with this solution arises when the start-up begins to compete on the same markets as its former employer. it is absolutely expected.performance of capital is not what it costs but how much it is being invested. which explains why the company is motivated to secure the survival of the start-up. 3rd October 1995. Harvard Business Review. pp 70-77 2 “Ces entreprises qui externalisent leurs salariés”. Peter F. p 26 64 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . it is a great opportunity to be its own boss. 4. some companies simply outsource some of their workers. Alfred Chandler has always been an adept of clear hierarchy. Tom Peters supports the idea that workers tend to be given irrevocably a lot more responsibilities and autonomy. They’re People”.2 Companies offer indeed the opportunity to build their own business to some of their workers. to develop a business in accordance to the vision of its core activity. Drucker. To try to remedy this lack of balance between the efficient hierarchy and the creative chaos. NTIC (New Technologies of Information and Communication) The change brought about the technological innovations of the 1990s and early 2000s have affected all business aspects. For the ex-employee.4.

1 Facing the globalization of the economy. a simple technique. They are definable by their sources. have driven massive shifts trough the competitive environment. as soon as all the actors of the business area master it.technological change. and may give access to a practice. the information age. and the inlet of NTIC. 2001. Moreover. little by little. p 60 65 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . companies can definitely not remain isolated (in autarky). its power is indeed newly applied to organizational and administrative management. as it is the exclusive belonging of a company or a group of companies. A technology will become. the speeding up of innovation in all areas. Technology is by the way really one of the most important dimensions considering the outsourcing solution: if technology is an old industrial catalyzer. entre concurrence et coopération. reduce costs. combined with drastically changed market forces. Technologies have for objectives to improve performance. NTIC bring the chaos and the tools to manage it. technology has an economical goal. 1 Alliances interentreprises. Each shift changes the rules of the game and one of the most pressing challenges for companies is to manage employees in virtual organizations. Vuibert. their application domains and their purpose. it is a source of differentiation and competitive advantage. and not everything that counts can be counted. Dominique Jolly. Contrary to science. and as Albert Einstein is said to have claimed: “Not everything that can be counted counts.” That is the real NTIC challenge.

as knowledge replaces strength: intangible beats tangible. Temporary development A] Figures 1 employment industry Europe is the geographical area where the temporary employment 1 Rapport économique et social annuel 2002. but it is quite another not to forget. http://www. • A growing number of businesses have outsourced their Human Resources functions.pdf 66 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Two Fast-Moving Trends Two fast-moving trends are changing the way companies have to manage talents: • A huge number of people who work for companies are no longer traditional employees. 5. the resource itself is no more valuable. and the value comes for now on from the mastering management of its flows. They are expected to demonstrate their value-added and to reduce their costs always more.1.org/etudes_statistiques/Rapport_économiŠl_2002_SETT.Chapter 5. The Human Resources are moreover drastically changing.sett. in the process. SETT (Syndicat des Entreprises de Travail Temporaire). Human Resources Outsourcing And The New Challenges Human Resources are facing the ever more demanding evolution of companies. 5. It is one thing for a company to take advantage of long-term freelance talent or to outsource its Human Resources management. that developing talents is companies’ most important task to compete in a knowledge economy.1.1.

working time. 20th April 1999 2 “Commission proposes directive on temporary agency workers”.. Vice President Adecco1. The second one. April 2002.K. Luxemburg. generates the highest revenue with €36 billion in 2002. Moreover. http://www. Finally. the U. The proposal aims to ensure equal treatment between temporary workers and comparable workers in the user company. the Netherlands.eurofound. and it concerns 4. Digby Jones.. consists in assessing applicants in order to identify those who not only have a real potential.eiro. business leaders in the U. B] Trend Thanks to Klaus Jacobs. have warned that it could be very damaging for companies. Conversely. very close to the HR outsourcing concept.html 67 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . just after the U.int/2002/04/feature/EU0204205F. that is to say group temporary solution to a given problem.S. Adecco veut gérer les ressources humaines de ses clients”. Belgium. breaks. Laure Belot. including pay. the temporary employment industry may be divided into two main activities. Le Monde. The first one consists in matching offer with demand. but much more those who will satisfy the client-company in the end. and this service sector expects more project approaches.eu.7% of its working population (still the first rank in Europe). C] Threatened flexibility The European Commission issued a proposal for a new Directive regulating the working conditions of temporary workers in March 2002. EIRONLINE. especially with the great help of the Internet. more complex. and Portugal). powerful tool.industry makes its highest revenue with €73 billion in 2002. The European temporary employment market increases by 10% every year. Spain. on a range of basic working conditions.K.2 This proposal is actually already applied in France (just as well as in Austria. the temporary employment industry is shifting from the industrial sector to the service sector. and holidays. CBI (Confederation of British Industry) Director- 1 “Au-delà de l’interim.

taking on temporary employment would do irreparable damage. not just to business but to employees as well. they had become. workers by 2005. Drucker. at least 1. The HRO industry as a whole is growing at a rate of 30% a year. Harvard Business Review. Isabelle Moreaux. after the outsourcing of manufacturing operations in the 1980s and the following wave of outsourcing by the early 1990s of information technology and software development.5 million to 3 million U. by 2000. which manage their clients’ HR activities.3 5. claimed that without improvements. HRO (Human Resources Outsourcing) industry development 4 In a related but distinct development.U. p 6 Inspired from “They’re not Employees.800 such organizations. the “co-employers” of 2. 2 3 4 February 2002. welcomed the draft proposal arguing that lower rates of pay for temporary workers undermine workforce motivation and act as a brake on productivity.2. 18th February 2002 “La CES prend l’accent britannique”.D]). John Monks. 30th May 2003 “Bosses war against rights for temps”. CBI Press. the global economy is now about to live its third big business revolution: outsourcing of business services. Liaisons Sociales.S. They’re People”.S. pp 70-77 68 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . this debate will all the more be on the European agenda. BBC News Online.2. as John Monks has just been elected at the head of the ETUC (European Trade Union Confederation). Finally. last May 2003. including HR activities. were the fastest-growing business service in the United States during the 1990s.General.2 Finally. workers. both the temporary employment industry and HRO industry are growing quickly. and are by the way already in the U.1.1 On the other hand.1. Peter F. PEO (see 3. 1 “CBI launches new bid to block irreparable damage from E. and PEO expect to be collectively the co-employers of 10 million U. June 2003. Even though they were virtually unknown only ten years ago. the TUC (Trade Union Congress) General Secretary. temping law”.S.

but in fact. Harvard Business Review. Temporary work scope expansion When the temporary employment industry first started nearly fifty years ago. Moreover. it supplied low-level workers to take the place of employees who were sick or on vacation.2.1.2. especially payroll. Today. The first HRO provider in the late 1980s offered to do bookkeeping. February 2002. it seems interesting to briefly present the law case opposing 1 Interimsmanagement. To that extent.3. 2002. Management Angels GmbH. flexibility has no account on the emergence of HRO providers. but now they can take care of almost all Human Resources activities. für die Wirtschaft im Wandel.1. Scope Expansions 5.2. HRO providers scope expansion HRO providers. Drucker. from bottom line to top management. HRO providers originally confined themselves to taking care of small businesses. They’re People”.managementangels. pp 70-77 69 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . many temporary workers are full-time workers for long periods of time in the same company. have expanded their scope in recent years. for their clients.5.1 5. there are temporary agencies for every kind of job. like temporary agencies. Expansions Explanations 2 5.de 2 Inspired from “They’re not Employees.3. http://www. Peter F. Flexibility The popularity of temporary workers is usually justified by the need of always more flexibility. 5.2. It is finally more likely the growing burden of rules and regulations for employers that encouraged both developments. but may now be designed from the start to be the co-employer for the largest multinational companies. Business Village.

.1 Microsoft has indeed been charged in 1999 for having misclassified 15.000 temporary workers that were in fact entitled (as employee-considered for this matter) to receive its employees stock purchase plan (a liability that could easily reach $20 million). A] Costs reduction A 1997 McKinsey study concluded that a multinational company could cut its labor costs by 25% to 33%.3d713 (9th Cir 1999) 70 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .Vizcaino to Microsoft in the U. Microsoft Corp. and they all threaten punishment for noncompliance. 5. tend to stress the need of at least an external counsel.S.S. and actually even more in Europe.2. that is expert in (has for core competencies) the management of this kind of complexity as a whole. B] Time gains No wonder that employers complain that they have no time to work on 1 Vizcaino v. the costs they impose on businesses are high everywhere in the developed world. The growing complexity of overlapping legal references that face ever more HR departments in the U. The outsourcing of employees and Human Resources activities is an international trend. Even more onerous than the costs of complying with employment laws are the enormous demands that the regulations place on management’s time and attention. having its Human Resources functions managed by an outside company. Costs reduction and time gains Temporary agencies and HRO providers favor costs reduction and time gains for the client-company. as although employment laws and regulations vary widely from country to country.3.. and at best of an external provider. They require managers to file multiple reports. 173F. This case clearly demonstrates that the litigation probably could have been avoided if the company’s benefit plans had been drafted differently.

but identity allows recognition. As a consequence. Managing knowledge workers Beyond the desire to avoid the costs and complexity of regulations. there is another major reason for both the rise of temporary workers and the emergence of HRO providers: the nature of knowledge work and the fact that knowledge-based organizations have lots of experts. If this corporate culture is not a reliable reflect of the parties (the workers). but various identities lead to a unique corporate culture. it is then evident that the identity they have is often too distant from the collective company identity. even in large organizations. thereby it is not optimized to be considered as a strategic asset for the whole (the company). Knowledge workers are not homogeneous. A direct negative consequence of this specialization is indeed that knowledge workers have most of the time fewer career opportunities within the organization.3. on problems (employee regulations).3. etc. Managing all of them effectively is a big challenge. specialized workers are better managed in specialized companies (with the same specialization). The success of temporary agencies and HRO providers is thereby evidently due to the fact that they both enable management to focus on the business. In conclusion. Culture builds identity. as they work. as their corporate culture better reflects individual identities. Both the large temporary agencies’ clients and the HRO providers’ clients lack the ability to effectively manage. place. and satisfy highly specialized 71 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .results. This is particularly true among the fastest-growing group of knowledge workers that are innovative industry specialists. one that temporary agencies and HRO providers can help to address. and thereby motivation. as knowledge is effective only if it is specialized. instead. 5. Moreover. Because knowledge work is specialized. and there is not the slightest reason to believe that the costs or demands of employment rules and regulations will decrease in any developed country. it is a deeply splintered work. one must share the same corporate culture without sharing individual identities.

Balancing its dual responsibilities. that is not true. in contradiction to what Human Resources theory says. if not all. But as all industries are now obliged to cope with the information age. suppliers. 5. In a total HR outsourcing contract. part-timers. Temporary agencies claim to be selling productivity. This explains why HRO providers can claim. and to be doing the company’s oversight job for them. or employees of its outsourcers. In the end. Every organization must take management responsibility for all the people whose productivity and performance it relies on.4. Who would dare say that interns are less productive than formal unfixed term contract junior collaborators? B] People development 72 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Temporary agencies and HRO providers perform this vital function for employees as well as for their clients. The temporary agency has no control over those last two areas and this lack of oversight is a real problem.knowledge workers. that the people they coemploy are high job satisfaction. but it’s hard to see how they deliver. But as we have seen. is probably HRO providers’ most important challenging job. brain resources management or human capital management concerns for now on absolutely all industries. and apparently document. it is expressly provided that the HRO provider has the duty and the right to place people in the jobs and companies where they best fit. The productivity of the people they supply to a client depends not only on how and where those workers are placed. of the people who work for a company are employees of that company. whether they’re temporary workers. HR management is all the more expected to perform well as it is applied in brain-based industries such as consulting or services. Issues For The Outsourcing Company A] Temporary workers motivation and management HR policies still assume that most. to the corporate client and to employees. and distributors. but also on who manages and motivates them.

while increasing 1 Intellectual Capital. Human Resources New Objectives The HR function faces a growing challenge from business leaders: it has indeed to enable the organization to achieve excellence by developing strategies to attract. develop and retain human capital. but then. challenge them and encourage them. Even while those people are not traditional employees.5. Companies have thereby ample reason to try to do away with the routine issues of employee relations. Stewart. mentor them and listen to them. and new policies. This trend will require more than just same new programs and new practices. 5. they are still a capital resource for the organization and critical to its business performance. If employee relations are being outsourced. and productivity of the knowledge workers on whose performance their own results depend. satisfaction. Indeed. new goals. regulations. HR does not manage a collection of fully-owned workers. new values.1 HR must enable companies to meet the expectations of their stakeholders.Temporary agencies and especially HRO providers free up managers to focus on the business rather than on employment-related rules. whether by systematizing employee management in-house or by outsourcing it to temporary agencies or to HRO providers. the main benefit of decreasing administrative work may be to gain more time for people relations. they may become impersonal. It will require new measurements. But they need to be careful that they do not damage or destroy their relationships with people in the process. and paperwork. People are capital. Leaders in knowledge-based businesses must spend time with promising professionals: get to know them and be known by them. motivation. people are opportunities. Doubleday Publishing 1999. but a network of partly-owned knowledge workers. and the key to greatness is to look for people’s potential and spend time developing it. executives thereby need to work closely with their HRO provider counterparts on the professional development. pp 79-106 73 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . The functions that are involved with employee relations should be systematized. Thomas A.

such as outsourcing strategies. faster and cheaper. a lot of tasks are outsourced and companies are equipped with very advanced information systems. In Europe1.75% with of only 1.5. Randall MacDonald (now Vice President Human Resources IBM Corp. November 2000. the average is of 1.. HR leaders use lots of tools to evaluate their performance. when J. and the average is of only 0. p 3 2 Le tableau de bord prospectif. Meet stockholders expectations through costs reduction After requiring HR functions to reduce their expenses and more generally all their external costs. recruiting. To this purpose. As far as this ratio is concerned. Kaplan and David P. and ratios are implemented. A common ratio is the number of HR employees divided by the annual revenue. PricewaterHouseCoopers. but also companies’ operational costs in general on the other hand.1. benchmark is realized. In the U. but the most recurrent and relevant one is the number of HR employees divided by the global number of employees. Chief Executives now expect the HR department to decrease its own operational costs on the one hand. and of 2% in France. without of course creating any social problem. to implement new strategies to reduce costs and to improve efficiency. Robert S. the American average is very different from the European.4% in Scandinavian countries. Thus to that extent. he 1 Le management des Ressources Humaines en Europe: les professionnels RH doivent développer de nouvelles compétences face aux défis du e-business.) was head of HR at telecoms giant GTE. also called HR staff-to-employee ratio. Les Editions d’Organisation. such as balanced scorecards2 and decisional analysis tools (turnover. Norton. 1998. absenteeism costs).4%.S. In other words. indeed.employees’ service quality. it has to work better. pp 137-155 74 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . 5.

introduced one of the most robust Human Resources scorecards. He took clear measures from every corner of Human Resources functions and rolled them into a four-pages report, which was distributed around the company. As a positive consequence, when discussions took place on which areas of the business were adding value, there was almost never a question about what the Human Resources department did, what its value was, and how it was improving.1

5.5.2. Generating value for the company
Though reducing costs is clearly one motivator to transform HR, far more compelling is the interest in generating value for the whole organization. Indeed, HR ROI is now calculated and expected to be so. New HR performance leverages are also implemented: they consist in being more aligned with the business thanks to HR Business partners working with operational collaborators, or in no longer being just a provider but a pro-active actor by forecasting future issues. HR Business partners are thereby empowered to grow business partnering, change management, workforce development and organizational effectiveness capabilities, and to truly support organizational excellence.

5.5.3. Seven questions to challenge objectives
William Schiemann of Metrus Group suggests that there are seven main questions HR leaders ought to ask themselves to know if they are on the good way or not to challenge future HR issues2: • Is HR present at mergers and acquisitions planning meetings, strategy reviews, and restructuring discussions? • Does HR provide an annual report on its ROI? • Does HR lead the people strategy? Has it developed key

1

“Be seen and heard or face extinction”, Personnel Today, Lance Richards, 19th February 2002 “Trends to Watch in HR’s Future”, HRFOCUS, December 2002, p 7

2

75
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

performance indicators for the success of that strategy? • Do its customers rate HR? • Does the organization conduct strategic vs. entitlement employee surveys? • Are HR employee and other survey initiatives linked to customer and financial metrics? • Does HR have an ROI process to evaluate its initiatives connected to the business strategy?

76
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

Chapter 6. Human Resources Outsourcing Strategic Approach
Whatever you might think, outsourcing Human Resources activities will be human-focused or condemned to fail.

6.1. Outsourcing Decision Theory
Now that one knows how to define the HR activities that may be outsourced (activities outside the dark cone of the illustration 15), one is now invited to enter the mechanism that leads to the outsourcing decision.

6.1.1. Bases
A] The transaction costs theory
This theory1 deals with two main important issues of the outsourcing process: decision (is it worth outsourcing or not?) and management (how to manage successfully an outsourcing operation?).

a) Principles
According to this theory, there are three ways to organize an activity: • Managing the activity by oneself (called “firm” governance); • Delegating the activity to the market (called “market”

governance); • Make it managed by a provider with whom one has solid relationships (called “hybrid” governance). The best governance structure, as far as costs are concerned, is the one

1

“L’outsourcing : une approche par les coûts de transaction”, Bertrand Quélin, Réseaux, July-August

1997

77
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

and the number of providers. c) Transaction attributes The transaction costs theory allows the determination of the optimal governance structure. There are finally three environmental factors interacting with the two behaviorist fundamentals: the uncertainty. and then all renegotiations that may be necessary. Opportunism occurs when there is a small number of providers and an atmosphere that may encourage the provider to take advantage of this context and to be unfaithful with its clients. but also temporal specificities (when the provider developed specific assets to respect time of delivery to its client).that minimizes the most the sum of production costs and transaction costs. 78 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . the uncertainty. the complexity. and the difficulty to measure the provider’s performance. specific physical assets (when the provider developed or adapted equipments for the client). The limited rationality consists in an inability to forecast all events that may occur during the outsourcing contract. There are specific locations (when a provider established equipments close to the clients to reduce storage and transportation costs). specific human assets (when the provider developed special skills just for the client needs). thanks to four criteria: the assets specificity. the frequency. i/ The assets specificity Specific assets are assets that have been specifically developed or adapted to a special usage. b) Fundamental hypothesis The transaction costs result from the interaction between a limited rationality and a similarly limited opportunism (hypothesis on which the theory is based) of individuals with environmental factors.

The less frequent a transaction is. and outsourcing with relational contract law. the less it is recommended to outsource it. Indeed. but it suggests three types of outsourcing: outsourcing with classical contract law. casual. These problems occur all the more as it is combined with a strong specificity of assets.The less the assets are specific. the more it is recommended to outsource it. iii/ The frequency Transactions can be unique. 1 “L’outsourcing : une approche par les coûts de transaction”. the bigger the transaction costs are. one can conclude the following: the bigger the level of uncertainty is. Réseaux. iv/ The difficulty to measure the provider’s performance The more difficult it is to measure the performance of an activity. Bertrand Quélin. we saw in the hypothesis that the individuals’ rationality was very limited. or recurrent. outsourcing with neoclassical contract law. and it is thereby impossible to write a contract that includes all future contingencies. the easiest it is to make the activity managed by an external provider. July-August 1997 79 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . d) Governance structures 1 The transaction costs theory not only distinguishes insourcing and outsourcing. ii/ The uncertainty The uncertainty is the fact that it is more or less difficult to forecast the future evolutions of the environment and the provider’s behavior.

ii/ Outsourcing with classical contract law This kind of outsourcing strategy must be implemented when the activity to be outsourced is slightly specific and allows economies of scale. and the frequency are all particularly high.i/ Insourcing As seen previously. A high uncertainty would make the contract difficult because of the necessity to renegotiate it permanently. Risks are more tolerable when the uncertainty is low.). These contracts are detailed and used for long-term inter-enterprises relationships. iv/ Outsourcing with relational contract law This contract applies when both the assets specificity and the uncertainty are high. and this kind of contract is used to manage simple and welldefined relations. it is possible to ask a third part to be referee in case of future conflict (see 8. when the assets specificity. Concerning repetitive activities. it is recommended to keep them internally in these conditions. in this case. and when production costs are almost the same for the provider as it is for the client internally. and flexibility clauses are added because all eventualities cannot be anticipated. not necessary to implement complex contractual mechanisms. It is.1. 80 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . it is more careful to manage the activity internally and not to outsource it. the uncertainty. Formal documents are emphasized. and when the production costs are almost the same for the provider as they are in the client-company itself. It is short-written and plans all eventualities: formal documents are emphasized. Moreover. and the relational aspect is very slight. iii/ Outsourcing with neoclassical contract law This contractual outsourcing is recommended when the assets specificity is high.

This theory is based on an easy idea: performance differences between companies of a same industry can be explained by differences in resources and skills. • Have almost no competitor able to imitate them. The decision itself As seen before. The mission of the management board is to create a high level of resources and skills by making them adapted to the environment. C] Conclusion of the two theories In conclusion.1.) and 81 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . • Have almost no substitutes possible.2. outsourcing has advantages (see 1. and thereby give a product value from clients’ points of view.2. In parallel.2. insourcing has for goal to benefit from coordination abilities and from the flexibility that are more important inside the company. • Are very rare and almost unknown by other competitors. where opportunism has only an obvious secondary role. one can say that insourcing resulting from the risk of individual opportunism tries to avoid this opportunism by keeping the targeted activity inside the company. Resources and skills that present all these characteristics must absolutely not be outsourced.B] The resource-based theory This theory deals with important topics for managers such as “core business” and factors activating outsourcing. Resources and skills are strategic when they are the foundations of a lasting competitive advantage. that is to say when they: • Open access to a large number of markets. The goal is to determine factors that underpin competitive advantages of companies. 6.

1.3. Hilmer. and this approach is very limited. We shall then distinguish several decision criteria: the belonging of the activity to the core business. James Brian Quinn and Frederick G. One must have objective approaches by using the four criteria we developed before (see 6.1. But one must be aware of the definition of a “core business”.2.) at the same time. Outsourcing presents two main interests: • A direct one. which do not belong to the “core business” can be outsourced. in order in the end to create always more value. Quinn1. A] The belonging of the activity to the core business All activities. According to James B. B] The level of performance Supposing the activities do not belong to the core business. or the internal 1 “Strategic Outsourcing”. as economies can be done and reinvested in the “core business” activities. which make the competitive advantage of the company. Summer 1994. the level of performance and the level of transaction costs. which is actually the basic logic of the labor division and specialization emphasized by Adam Smith at the end of 18th century. there are two possibilities: whether the internal performance is worse than the provider’s performance and thereby it is recommended to outsource.B]). The question is to know how to decide the outsourcing of this or this activity.disadvantages (see 1. pp 43-55 82 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . because general managers often subjectively decide it. • An indirect one. as costs decrease and performance increases. Sloan Management Review. companies waste their financial resources when they do not outsource all their activities that are not part of their “core business”.

all the more as the outsourced activities are based on specific assets. inside the whole company. 1 “The hidden costs of IT Outsourcing”.B]). and finally the type of activity. one can use the cone of (HR) competencies previously described (see 4. There are non-negligible fixed-costs. the degree of proximity to the HR department global strategy. as there is a high uncertainty and as they are regularly processed. and the difference of performance and costs that are necessary to set about an outsourcing operation is all the more important as amounts involved are low. C] The level of transaction costs 1 These costs can be very high. In fact. or (better solution) be managed by a subsidiary created to this purpose and which can propose its services to the holding but also to other companies (spin-off strategy). Spring 2001. Jérôme Barthélemy.performance is better than the provider’s. As far as HR activities are concerned and as HR core competencies obviously differ from one company to another. Volume 42.2. Sloan Management Review. What Should Be Outsourced Any activity can be a candidate for outsourcing. and in this case the activity must whether be kept internally but there is no focusing reinvestment in the core business. arises then the problem of defining which of these activities are part of the HR core competencies and which are not. pp 60-69 83 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . in order to clearly situate each HR activity according to the three defined dimensions: the HR function belonging. This question is all the more crucial as it strongly determines in the end the HR department competitive advantage. As a consequence.2. 6. the HR department constitutes a real value chain itself. provided it is not critical to the “raison d’être” of the company. Number 3.3.

In other words. benefits administration or training. each square of the matrix representing a particular activity can be chosen to be outsourced or not. Traditionally. The closer to the central core competencies cone the activity is located the less it should be outsourced. that is to say: Style. we bet the dominos will fall quicker than so far expected. only remains thereby the evaluation of each activity’s distance to the HR strategic activities. clients have parcelled up discrete areas such as recruitment. As far as we are concerned. we strongly support the idea that the dark cone of HR core competencies is quite thin. The current main brake to this trend is the structuring of the offer. Once the cone (see illustration 15) is clearly set up. Structure and System). with the advantage not to limit systematically strategic activities to managerial ones. 84 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . the market is not mature enough. But as soon as some reliable multinational companies will be able to provide the all range of HR outsourcing services. integrated approach and that there will be the advent of new providers offering (helped by the technology) “life cycle” services. from recruitment to retirement and beyond. Skills and Staffing (whereas the hard ones are: Strategy. Shared objectives. we think that the future will show that HR functions may be largely and successfully outsourced. according to its location inside the cone. In the end. the decision to outsource some of these HR activities becomes a lot easier to take. Indeed. But we are convinced that the next generation of HR outsourcing will be characterized by clients taking a more strategic. and outsourced these to providers with reputation as specialists in the niche service areas. These are the real challenge of HR outsourcing. outsourcing most HR activities aims to improve the four soft “S” of the seven “S” approach developed by McKinsey. which handle all employee issues. The cone allows bringing about a global reflection on what is strategically decisive and what is actually not in the process of creating valueadded.Two dimensions are indeed already given by the illustration 4 (HR function belonging and type of activity). and it evidently is lacking large worldwide credible providers.

If it is true that Human Resources activities must be tailor-made for each different company. pp 114-122 Creating value through HR Outsourcing.2 And as it is so. 1 Intellectual Capital. Thomas A. Doubleday Publishing 1999. Outsourcing Human Resources activities to a third specialized company allows benefiting from communities of practice1 that accumulate experience and know-how of excellence. According to Exult4. Advantages Outsourcing provider capabilities enable Human Resource’s shift of attention and skills to more strategic roles. February 2002 85 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . the company does not own the human capital assets. p 104 Intellectual Capital. Stewart. Thomas A. • Supports devolution of people management to managers. It is in fact the complete opposite: a business relation would have the advantage of largely stressing the crucial customer knowledge strategy. p 100 Intellectual Capital. Thomas A. • Access to meaningful Management Information System and measures. it is according to us not an argument to justify its insourcing. Melbourne. Doubleday Publishing 1999. Dave Connaughton 2 3 4 (Director Business Development Asia Pacific Region Exult). • Lower unit cost for any given level of service. • E-enabling the workforce. Stewart. the main advantages of HR Outsourcing are the following: • Ability to focus on aligning HR Strategy to business strategy. companies should favor connection more than collection. Outsourcing implies understanding that in the intellectual capital era.3. • Efficient management of third party.6. • Rapid scalability (a solution to solve a problem has to be rapidly efficient as the size of the problem increases). Pitfalls. it is only one of its part-owners. Sourcing Interests Group. Stewart. Doubleday Publishing 1999. Strategies. Opportunities.3 The real competitive advantage relies thereby on your network.

in the European regulations patchwork.4. Lisa Gelman and David Dell. Finally. as it is an effective mean of harmonizing a number of different regulated HR systems. It seems indeed necessary to rethink systematically HR indicators (or scorecards) in the direction of a better assessment of the HR contribution to global value-added. 51% of respondents reported that they had fully achieved their outsourcing objectives. 6.• Reciprocal services.1 6. Drawbacks Outsourcing HR operations may sometimes pose some challenges and problems. • Shareholders dividend.4. Another 42% had partially achieved them. Nevertheless. Marie-Béatrice Baudet. 2002. its impacts on the company’s level of competency as a whole. The Conference Board. Le Monde. even better in financial terms. it enables the outsourcing company to shift risks to a third party with expertise and to get a single neck to strangle when problems occur and shareholders complaint. for American companies that have subsidiaries in Europe. 7th September 1999 2 HR Outsourcing Trends. It may also be seen as alternative to making a capital investment in the new technology necessary to support the HR function. outsourcing is a good way to manage their HR functions.1. and on the corporate long-term benefits. p 6 86 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Moreover. Those who expressed dissatisfaction cited lower-than- 1 “Le prix réel des nouvelles organisations d’entreprise”. most of the current management tools still do not allow an accurate measure of the hidden-costs generated by these advantages and by flexible corporate organization in general. Quality decrease and loss of control In The Conference Board Survey2.

6. major hiring activity and shifts to business strategy will happen while HR is moving to a new model and is totally or partially outsourced. plant closings. as far as each new process implementation by the outsourcing company after the contract is signed. High commitment required during outsourcing implementation One must also not forget that mergers and acquisitions. 87 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .4. 6.4. The implementation of a new model in order to gain value in the end will be. during the transition. and that all work done adheres to proper security procedures. is likely to be discussed and charge negotiated by the outsourcer.2.3. which has now the possibility to increase its prices. It is all the more crucial as HR activities deal with a lot of confidential and personal data.expected service levels and loss of control as problem areas. Security issues Another preoccupation is the security concern. but difficult to control. as it leverages the activity. Human Resources outsourcing creates indeed an increased security risk. 6. It is a necessity for the company that outsources. in most of the cases a real nightmare.4. that the provider will adhere to the security policy.4. High unexpected costs The costs can be difficult to control. This implies the development of change management skills on parallel to particularly developed organization skills.

Thereafter we describe the legal environment in which such a project takes place. IMPLEMENTATION We would like along this third part to surround the outsourcing concept by now determining the conditions of its successful practical implementation and by laying the foundations of an efficient outsourcing operation management. Finally the essential aspects of the management of outsourced HR activities are analyzed.PART III. First is presented how we suggest one should manage an HR outsourcing operation. 88 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .

and that has the necessary skills to consider all specific issues of this sensitive kind of outsourcing. as this last cell will coordinate the relations between the outsourcing company and the provider. and communication to the provider’s selection process. This project team may also include one or more members of the future piloting committee. Nevertheless. It is indeed very important that it is balanced and that it makes both parties winning the deal. These issues must be directed and resolved by a dedicated team. They may be directed by an external project manager (consultant or interim manager) specialized and experienced in HR outsourcing. composed of internal employees and/or external consultants specialized in project management. the outsourcing company has to focus on the project phase not to forget any aspect of the process. financial. 7.Chapter 7. Project Team Managing an HR outsourcing project consists for the outsourcing company in considering both internal and external issues. technical. It is essential that they are involved 89 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . as will strongly emphasized later on. Moreover. a good contract is absolutely essential to the success of any outsourcing operation. and of course in business areas.1. the outsourcing solution does not prevent from keeping internally some decisive resources that also participate in making the difference and coordinating the interaction between the two structures. from project definition to staffing reorganization. Managing The Human Resources Functions Outsourcing Project For HR outsourcing to be optimized and successful. and to anticipate problems. environmental. The team may also include experts in legal (see chapter 8). as they have the needed experience in managing a project.

authorizations. and a second one (in the final stage) specifying commitments and deadlines for the provider. (documentation). 90 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . once the outsourcing deal is effective. training requirement. the finally outsourcing company’s 7. the more the provider is hold to fixed pricing and time tables.2. assets and environmental requirements. The major typical topics included are: project specifications. The more detailed it is.2. Project plan The project plan defines the project requirements in more or less detailed. one must remember that the more detailed the final project plan is. implementation schedules. implementation meetings and requirements. the better the operation development will be. according to the size and the ambition of the project.and take part in the project from the beginning. Finally. As already mentioned. in order to manage it the best way. the project team develops two project plans. definition of specific provider’s tasks with milestones and deliverable dates. Risk assessment The project team must identify and outline the risks HR outsourcing operation could lead to. one or more members of the managerial activities. the first one defining the outsourcing company’s initial requirements.2. may also be members of this project team. by defining parallel running environment or pilot phases. Identify these risks due to new methodologies implementation will allow the project team considering the way these risks can be reduced.2. testing permits and and acceptance requirements. for example. Project Definition 7. responsibilities. 7. and assess the weight of benefits compared to risks. installation reports quality and and plans.1. Generally.

implementation costs. it is important to stress that the NPV ignores intangibles (decisive as far as HR outsourcing is concerned) that may make an outsourcing operation worth pursuing despite a negative NPV.7.1.3.1. 7. as it will evaluate the profitability of the investment based on anticipated cash flows and discounted at a state rate of interest. Internal Issues 7. some other internal businesses will be affected and obliged to change. taxes.2. One may also add the use of the transaction cost theory seen earlier in 6. not only to be aware of the project.3.1. but also to actively 7. Moreover. the project team should not forget to tactfully inform all the other and parallel areas managers which could be affected by the project. etc.3. While using the NPV tool. Management commitment The support it. transition costs.). but the costs of HR function outsourcing must also be assessed (separation costs. Moreover. A]. Cost analysis The costs of the project phase itself have to be assessed (external consultants costs. Organization’s ability to absorb change Whatever the kinds of HR functions outsourcing procedures adopted. running costs.3. 91 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . In order to obtain a reliable statement of the quality of the investment. travel costs. legal advise costs or travel costs for example). it is possible to use the calculation of the NPV (Net Present Value). to help them managing the organizational change. project team has to convince the outsourcing company’s management team.2. mismanaged employee transition. one must be aware of the degree of accuracy of its assumptions.

Staffing reorganization As developed in 7. according to the sensitivity of the project. A communication strategy must be set up from the beginning of the project. IBM was committed to run and support the information system of the pharmaceutical company for duration of seven years.200 former employees of the Anglo Swedish company. Communication The project team should include in the project guidelines procedures related to confidentiality and internal communication.Not only the leaving HR staff will have a completely different job. outsourcing support activities such as HR functions consists in fact in a collective empowerment of the people involved. 2nd May 2001 92 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Frank Niedercorn. AstraZeneca signed a $1. 7. the impact will not only be apparent in the directly affected department. or even totally transferred.3.3. As an example. Les Echos. Finally.3. the outsourcing company will maybe need new staff with other profiles. as some functions will be reduced internally. when at the beginning of the year 2001. HR outsourcing often includes staff transfer. 1 “L’externalisation à toute vapeur”.4.7 billion contract with IBM. in order to communicate the vision and the strategy of the outsourcing company and to avoid any confidentiality issue. 7. which will also maybe have to reorganize their staff themselves. On the other hand. If some departments will be positively affected. as they will work with outsourced employees. and such an operation surely leads to staffing reorganization. but also on others. others will be disadvantaged.C]. But IBM was also committed to integrate in its own staff the 1. and leaders would gain remember it. but also other departments will have to absorb some changes in the organization.4.3.1 As just mentioned. which implies for the project team an assessment of the ability to absorb change.

or once the deal is done and the contract is signed. Moreover.4.1.We can distinguish three main communication strategies.2. Communication The outsourcing company. Announcement and information to some other stakeholders has to be carefully managed: government. and the outsourcing company’s clients. Indeed.4. just informing employees that there will be an outsourcing operation but waiting until the negotiations are well under way. or at the limit simultaneously. 7. 93 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . or hiding everything to employees until the deal is done and the contract signed. as we already mentioned it. has to plan an external communication strategy. Provider’s selection issues The decision to deal with one or another provider is absolutely crucial. External Issues 7. stockholders. in order to remedy in the end to the often very sensitive dimension of such an operation. as the reversibility of this particular choice will be very difficult to consider in the future. 7.4. with pros and cons for each approach: being transparent with employees from the beginning and along all the different phases. during the provider’s selection. Each approach has its reasons for being according to its specific environment. the decision to outsource and the name of the selected provider should be announced to the press after announced internally to employees. a particularly critical issue is the selected period when to make the announcement: is it during the project phase and before the provider is selected. implementing an HR outsourcing project.

The RFP should be structured in such a way that it will be relatively easy for the outsourcing company to compare the proposals from each provider. The pricing proposed by the provider. should be 1 The maturing of outsourcing.K. Indeed. In the case of logistics outsourcing. is actually being largely applied. according to the number of providers on the market: • The ordinary invitation to tender (all potential providers of the market are in demand). It is also called a competitive procurement process. a study1 dealing with IT outsourcing in the U. • The invitation to tender with preselections (a small number only of providers are in demand). any assumptions that it wants the provider to make. It seems indeed that this approach combines two main advantages. 1996 94 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . the proportion is even greater2. as three quarters of the outsourced companies used this method. Logistique et Management. KPMG Research Report. revealed that two thirds of the surveyed companies used it to make up their mind. in particular.A] Three different selection processes There are mainly three ways to identify one’s best choice. The RFP should clearly describe what it wants the provider to do. To do a good competitive procurement. which differentiate from one another. 1997 Chaîne logistique globale: l’externalisation en marche? Etude sur l’externalisation de la chaîne 2 logistique globale dans les entreprises industrielles en France. and give a clear timeline. the outsourcing company will need to understand the scope of what it want to outsource and document its requirements as part of the RFP. which implies concretely an RFP (Request For Proposal) process. and reaching at the same time propositions of a good quality. • The direct selection (only one single provider is in demand). which are obtaining the lowest prices on the market. a) The ordinary invitation to tender This approach.

broken down to a level that makes "apples to apples" comparisons possible. and this situation sometimes strongly weakens its impetus need of competition. Moreover providers investing themselves in such an invitation to tender consider this method as being less interesting as the competition is the largest. 2003. Amacom. the quality is a lot harder to define in strict terms. the invitation to tender must be as clear as possible. one will have to deal with fewer candidates. http://www. it takes a long time to manage the perusal that brings to the decision. some providers simply ignore this kind of selection process to concentrate on the two others. Attorney at Shaw Pittman. As this method implies that all providers of the market should be in demand. one shall draw the attention on two limits as far as the ordinary invitation to tender is concerned: the longest process period and the low attractiveness for potential providers. Legal and Otherwise With Outsourcing Deals and How to Avoid Them”.1 However. In fact. both processes are exactly the same. but in this case. if it is quite easy to evaluate prices according to the market. Advantages for companies willing to outsource are: less applications to assess. Greaver. as a consequence. b) The invitation to tender with preselections This approach is intermediate between the ordinary invitation to tender described above and the direct selection described later on. In other words. a more attractive process to provider’s point of view (as competition is more acceptable) and a low influence information broadcast as far as the outsourcing project is concerned. In the end.php?t=25 2 Strategic Outsourcing.com/particle. to maximize the use of this technique2. in spite of its theoretical efficiency. as precise as possible. it must let enough time for candidates to return their proposition and assure direct contacts with decisionmakers. 1 “Common Problems.chiefofficer. Maurice F. December 1998 95 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . The only actual difference with the first approach is the suggested preselection.

there are no guarantees concerning the reliability of such an option. the outsourcing company must have good reasons to focus on only one provider. Sole sourcing approaches are common in case of requirement of a very strong buyer-service provider relationship due to a lack of competition. the whole success of that kind of approach entirely relies on the quality of the information at the disposal of the outsourcing company. banking references or even the notoriety of the providers as well as the professional references of the particular persons representing the candidate. such as former partnership or any other strategic pressure. In fact.The main advantage for candidates is that they consider the challenge valuable. flexibility. two non-exhaustive lists of objective and subjective criteria 96 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . If these criteria are obviously particularly decisive. balance sheet and income statements. Following. c) The direct provider’s selection This last approach consists in selecting one single provider to be in demand for the invitation to tender. the spontaneous criteria are economical and technical ones. as this option involved fewer actors. Moreover. Finally. and capacity in helping transferred staff to integrate their new structure. revenue. The main advantage of such a method lies in its cost. On the other hand. one can underline the fact that this option is less expensive and equally efficient to the previous one in surrounding its future partner. but their investment returning the invitation to tender is optimized anyway. such as price. as they were already selected by the client-company. one should not ignore more general criteria such as financial stability. performance. B] The selection criteria First of all. it is all the more possible to make it more complex in order to get the most obvious results. They may not win the business.

4. • Permanent wish of improvement. • Satisfaction of current clients.thanks to Maurice F. • Strong experience as far as staff and equipment transfer are concerned. The subjective suggested criteria above are all dealing with the suitability between the client and the provider: • Trustful and respectful of confidentiality. Maurice F. John K. • Good managerial competencies. 2000. December 1998 Business Process Outsourcing. Greaver1: • Good reputation. Inc. Greaver. • Suitability between interacting corporate cultures. • Flexibility and ability to change. • Clear vision of the market. • Commitment to invest in specific assets for its client-partner. • Willingness to share expertise. Process. p 51 97 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . 7. • Constructive general behavior. Assets transfer The transfer of activities to the provider typically includes some or all of the following2: • The transfer to the provider of client’s assets used to manage and facilitate the business function. such as facilities and business 1 Strategic Outsourcing. Strategies and Contracts. Amacom. John Wiley & Sons. • Financial stability. • Problem-solving method implying the client-partner..3. Halvey and Barbara Murphy 2 Melby.

it can choose to simply lease them. The parties have to assess the most favorable means to transfer these assets on a site-by-site basis (to minimize tax and regulations weight). and other related tangible assets. As we will further develop in 8. when the outsourcing company does not want to transfer its assets to the provider. • The assignment or license to the provider of proprietary methodologies or technologies used by the client in connection with its business function operations. • The transfer to the provider of all or a significant portion of the client’s employees previously involved in the internally managed business function operations to the customer’s organization.A].2. They will need to negotiate a purchase and sale agreement.1. • The assignment or sublicense to the provider of any third-party methodologies previously used by the client in connection with its business function operations. what could be critical in the case of assets transfers in general and equipment transfers in particular.2. the contract should include a clause for intellectual property protection. 98 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . B] Equipment transfer Many outsourcing deals lead to equipment sale from the outsourcing company to the provider. in exchange for payment or reduction in annual fees.equipment.K]. A] Assets leasing As we saw in 1.3. C] Staff transfer Three different possibilities are possible for the outsourcing company concerning its staff when it outsources its HR activities: • Find other opportunities inside the company for displaced employees.

as Alison Humphries. it is still often felt like a tangible traumatism that companies must necessarily cope with. 26th October 1999. Anne Galez-Rovan and Catherine Lévi. in any outsourcing operation. Collaborators were used to identify themselves to a particular product. pp 47-48 99 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Director of BNB (Barkers Norman Broadbent) Outsourcing says: “Nor need HR staff being transferred to another company necessarily feel they are being dumped”.• Try to transfer the greatest number possible to the provider. and they are now asked to focus on their profession and to redefine their points of reference in this new environment. and one cannot. they will most of them benefit from such a transfer. In fact.” Finally. In her experience. their CVs will be much more broader as a result. etc. perks. just as in any other business operation. underlines: “My staff act more as consultants. often felt by the concerned collaborators as being a staff failure. Les Echos. Indeed. And when they choose to progress. during an outsourcing operation. Staff transfer is. which gives them the chance to become much mire rounded in their skills. Moreover. Even while. • Find opportunities outside the company (outplacement). a) Transfer perception The only difficulty with transferring equipment is the evaluation of its value. on no account. employers putting out to tender are usually keen to ensure that the provider can offer outgoing staff with good career development opportunities. salary. if on the one hand they surely feel betrayed by the outsourcing company. staff transfer is a lot more complex. most of them did not participate in choosing this particular provider or they did not even know it existed. as Michelle Walker. they also feel insecure as far as their future business environment is concerned.1 Moreover. as well as their future carrier. people make the difference. 1 “Le délicat volet social de l’externalisation”. On the contrary. in the long term. Personnel Services Director Rebus HR Services. brand or culture.

it is most of the time a great opportunity to be transferred in a company that have for core business the profession it is specialized in. As it is part of its core business.5. the outsourcer management team has for prior mission to improve the productivity of its capital that is to say of its staff. Factors determining the success 100 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . We are convinced that if HR outsourcing keeps growing. HR professionals will be less likely to follow careers in companies operating in other sectors. In other words. As emphasized by Alison Humphries: “It provides much greater opportunities.leave aside the particularly touchy staff transfer problematic. national as international wide. 7. it can give them the opportunity to work with several different clients on projects that are up to their skills and it also allows them more geographical flexibility. Instead of being regarded as being of doubtful value they will find themselves an essential fee-earning part of their business. With an outsourcing partner. Outsourcers offer in most cases better career opportunities. b) Staff transfer: a good bargain For the staff. the role of HR professionals becomes central rather than peripheral. as expected. the provider will be much more armed to take the biggest advantage of its staff’s skills and to develop them.” It is easier for transferred employees to change job inside the core business or to be promoted inside the profession. they will be employed by HR outsourcing providers. The whole success of an outsourcing operation largely depends on the staff transfer successful outcome. handling a range of different accounts.

p 5 101 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . either because it is unable to meet contracted quality expectations or because it cannot respects contracted tariffs. AON Human Capital Consulting. 1997 2 The Beat Goes On: Outsourcing Your Human Resource. the provider might postpone this starting date.According to the Saratoga Institute1. commitment. methods. predictors of success are “adequate diligence.6. and agreement between the employer and provider regarding performance levels and roles”. which had recently undergone significant restructuring: planning. business focus. 1 Restructuring the Human Resource Department. and benchmarking. Indeed. as we saw previously. trends. effective communications. Saratoga Institute. This situation results from a lack of attention of both parties considering abilities to face the real ambition of the project and the needed level of excellence. there are six leading indicators for successful HR restructuring that have been identified by twenty-six Top Companies. communication. According to Mark Lifter2. teamwork. American Management Association Special Reports. Problems Likely To Occur In less than 5% of the cases. during the quarter before the forecasted starting date of its services. 7. these factors are determining the success or failure of an outsourcing operation. objectives. Knowledge@Wharton in collaboration with Aon Corporation.

102 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . as many large companies expect that internal legal professionals must stamp all contracts involving transactions from a certain amount. Legal professional As we saw before. This legal support has in fact two very important roles to fulfill: • Actively participating to the whole outsourcing implementation process. implementing an HR outsourcing solution is managed like any other project.Chapter 8.1. They can just be the internal legal staff. the legal support may also consist in a law-firm or any independent attorney specialized in outsourcing cases. One of the profiles must correspond to a legal professional. Legal Aspects Of A Human Resources Outsourcing Operation Outsourcing operations have a lot to do with complex legal issues. The legal professional in the team should not have a leading position but has to be part of all operation stages. and of course especially when the contractual aspects arise. Outsourcing Legal Actors 8. 8. with experience in outsourcing contracts. from the decision motivation to the board. until at least the beginning of the HR functions outsourcing first effects.1. and if possible especially with HR functions outsourcing contracts. • Negotiating as the company’s spokesman all the contractual details and framework of the deal. That is mainly the reason why companies have to appeal to legal professionals. as it will then be able to assess the legal risks following such an HR outsourcing operation.1. Moreover. It is indeed crucial to gather appropriate profiles to be part of the leading team.

state or local). conflicts must arise whatever precautions were taken. and it is always better to agree on one before the conflict arise (national. That is mainly the reason why companies will have made the negotiations by a third-party. as they surely best fit to the job. effects can be different according to the chosen governing law.S. The outsourcing company must not forget that the deal must be built on business value and desired outcomes. Governing law Because laws can be different from one country to another or even from a state to another (like in the U.) that will anticipate as much as possible the likely occurrence over the term and anticipate with a process to resolve disputes.2. federal.3.1.2. conflict is part of the game.1. but the negotiator can help obtaining a fair contract (see 8. It is very important that conflicts with future partners do not get personal. that is to say a “give and take” process. Outsourcing negotiator In all kinds of negotiation situations. It can be a businessperson or most of the time a legal professional team. a partner absolutely necessary to the good functioning of the company’s business. 103 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Legal Framework 8.8. It will also lead the whole negotiation process. legal professionals who are moreover quite used to it will exclusively share all negative feelings that could be given off conflicts during negotiations. the negotiation opponent is likely to be soon one of the most important business partners. but one should not let it have too much useless impact.2. or within Europe). In the particular case of HR outsourcing. All the future outsourcing relationship management will depend on this choice. In fact.1. 8.

. • Countries where approval from a regulatory agency is necessary prior to migrating business process operations to a provider site.2. and that certainly determines the success of the outsourcing company’s decision to outsource. Relocation of service locations Some countries expect the outsourcing company to get a government consent and approval (or sometimes just to notify it). Inc.3. 8. The terms and conditions of employment (employee transitioning. the government can even impose to keep a service location in its country.2. • Countries where notice – either formal or informal – is necessary: this category can be further divided into two subcategories in order to reflect whether notice is required prior to the provider taking over business process operations or whether notice can be given afterwards. 2000. Process. Halvey and Barbara Murphy Melby. The main issue is that if authorities are not cooperative. p 124 104 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . In some cases. John Wiley & Sons. • The fourth category is for those countries where no action is necessary.2. 1 Business Process Outsourcing. before to relocate any service outside its borders. We can divide the countries into four categories1: • Countries where approval from a regulatory agency is necessary prior to the provider taking over business process operations. John K. Strategies and Contracts. the entire operation can be delayed or even cancelled. Staff transfer The provider might be required to make offers of employment to parts or all the outsourcing company’s staff.8.

if companies want to be successful.schedule for employee communications. severance payments. there is nothing more armful 1 Dictionnaire de l’infogérance. Managing the issues associated with staff transfers will be a key issue. many brilliant elements will just leave the company even before the transfer is over. the legal framework of such a transfer represents only a minimum protection for collaborators. the faster solutions or answers are found. and slow down the integration process of the staff into the outsourcer’s organization. Whatever your ambitions are. The outsourcing company may even follow the transferred staff situation a long period after the deal. when you manage a project.) for the client’s employees is often one of the most heavily negotiated and regulated provisions of the contract. It is all the more necessary to work on a fair plan. Pierre Laigle. whatever the legal environment is. As a general way. particularly given the HR expertise of the employees involved. concerning especially pension plans.1 Both companies have to organize the transfer in a transition period. as the staff motivation is the key to the success. termination notice requirements. One does not want transferred staff that feels it has been sold with furniture. The faster problems or doubt arise. In this case. by expecting from the outsourcer regular quantitative as well as qualitative information. The more transparent and clear the management communication will be. and union rights for example. etc. Hermès Science Publication. one of the most important aspects in managing such a transfer is the communication policy. administrative and financial responsibilities. They must accompany the staff with waving their former company goodbye and with their integration in their new professional environment. Finally. 2000 105 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . it is nevertheless very important not to go too far. As a consequence. the more constructive will be the debates. they must absolutely go way beyond the strict minimum legal expectations. The legal procedures are very heavy and take quite a long time. in order to help the concerned staff to evacuate worries linked to this situation. contract-related issues.

the E. 1 http://europa.. and if there is any staff transfer planned in the HR outsourcing deal.U.than a misunderstanding purpose. if the depart point is in the E. This Directive.U. authorization.int/eur-lex/pri/en/oj/dat/1998/l_201/l_20119980717en00880092..U. E. staff transfer within the E. imagination is always more dangerous in such a case. coming in effect the 12th april 2001.pdf 106 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .eu. This Directive. A] European context In Europe. Although people transfer in an outsourcing context do not particularly aim social restructuring. of the 12th March 2001. As far as the transfer of employees is concerned. No matter if one outsource outside or inside the E. regulation will be effective (knowing that the deal can exclude any staff transfer). Whatever the true reality is. most European national and supranational regulations tend to assimilate however those transfers to a new kind of restructuring operation. tends to protect employees against the hidden restructuring operations by selling an economically independent activity of a company and by avoiding this way all negative publicity and heavy procedure related to such an operation.U.eu. and consent requirements. It includes specific notice.U.. abrogates all the disposals of the 1977 (77/187/EC2) and 1998 (98/50/EC3) Directives and codifies the reconciliation of E. as national regulations in general.int/eur-lex/pri/en/oj/dat/2001/l_082/l_08220010322en00160020.U. is regulated by the Acquired Rights Directive (2001/23/EC1) Council Directive. members regulations concerning the preservation of the employees’ rights in case of company transfer. its local implementing legislation and Work Council regulations will dictate whether the customer’s existing HR staff will transfer to the service provider and oblige the new service provider to continue the employment of the concerned employees.eu.pdf http://europa.int/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN&numdoc 2 =31977L0187&model=guichett 3 http://europa.

working contracts transfer.U. it will have to entirely assume and take care of the dismissal procedures and severance pays. this protection (apart from information and consultation before the transfer) does not apply. and collective conventions alignment. b) Collective transfer 1 In this case. and employment security.U. B] French context a) Individual transfer In this case. INSEP CONSULTING. • Continuous information.If the outsourcing deal is done from E. If some collaborators do not want to be transferred. Edition Liaisons. 1 Droit du Travail. to outside of the E. • Transfer preparation. to detect reluctant aspects and establish guarantees. training. Droit Vivant. Jean-Emmanuel Ray. • Give value to professional advantages for the employees: career opportunities. pp 208-213 “7 conseils pour… réussir une demarche d’externalisation”. in India for example. Article L.12) implies for the outsourcing company2: • Prior information and consultation. If a compromise is found between the two parties. each transferred collaborator agrees to break off his work contract to sign a new one with the providing company. Dominique Genelot.12 and following. 2 November 2002 107 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . 2001. the outsourcing company and the providing company negotiate the staff transfer according to the French Labor Code. the providing company will automatically make them redundant. The social legislation (Art L 122. 122. If this one does not want to integrate all associates. the whole staff has to be transferred to the providing company..

as an outsourcing operation often give rise to 1 The Challenge of Outsourcing Human Resources. • The transfer of the whole entity. C] English context The TUPE (Transfer of Undertakings Protection of Employment) regulates the employees’ transfers in the U. as it is subject to three necessary conditions that are: • The existence of an autonomous economical entity.• Change management help: cultural adaptation. The consequences for collaborators. • The possibility to be transferred again if the outsourcing company changes its provider.2. • On a collective scale. Dispute resolution A] Informal dispute resolution Most of the time. 2001.K. remuneration.4. etc. seniority and position. The purpose is to protect the rights of employees where there is a transfer of undertakings of their work to a new employer. practical organization. are: • The standing by of individual advantages. identity transformation. • The standing by of the entity after the transfer. Chandos Publishing. that is to say everything related to status. This law seems nevertheless not always applicable to outsourcing operation. pp 181-188 108 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . the standing by of the former industry-wide collective labor agreements during fifteen months. the contract includes a provision on informal dispute resolution methodologies. since 1981.1 8. and to reintegrate it if it finally insources the activity back. Sally Vanson. as far as the transfer of their work contract is concerned.

including its rights to monitor the provider’s compliance with these obligations.U. Commission works on it at the European level.2. Commission stated it1) that data protection laws do not differ anymore from one jurisdiction to another. Even while there are already two E.eiro.eu. parties should agree before to conclude the outsourcing deal. Data issues In the context of technological advances in the communication and data savings area. Finally. of always more globalization. suggesting a new European framework of principles and rules. such as staff transfer for example. they are too general. E. To prevent this to occur. and E.U. and of more and more outsourcing of HR activities of large businesses in Europe. Directives.U. on a formal dispute resolution: mediation or arbitration procedures if applicable for example. these kind of resolution will only be possible for businesses disputes.int/2002/11/feature/EU0211206F.U. the outsourcing company must ensure that its organization is in position to comply with its obligations under the relevant data protection legislation. The practice regarding this issue is diverse and can be incredibly complex. etc.5. different drug and genetic testings legislations. and the contract need to contain detailed provisions relating to the provider’s handling of data. As just mentioned. developed later. members have different processing of medical data. it is important (and the E. B] Formal dispute resolution This informal methodology can sometimes not be sufficient. building on those already existing.operational disputes. A] International data flow 1 http://www. It is for the moment still the case. but not for problems regulated by the law.html 109 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . 8.eurofound.

int/2002/11/feature/EU0211206F.eu.eurofound. Indeed.eiro.eurofound.U. which needs to be taken into account.html http://www.eiro. Most of the E.eurofound.eu. • Prohibit all third-party access to certain types of data. Commission states2.int/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN&numdoc 2 3 4 =31995L0046&model=guichett 110 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . most E.html http://europa.eu.eu. As the E.U. as HR outsourcing implies new and different data flows. countries have general legislation on the processing of personal data and the free movement of data.U. requires Member States to ensure the rights and freedoms of natural persons with regard to the processing of personal data.int/2002/11/feature/EU0211206F. countries ensure the protection through more or less strong regulations. • Require or prohibit encryption. and maybe new governmental permissions. Commission states3 that there are two Directives regulating the processing of personal data: • The Directive concerning the protection of individuals with regard to the processing of personal data and the free movement of such data (95/46/EC4) of the European Parliament and of the Council (24 October 1995). Directives The E. and in particular their right to 1 http://www.U.U. C] E. members do not have specific legislation concerning the protection of employees’ data.html http://www. several countries: • Impose minimal security measures (access code for example).Countries generally impose restrictions on transborder data flow.1 B] Data security Concerning the outsourcing company’s data security.int/2002/11/feature/EU0211206F.eiro.

with respect to the processing of personal data in the telecommunications sector and to ensure the free movement of such data and of telecommunications equipment and services in the Community. and make its project team negotiate and work closely with the provider to elaborate a new and singular contract. It is particularly the case with HR outsourcing contracts. in order to ensure the free flow of personal data in the Community. • The Directive concerning the processing of personal data and the protection of privacy in the telecommunications sector (97/66/EC1). Commission is working on data protection.U. even if the tools are quite universal.2 8.3. This Directive provides for the harmonization of the provisions of the Member States required to ensure an equivalent level of protection of fundamental rights and freedoms. as it will be used in the event of a dispute between the parties.privacy. any company would expect its HR services to be 1 http://europa.pdf http://www.eurofound. and economies of scales made unquestionably possible.int/2002/11/feature/EU0211206F. Most of the time. That is the reason why the E. as each outsourcing process and conditions are different. These Directives are very general and without enough precisions on their application to the workplace. providers propose their standard and prepared contract. as earlier seen in this thesis HR services are necessary tailor-made. Indeed.eiro. and in particular the right to privacy. But the outsourcing company must refuse this contract. Outsourcing Contracts A particular attention must be given to the structure of the outsourcing contract for the viability of the deal. to protect both employers and employees.html 2 111 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .eu. and are unwilling to change it. in the form of a statutory instrument or a social partner’s agreement.eu.int/eur-lex/pri/en/oj/dat/1998/l_024/l_02419980130en00010008.

which can be simply distilled in five basic issues that must be considered and addressed by the parties1: “What is it?”. companies are outsourcing activities that they used to manage internally. the outsourcing company agrees to compensate the provider according to a negotiated fee schedule. p 52 112 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . 2000. A negotiation with respect to an outsourcing arrangement is not one that either party should be willing to win. flourish as methodologies and technology advance. A fair contract may well be one that requires both parties to perform in a 1 Business Process Outsourcing. a very important aspect of the contract deals with staff and equipment transfer. In return. Given the wide variety of business issues and the many different legal disciplines involved in even the easiest form of outsourcing transaction. The contract will accurately record each party’s rights and responsibilities at any given time during its term. Strategies and Contracts. the parties are confident that these five issues have been fairly and comprehensively addressed. and hopefully. It is important to note at this point that a fair contract is not one that is necessarily ideal from either party’s perspective. Process. The most common form of outsourcing contract involves the transfer of control and ownership of all or part of HR functions to the provider. Halvey and Barbara Murphy Melby.performed in accordance with its own and singular corporate strategy. John K. Inc. it should come as no surprise that one of the most difficult stages of an outsourcing transaction is drafting and negotiating the contract. “How much is paid for it?”. Overview Numerous outsourcing contracts are set up from an insourcing situation. In other words. and “What happens if it is not done?”.1.3. “Who owns it?”. 8.. John Wiley & Sons. If. most of the time. As a consequence. “Who does it?”. it is likely that the relationship between the parties will survive the inevitable day-to-day disputes that arise in complex contractual relationships. at the end of the contract negotiation process.

Similarly. C] Service level agreements It is necessary to mention the level of HR service expected. as it will allow the outsourcing company to monitor the provider performance. John Wiley & Sons.3. the contract must include the most exhaustive detailed list of HR services to be provided. but more likely in an optimal balanced economic performance. pp 53-66 113 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . John K. there is no bright line for determining when is a contract too is sufficiently A contract comprehensive. response time. delivery 1 Inspired from Business Process Outsourcing. Process. it may be necessary and clearer that the contract contains a multiple-agreement including different contract structures (one contract for each process or each country for example).2. that might as comprehensiveness subjective. Key contract issues 1 A] Structure of the agreement The requirements of a contract for the outsourcing of a company’s global HR will have a different order of complexity to a contract for a limited number of HR processes in a single jurisdiction. Inc. considered insufficiently detailed. B] Scope of services To avoid future problems. The structure of the contract is crucial to motivate service providers to deliver and create value-added. for example. and to check the contract compliance or non-compliance. These agreements describe the level of HR services expected. 2000. Halvey and Barbara Murphy Melby.. as far as. in the eyes of another organization. 8. Strategies and Contracts. Depending on the complexity and variety of services and countries involved. seem comprehensive for one organization could be.way that will not result in optimal economic performance.

some details concerning the transition plan. 114 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . To establish these levels. it is preferable to measure. a provision that will force changes in the service levels. assets and staff to the provider. It is also very useful to include in the contract some benchmarking provisions in order to compare the provider’s performance and the costs associated with the services on a periodic basis against an appropriate external benchmark.requirements. D] Term/Effective date The duration of the contract term. in comparison with the service level and performance agreed. and the contract should include renewal options and conditions. to avoid any misunderstanding from the beginning. of parallel operating environments (duplication) and planned testing for example. as much as the effective date reference (beginning of the provider’s control on outsourcing company’s operations) are also very important. E] Transition Parties should include in the contract. and even cost reductions. are concerned. if any. Some provisions must absolutely be taken in the contract mentioning damages applicable if any service level failure occurs. that is to say of deadlines and methods planned to transfer operations. users satisfaction. Concerning the users satisfaction all aspects must be described. transfers are regulated and must be operated very carefully. As explained in the legal framework part. from the number of persons to be surveyed to the content of the survey. reporting requirements. in case of underperforming. the existing service levels achieved by the HR activity prior to the outsourcing operation. if the function was insourced before.

G] Assets transfer This second kind of transfer is also critical.F] Staff transfer The contract could specify any obligation for the provider concerning the business process staff. regulations are very restrictive and the subject is very sensitive in Europe. the outsourcing company should notify whether it wants the provider to apply its own standards and methodologies. It can also be required the writing of a management procedure manual for example. It is essential to define the different roles and responsibilities in the contract. Moreover. as it has been developed in the legal framework part. knowing that. For this transfer. as it can allow the outsourcing company to get cash rapidly. and the contract must for this reason mention the nature of the provider’s obligation in respect to these employees. Concerning the methodology. I] Roles and responsibilities The outsourcing company may wish to retain certain critical responsibilities. a purchase or sale agreement must be established. parties can decide whether the provider must hire the former team or not. 115 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . but it should be mentioned in the contract by security. and on the other hand may be obligated to provide certain assets or services. H] Integration of methodologies/technologies Both the outsourcing company and the provider must specify if there is any IT-failure to be solved for them to be compatible as far as technologies are concerned.

instability. handle changing business requirements and new objectives. inequity or mistrust are dangerous to an outsourcing agreement.). John K. Kathleen Goolsby. L] Confidential information 1 Governing Attitudes: 12 Best Practices in Managing Outsourcing Relationships. 2000. Process. software. It is for this reason more than advisable to include in the outsourcing contract a governance agreement that will state how the parties desire to manage their relationships over the long term and design responsibilities as it: • Reflects the components of how parties will interact and communicate at various levels of the organization. May 2002 2 Business Process Outsourcing. strategically plan for the future and continuously improve the value they wish to achieve through their relationships. Outsourcing Center. inventions. It should indeed be clearly specified the respective proprietary rights of the provider and its client. tools. Strategies and Contracts. trademarks. when challenges occur. p 59 116 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . • Establishes how the parties will work together on an ongoing basis at the level beyond day-to-day operations and metrics. and to any other intellectual property assigned or licensed to the provider or used by the provider in order to provide the ordered HR services to the client (methodologies. to the right to use of each parties. the contract should include provisions with respect to the ownership of HR processes for instance. Inc. John Wiley & Sons.J] Governing agreement 1 As seen earlier. • Governs the parties’ attitudes and reactions. Halvey and Barbara Murphy Melby. etc. patents. K] Intellectual property 2 As a general matter. preventing misaligned attitudes from governing the relationship..

. know-how. the provider will necessarily access to very confidential information. will also but to also the data on know-how. Q] Currency risk The contract must also include the definition of the currency or currencies that will be used for the payments just evoked. the access provider’s methodologies. M] Data flow The legal framework of transborder data flow has already been described in 8. O] Reports and documentation All reports expected by the outsourcing company must be defined in the contract. A provision that will force changes in the service charges in case of overcharging should be included. except if both the 117 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Too many details seem to be always better than too few. and technologies. and a lot more. the contract should protect and secure the confidentiality of each party’s data and information. but it is more secure to re-mention this issue in the contract as well. N] Data security To the same extent. methodologies and technologies. strategic plans.2.In this particular case of HR outsourcing.5. the legal framework of data security has been developed in 8.2. Indeed. P] Pricing / Method of payment The way the fees (fixed and/or rate-based for example) are determined and will be paid must also be defined and made clear in the contract. Similarly. such as personal data on the outsourcing outsourcing company’s company employees.. but the outsourcing company should re-mention it in the contract to minimize risks. For this reason.5. specifying their delivery times.

sales) on a country-by-country basis for example.. There should be no "Assumptions" in the final agreement. 1 “Common Problems. as only one party will support the risk. this selected currency is subject to exchange rates fluctuations.chiefofficer.1 U] Governing law As explained in 8." Any assumption should be discussed in detail and the impact to the price or services of variations in that assumption should be clearly documented. it is necessary to mention the governing law chosen in the contract. the price will change. it must be considered possible variabilities in the outsourcing company’s business.2. or in the provider’s business. or renegotiation right for example. R] Taxes Because the tax liability imposed on an HR outsourcing operation can be very heavy. in order to manage any future potential problems. To limit the damages.. http://www.com/particle. This leads to possible discussions. S] Audit An eventual wish of internal or external audit to audit the services or the fees charged will be addressed and assessed in the contract. both parties should assess the tax exposure. In the contract.U.provider and the outsourcing company stay in the same economical area such as E. parties should include in the contract flexibility and clauses (agreements) to allow this potential variability.php?t=25 118 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . 2003. they can decide the allocation of responsibility for taxes (VAT. such as termination clause as it will be developed later. Legal and Otherwise With Outsourcing Deals and How to Avoid Them”. T] Business variability If the term of the contract is long. "Assumptions" are providers’ codes for "If this doesn't turn out to be true. Attorney at Shaw Pittman.1. service.

It is also useful to define the way dispute will be resolved (applicable fees. which party pays.). etc. 1 http://www. security violations. for failing to meet service levels.. such as staff transfer regulations.2. parties should also add a formal dispute resolution: mediation or arbitration procedures if applicable for example. personal injuries. these kinds of resolution will only be possible for businesses disputes. or environmental claims that might occur.). etc.4. On the other hand. According to a Gartner Group Outsourcing Study & Report 19971. intellectual property infringement. for change of control. W] Indemnities It is also advisable to add an indemnification clause to prevent potential property damage. it is advisable to include in the contract an informal dispute resolution process. the contract should include a clause mentioning how changes in laws and regulations will be handled (which party is responsible for it. currency chosen. but not on problems regulated by the social law. but all the main topics concerning HR outsourcing in Europe are covered. X] Termination The contract should finally include all cases by which each party may terminate the agreement according to certain events (termination for convenience.com 119 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . As just mentioned. These key contract issues list is a non-exhaustive one. for cause. what will happen if the change prohibits some processes of the outsourced operation. etc.Moreover. 25% of outsourcing contracts will have to be renegotiated or cancelled within 3 years.).dataquest. V] Dispute resolution As seen in 8.

and a too long contracting process can endanger the good running of the whole project. it may happen that the time negotiating the contract goes beyond what was initially expected. Most of the time. deadlines and costs previsions might not be completely respected. traditional contracts are too rigid (fixed-prices for instance) and cannot be changed in consideration of the technological or activities changes. lot of hidden costs can appear once the contract is signed.4. As a result.8. Moreover. Problems Likely To Occur In 75% of the cases. or of fast fluctuations of prices and performances on the market. It is indeed important to notice that contracting processes can reach almost 20% of the total annual costs of any outsourcing service. 120 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . if the contract is not complete and not totally clear. during the year before the signature of the outsourcing contract.

The managerial function may stay the same.1. on the one hand. but on the other hand it is easier for the management to lead on effective results without having to take care of the day-to-day issues. in fact.1. the piloting committee is a new organ that will take in charge the control of the outsourcing relation.1. HR activities that are mandatory in certain European countries and. 9. In our opinion. It does not manage throughout direct authority but throughout contractual relations. except for both.Chapter 9. the management team has three main activities to fulfill in order to assume their complete responsibility of the function: • Defining big orientation needs and priorities of the business. Managing Outsourced Human Resources Activities 9.2. The most important is that the HR overall responsibility stays inside the outsourcing company. Elements To Keep Internally 9. As explained further. the only difference is that it does not own the resources it manages anymore. companies of the future will outsource their whole HR department. Piloting committee 121 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . on the other hand. In the end. On the one hand.1. and to some extent could even be outsourced to a third-party. • Assuring the coordination with the business. one can say that it may seem harder to do so. as they are core to the outsourcing company’s business. Managerial activities The outsourcing company should necessarily keep in-house the strategic coordination of the outsourced activities and their control. • Taking strategic decision for the business. activities that have for essence the strategic coordination with the whole company.

It must be composed of people combining good knowledge of the company.com/particle. • Measuring the accurate HR impact on the whole business. which the piloting committee should. Attorney at Shaw Pittman. Its role consists in controlling the relation between the clientcompany and the provider. environmental. one person or more (according to the size and the ambition of the project). and of course business areas to be able to check and evaluate the performance in all these important matters. make sure the provider performs: • Focusing on the service. Human Resource Management. • Emphasizing transparency as far as practices and their results are concerned. Spring 1997 122 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Volume 36. Dave Ulrich2. technical. Number 1.When activities are going to be outsourced. • Increasing the knowledge it masters concerning its client. whether both parties respect the deal or not and constantly evaluates the performance of the outsourcing solution. defines nine decisive actions. • Encouraging HR business-partner approaches. • Developing global HR tools and interfaces.php?t=25 2 Dave Ulrich. good legal skills and excellent know-how in the field of Human Resources Management. Legal and Otherwise With Outsourcing Deals and How to Avoid Them”. As just said. http://www. it is the client's job to make sure that the contract is done properly in order to increase the likelihood that the relationship will be a happy one. 2003. finance. according to us.chiefofficer. 1 “Common Problems. is directly reporting to the management team described above. • Managing various and flexible careers inside a single core competency. but also assemble skills in legal.1 The piloting committee. It regularly checks whether the contract fits to the needs or not. it could even be outsourced itself to a third-party specialist company. HRM editor.

”1 9. Influencing and conflict management skills These skills are very important as well. 9. European leader for HR outsourcing at PricewaterhouseCoopers. to maximize its chances to build a successful outsourcing operation. even more than an 1 “Change Management”. 9. 9.2. someone who is focused on managing relationships rather than handling transactions.4. Alliances management skills These skills make it possible to manage the relation with the different providers.2. Personnel Today. so you will need a different kind of person. The aim is to reach a win-win situation.2. said: “You are establishing a partnership with the organization. 9. • Investing in always more human capital management asset. As David Koch.1. the company has to make absolutely sure that it has the following competencies at its disposal.3. 18th April 2000 123 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Outsourcing implementation skills These skills allow making sure that the provider does its job the way it announced it would do it.2.2. as they imply developing flexibility and credibility. Required Skills In the end.• Mastering the knowledge of the company’s business and its environment. It doesn’t take a lot of those sorts of people but it needs someone with clout. not a service.2. Strategic vision skills These skills allow defining which outsourcing strategy would best serve the competitive advantage of the company.

it seems that social capital development would be very useful. and that is mainly the reason why it is important and surely decisive to have internal excellent change management skills. Other Solutions To Keep Control Aside the contract. most of the time. Change management skills Outsourcing implies strong operational changes for companies. thereby the exclusive client-company gain a big influence on the provider. 9. 9. enabling trust and fostering cooperation. especially in order to help collaborators facing their new environment. Transfer of specific assets If the client-company transfers particularly specific assets to the provider as part of the deal.5. and if those specific assets are being hard to standardize for the need of other deals with other client-companies. pp 86-93 124 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .2. Laurence Prusak (Executive Director IBM Institute for Knowledge Management) and Don Cohen. and when possible mixing both employees of the provider and the outsourcing company. Social capital development skills 1 It order to make a HR outsourcing operation work on a long-term basis. the provider accepts only assets that can often be standardized. But it is always 1 “How to invest in social capital”. June 2001. 9. 9.2.unbalanced particularly winning situation.3.3. Harvard Business Review. Developing social capital consists in fact in favoring people connections.6. In fact. other structural mechanisms allow a certain control on the outsourced operation.1. As an example both companies should think of incentives that workers could enjoy together (and not alone and outside the company).

Interest acquisition The acquisition of equity by the client-company in the company providing the outsourcing services is a good solution to have a control on it without being its main stakeholder. Most of the time. 1 “IT outsourcing: finding from an empirical survey in France and Germany”. in other words. that is to say.useful to know the exact implicit power one has on the provider in order to have done what exactly needs to be done.3. Pierre Laigle. in the activities that have the best ROI. 2000 125 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .3. 2001 2 Dictionnaire de l’infogérance. it may happen that the transition period during which the two companies proceed to the transfer of assets from one to another is not enough well managed. Hermès Science Publication. Spin-off structure 1 Of course. as already seen.4. 9. Problems Likely To Occur 2 9. but it is nevertheless not of decisive value comparing to a strong common stakeholder. Jérôme Barthélemy and Dominique Geyer.3. they suffer from the loss of key-collaborators on the one hand and from the difficulty for the provider to build new efficient teams on the other hand. 9. European Management Journal.4. Bad start In 10% of the cases.2. 9.1. the solution of creating a spin-off allows the company to keep quite an entire control on the service. it gains influence but it is limited enough not to interfere with core business focusing investments. it seems that the spin-off solution does not offer the best performance results (unless the activity becomes a core business). as the same stakeholder will privilege the performance of its core competencies. On the other hand. There might indeed be a contract between the two organizations. during the six months before the forecasted starting date.

this has for sure a negative impact on financial forecasts. No evolution perspectives In 50% of the cases.2.4.4. it does not take too much time to do pressure on the client-company in order to obtain a better deal. Most of the time. Maladapted services In 30% of the cases. 9.4. during the first year of outsourcing. which is really not a satisfying situation. Overlapping legal framework An additional critical aspect is that while the former outsourcing company's employees would frequently go above and beyond the call of duty to make sure that problems are resolved and impact minimized. and so perceived client service degrades. When the provider has previously underestimated the prices of services. if the outsourcing company tries to get them to work harder by offering them some extra incentives such as stock-options. pricing sometimes goes drifting off.4. it may happen that the provider did not succeed in meeting contracted expectations.9. the provider’s employees do not necessarily have the incentive to do that. it has a too stable or rigid service offer. during the first three months. the provider in this type of cases has a valuable know-how in a certain kind of service. it appears that the possibilities of service evolution are very weak. but unfortunately it has hardly any possibility or will to focus on change management skills. 9. it probably has destroyed that essential dividing line between the provider’s employees and them becoming its agents and employees in the 126 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .4. whatever the price its clients would be ready to pay.3. the client-company has to do the job simultaneously. In fact. whereas the whole outsourcing operation seems to be a success. In other words. etc. during the first year of outsourcing. Thereby. 9. No respect of pricing In 20% of the cases.5..

but still. 1 “Common Problems. to add further security.php?t=25 2 Vizcaino v. and implemented properly. 2003. Insurance like the EPLI (Employer Practices Liability Insurances) for example. http://www. of course the outsourcing company had better get ready to pay them the full package of fringe-benefits its regular employees get . not all legal HR issues can be easily anticipated. Attorney at Shaw Pittman.. At that point. Legal and Otherwise With Outsourcing Deals and How to Avoid Them”. written.1 As seen before in 5.S.3d713 (9th Cir 1999) 127 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .1. the key is a proper management.eyes of the law. Microsoft Corp..2. can therefore be purchased in certain countries.3.com/particle. legal framework can sometimes overlap and even while the outsourcing contract is drafted. illustrated by the law case opposing Vizcaino to Microsoft in the U. 173F.chiefofficer. This means allocating the risk to other parties.and which it had hoped to not pay by outsourcing in the first place.

we focused a little more on IBM’s case in Europe. position and implement HR outsourcing. We describe in the last part several business partnerships between HRO providers and HR outsourcing companies. the current evolution. CASE STUDIES After having understood how to define.PART IV. 128 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . we found it very useful to give a little overview of today’s best practices. and the promising future of the whole Human Resources outsourcing industry. A case that is quite indicative of the origin. In the end.

Human Experienced Customers 10. investment advisory work and pensions to its former benefits group. Its around 73. which spun off to form Black Mountain Management.shtml The Beat Goes On: Outsourcing Your Human Resource. AON Human Capital Consulting. c) Results According to an AON’s report2. including employee record keeping. 2002. It serves global institutional. Credit Suisse First Boston estimates its savings at $115 million since 1994.1. Companies That Resources Outsourcing Have Outsourced Their Transactional Activities 10.1.1.p 5 129 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . corporate.csfb. which is a leading global financial services company headquartered in Zurich. 1 http://www.Chapter 10. Externally outsourced A] Credit Suisse First Boston Group a) Company overview Credit Suisse First Boston is the investment bank of Credit Suisse Group. government and individual clients in its role as a financial intermediary.000 employees operate in more than 69 locations across more than 34 countries on five continents.1 b) HR outsourcing deal Credit Suisse Boston decided to outsource most of its transactional HR functions. Knowledge@Wharton in collaboration with 2 Aon Corporation.com/about_csfb/company_information/about_csg/index.

B] Other model

outsourcing

companies

that

applied

this

British Telecom signed an outsourcing contract with Accenture HR Services. In 10 years, BT transformed its in-house HR capability from 14,500 people to under 650 HR Business Partners with HR transactional needs now provided by Accenture HR Services. “Our in-house Business Partners provide strategic HR input and facilitate the delivery of the world's-best people management consistently across the company," said Denis Reay, BT Wholesale's HR Director. “As a result, we have been able to achieve rapid organizational change and demonstrate that this commercial focus helps HR deliver real value to the bottom line. It is a fundamental part of our reputation as the employer of choice in our industry.”1 Telecom Italia signed with Accenture HR Services, a 7-years ($200 million) business process outsourcing agreement, under which Accenture will provide outsourced payroll processing and administration services to Telecom Italia.2

10.1.2. Internally outsourced through the shared services center model
A] Global shared services Center example: Boeing a) Company overview
The Boeing Company is the world's leading aerospace company, with its heritage mirroring the history of flight. It is the largest manufacturer of satellites, commercial jetliners and military aircraft. The company is also a global market leader in missile defense, human space flight and launch services. In terms of sales, Boeing is the largest U.S. exporter.3

1

http://www.accenture.com/xd/xd.asp?it=enweb&xd=services%5Chp%5Chrservices%5Ccase%5Chrs_bt.xml
2

http://www.accenture.com/xd/xd.asp?it=enweb&xd=_dyn%5Cdynamicpressrelease_560.xml http://www.boeing.com/companyoffices/aboutus/brief.html

3

130
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

b) Implementation overview
The Boeing Company1 implemented a new business unit called “The Shared Services Group”, providing the company’s other business units and World Headquarters with innovative and effective common services, which are: • Information Services (Computing resources, Telecommunications, E-commerce, Information-management security); • Facilities and Logistics Services (Transportation, Facilities); • Supplier Management and Procurement; • Safety, Health and Environmental Affairs; • Security and Fire Services; • Boeing Travel Management Company (Comprehensive Travel Services). And as far as HR functions are concerned: • Hiring; • Training; • Compensation and Benefits, Health and Retirement Benefits (1 million retires, dependents, inactive employees, and employees); • Employee programs: ~ ~ Part-time opportunities; Virtual offices (work from home or from other locations); ~ ~ ~ ~ Educational opportunities; Child and elder care referral programs; On-site child-care and fitness centers; Recreation clubs;

1

http://www.boeing.com

131
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

~ ~

Employee discount; Community involvement opportunities.

The Shared Services Group employs 18,600 employees worldwide. It is based in Bellevue, Washington, and has employees in forty-five U.S. cities, and six international cities. Concerning the HR Services provided, • On an average day, 16,129 hours of training is delivered to employees; • More than 35,000 employees, retirees and family members in the company’s 300-plus recreational clubs.

c) Results
According to the Shared Services President1, the Boeing Company has successfully removed more than $1 billion from the infrastructure over the three years 1999, 2000 and 2001. They plan to make some more economies of scale, working on another $500 million in 2002, and at least $250 million more in 2003. If the Shared Services Group were a stand-alone company, it would rank in the top 300 on the 2001 Fortune 500 listing.

B] European shared services center example: DuPont Europe a) Company overview
DuPont delivers science-based solutions that make real differences in people's lives around the world in areas such as food and nutrition, health care, apparel, safety and security, construction, electronics and transportation. It employs 79,000 workers, of which approximately half work outside the U.S., and

1

“The evolving Role of Managers and Leaders”, Laurette Koellner (Shared Services President), National

Management Association Boeing Space Coast Chapter, The Boeing Company, February 2002

132
OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY

“People Managing Processes” offers: • Compensation and Benefits Consulting and Delivery. • DuPont Consulting Solution.operates in 70 countries worldwide. 2 It created indeed a new business unit called “DuPont Global Services”3 that provides to internal businesses and external selected clients all over Europe from a single solution to integrated programs. for example. AON Human Capital Consulting. each one focused on an expertise domain: • Asset Productivity Processes.dupont. • Staffing and Relocation Services. aligned and consolidated its HR services inhouse before outsourcing. Knowledge@Wharton in collaboration with Aon Corporation. The last division. • Business Services. These shared services centers.html 2 The Beat Goes On: Outsourcing Your Human Resource. Work/life.com/NASApp/dupontglobal/eu/index.1 b) Implementation overview DuPont Europe. p 4 3 http://eu.jsp?page=/content/EU/en_US/overview/glance. • Work environment Services (Diversity. • Legal Services. • Value Chain Processes. are available by phone and are organized into six divisions. 1 http://eu. • People Managing Processes.com 133 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . • People and Organizational Development Consulting.dupont. Health and Personnel Relations). generating $24 billion revenue in 2002.

as some HR processes are indeed directly provided on line). 41% of its revenue is generated outside the French borders. decided in October 1999. and a lack of HR employees. 80% of them are civil servants. Its goal was to decrease its HR staff-to-employee ratio. Finally. with a worldwide headcount of 240.4%. It provides services to about 100 million customers within more than 20 different countries. This one was in 2001 of 2. C] French shared services center: France Telecom a) Company overview France Telecom is the French national telephone company. to set up 10 HR platforms in France. c) Results This new organization led to strikes and discrepancies between direction and trade unions. the quality of service is worse than before and the employees’ population is too “special” to operate the same ratio than in the private sector. D] Other model outsourcing companies that applied this 134 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .145 employees.The People Managing Processes team is committed to creating unique HR offerings that will help clients’ employees to reach higher levels of productivity. According to them.9%.000 employees. as there are 2. as employees’ representatives argue that there is overwork. hot lines dedicated to all questions connected with personnel management. without dismissing but by dividing up HR tasks between HRSC (HR Services centers and managers. b) Implementation overview France Telecom. indeed.900 HR employees for a total amount of 120. through a project called “DRH demain”. and of course with the help of new technologies. The next step is to reduce it to 1. especially in Europe.

and transactional processes such as payroll services.). Asia. Sears. including 300 workers in Europe. year-end processing.accenture. and call center support. tax-filing services. and benefits payroll interface services. Personnel Today. America. 1 “Oil giant flies the flag for keeping HR skills in-house”.and benefit-related questions and will administer Borden Chemical’s payroll processing activities. 26th September 2000 4 http://www.S. Other large companies also applied this model. Warner Lambert.com/xd/xd.City Group Business1 Services set up three shared services centers in Europe. Hewlett-Packard. Catriona Marchant. “After twelve months the cost base was reduced by 30 percent with no loss of services or control”2 reports Leo Bartie.4 Thomson also implemented one different shared services center for each geographical area (Europe. etc.asp?it=enweb&xd=_dyn/dynamicpressrelease_563.xml 135 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . diversity specialists. 26th September 2000 3 “Oil giant flies the flag for keeping HR skills in-house”. the Philippines and in the U. Borden Chemical signed in 2003 a five-years HR outsourcing contract with Accenture HR Services will help Borden Chemical accelerate and improve the accuracy of the processing of its benefits eligibility and qualified life event management. It will also provide Borden Chemical employees with access to a call center for payroll. in 1997 to manage HR in the 92 countries in which it operates. 26th September 2000 2 “Oil giant flies the flag for keeping HR skills in-house”. “Shell People Services”. oil giant Shell has rejected the option of externally outsourcing its HR function and set up an HR shared services center in Europe. annual benefits enrollment. with HR as a key component. Personnel Today. Personnel Today. Catriona Marchant. check processing and distribution. including administration and reporting. as it is called. European Head of the company. Usinor. employs 550 people globally. Catriona Marchant. which includes HR expertise. as Lockheed Martin. In the early 20003. etc.

A Company That Has Outsourced Some Of Its Human Resources Processes: Kellogg Foods 10. frozen waffles. September 2 2002 136 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .2. Its goal was: • To reduce headhunter fees and improve efficiencies for the company. Michigan. Company overview Kellogg Foods is the world's leading producer of cereal and a leading producer of convenience foods. toaster pastries. HRFOCUS. • To reduce the headcount and obtain better candidates. Houston). a division of Bernard Hodes Group. meat alternatives.1.As noticed before.2 A team of RES recruiters works only for Kellogg. including cookies.kelloggs. HR outsourcing deal Kellogg Foods decided to outsource all its recruitment functions in 1999. shared services centers are a good first step for companies that are looking to externally outsource.com/company/ “How Outsourced Recruiting Saves Time and Money – and Gets Quality Hires”. crackers. pie crusts and cones based in Battle Creek. some of them are based in RES’ Houston Headquarters and some others are based in 1 http://www. • To guarantee a flexible recruiting resources in order to answer the uncertain changing environment and hiring needs of the company.2. Its products are manufactured in 19 countries and marketed in more than 160 countries around the world. It decided to outsource the department (keeping the strategic aspects internally) to RES (Recruitment Enhancement Services. cereal bars.2. 10.2.1 10.

905 in 2000 to $ 3. HRFOCUS. Director of recruiting and staffing at Kellogg “How Outsourced Recruiting Saves Time and Money – and Gets Quality Hires”. Outsourcing implementation results The outsourcing arrangement succeeds thanks to the strong partnership between Kellogg and RES. handles all related recruiting work except for relocation. from $7. Outsourcing had in the end positive results for Kellogg: • The provider filled 52% of available jobs in 2000.946. and there were many calls for customizing features in the technology program that caused problems in implementation.784 in 1 Cydney Kilduff. RES advertises open exempt jobs. agency fees were just $294. including online internal job posting and employee referral programs.2. but Kellogg encountered resistance from hiring managers who preferred their outside agencies. thanks to the use of technologies. Kellogg implemented a Webbased recruitment management system.3. The program also included an efficient maximization of recruiting and hiring program. In 2001. • The cost per hire was cut in half. and 96% in 2001. There are indeed savings in costs and time.375 and 389 jobs were filled. Kellogg’s efforts to establish a more efficiency system with an outsourcing provider and with internal technologies are paying off. 10. and uses Kellogg designs and standards for recruiting. The Director of Recruiting and Staffing at Kellogg1 announced at the 2002’s annual conference of the Society for HR Management in Philadelphia2 some of her outsourcing results. September 2 2002 137 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .163 in 2000 and 202 jobs were filled.Kellogg’s HR department in Battle Creek. • Outside agency fees were $1.

000 U.2001. The programs’ center of operations is located in Glasgow.exult.com/company_overview/profile/index. In 2001. were: 1 http://www. the BP-Exult agreement was the largest HR outsourcing contract in history.S.bp. 10.3. BP has well-established operations in Europe.net/clients/contract_bp.. managing any contracts with other third party suppliers on behalf of BP. Its main activities are exploration and production of crude oil and natural gas. it took an average of 67 days to fill jobs.3. and manufacturing and marketing of petrochemicals. At the time. marketing. and U. BP’s goals. Australasia and Africa. refining. according to Exult Inc. North and South America.1. • In 2000. BP Amoco (British Petroleum Amoco) A] Company overview BP is the holding company of one of the world's largest petroleum and petrochemicals groups. employees.1 B] HR outsourcing deal BP Amoco outsourced in December 1999 a major part of its global HR functions to one exclusive HR outsourcing provider: Exult Inc. Exult support BP through its own services centers and will act as a service integrator.asp http://www. They agreed2 on a 7-year relationship for HR Services to over 50. that has dropped to 39 days. Companies That Have Outsourced All Of Their Human Resources Business Processes Except Managerial Ones 10.K. supply and transportation.html 2 138 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .

The team was organized by region with functional team responsible for their specialties in all areas (myHR. a personalized web-based portal through which every employee could access HR information and services (career service. was in charge to drive the programme.net. • Build a collaborative partnership to deliver services. “The Atlas Project Team”.• Access to further economies of scale. • A desire to improve workforce satisfaction with BP as an employer.). the outsourcing deal would see the creation of “myHR. • Need to free up its own HR function to focus at a more strategic level on people management. etc.). etc. • Speed of deployment of new services. • International consolidation efficiencies. even if there have been 1 “BP”. D] Outsourcing implementation observed results a) Positive ones A step-by-step implementation rather than the full Big Bang treatment has helped the program to be accepted by employees. • Cost reduction.net”. information for foreign placements. C] Comments This deal has been done through the introduction of redesigned global HR process. Under the title of “The Atlas Programme”1. Personnel Today. composed by subject matter and functional experts from BP and Exult (50 members). • Ability to deliver HR innovation to all employees. 17th October 2000 139 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . enabling a closer alignment of company strategy and organizational capability.

2002 140 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . as it is reported in Personnel Today1. 26th June 2001 Vice President of HR for US operations: Don Packham The Beat Goes On: Outsourcing Your Human Resource.net/clients/contract_bp. operations2 reports in the Aon’s study3 savings of $50 million in the first two and half years of BP’s outsourcing contract. provision of data and metrics to drive strategic change. The myHR website became the first year already the company’s second most visited Internet site after the BP homepage.2. 10. Other main companies which applied this model An AON study6 reports that some companies like BP Amoco. 23rd April 2002 The Beat Goes On: Outsourcing Your Human Resource.3. Knowledge@Wharton in collaboration with 5 6 Aon Corporation. BP Amoco’s Vice President of HR for U. avoided capital. During the first year. Knowledge@Wharton in collaboration with 2 3 Aon Corporation. as the company has not achieved everything it set out to5. BASF Cable & Wireless and Bank of America decided to outsource all their Human Resources functions. AON Human Capital Consulting. delivery of information and web-enabled HR services.html “The cautious approach”. keeping only strategic activities internally. Personnel Today. Moreover. the results4 have included cost reduction in excess of 20%. the HR staff-to-employee ratio fell from 1/60 to about 1/50. but also AT&T.exult. AT&T signed in May 2002 with the HR outsourcing provider AON a 7-year 1 “The odd couple produces model for HR outsourcing”.S.K. as to extend the system beyond the U.. Personnel Today. and the U. b) Negative ones Some ambitions have not been achieved. p 5 4 http://www.S. AON Human Capital Consulting.pockets of resistance.

Personnel Today. covering the predominance of the bank’s back-office HR and affiliated financial processes that support the needs of over 130. Computerworld.html http://www. employees. as Colgate-Palmolive.html http://www. in 2002.net/clients/contract_pru. the contract has been extended to include regional staffing and recruiting functions. $200 million contract over seven years. employees.net/clients/contract_boa.exult.6 Prudential Financial signed.html “The cautious approach”.S. Personnel Today. Personnel Today. and other administrative services) for 70.000 U. 23rd April 2002 http://www. It chose AON. BAE Systems (with Xchanging). Unisys (with Exult. and an achievement of target cost reductions. 1 “How to succeed at HR outsourcing – by really trying”. a 5-years outsourcing contract (£80 million2) including all the HR transactional functions as well as the non-transactional ones.net/clients/contract_ip. 23rd April 2002 3 4 5 6 7 8 141 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .S.7 Some other companies also chose this model. ($600 million) for its almost 70. Bank of America signed with Exult Inc. 23rd April 2002 http://www.net/clients/contract_boa. Linda Rosencrance. in part.exult.agreement to provide “end-to-end” HR services (and payroll. a successful annual benefits enrollment. 14th February 2003 2 “The cautious approach”. a 10-year contract3 ($1billion4). because of its willingness to offer jobs to all of its HR employees1.000 U. etc. Following the success of this first agreement. To outsource HR processes for approximately 47.000 employees8). a ten-years contract with Exult Inc. in 2001.000 of its employees. a ten-years HR outsourcing agreement with Exult Inc.exult.exult.html “The cautious approach”. Cable & Wireless signed with Accenture HR Services in 2001.000 employees. including 36. International Paper signed. Key accomplishments5 to date have included a complex payroll conversion. General Electric.

Dice. As main HR outsourcing deals have just been described. HRO providers are increasingly forming partnerships and acquiring resources in a bid to get contracts from big business. Bernard Hodes/RES.1. and then the author concludes that any company that would want to get into HR Outsourcing successfully needs to make some sort of alliance with a technology outsourcer. Payroll and Benefits 3 142 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . the main HR outsourcing providers have also been quoted. example an overview of this industry. KornFerry Futurestep Americas. Staffing and Recruiting 2 The main providers are: Manpower. primarily. Spencer Stuart. Robert Half.Chapter 11. and Monster.S.com. but the trend is also noticeable in Europe. Adecco. As it is underlined in HR Magazine1. HRO Providers Specialized In Some Human Resources Functions Outsourcing Services 11.com. This part will give through the Exult Inc. 11. Human Experienced Providers Resources Outsourcing In the U. They work on filling gaps in their array of services so they can better compete for big-volume and big-money outsourcing contracts. clients are in a recession period interested in access to technologies without the large implementation costs.2. Spherion.1. 11.1. Careerbuilder.1.

11. Unisys.1.1. Paychex.2. November 2002.3. A] Company overview This Irvine (California) HRO provider is pursuing aggressively this market5. April 2002 143 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Definity Health and VSP/Vision Service Plan.com. Steve Bates.The main providers are: ProBusiness. Human Resources Outsourcing Today. Steve Bates. some providers are specialized in HR transactional activities. Employee health and Pension benefits 4 The main providers are: AFLAC. pp 53-54 3 “ Bigg fishing for business: HR outsourcing firms are forming partnerships and acquiring resources in a bid to get contracts from big business (Outsourcing)”. April 2002 2 “ The 100 Superstars of HR Outsourcing”. 11. HR Magazine. HR Magazine. Bank of America. April 2002 4 “ The 100 Superstars of HR Outsourcing”. To date. HRO Providers Proposing An Integrated Solution Including The Whole Range Of Human Resources Processes 11.2. HR Magazine.1. Specific providers in specific countries In Belgium (with “Secrétariat social”) and in Italy (with “Consulenti di lavoro”). www. Exult Inc.4. and employee relations. Human Resources Outsourcing Today.hrotoday. TALX UC Express and ADP. 1 “ Bigg fishing for business: HR outsourcing firms are forming partnerships and acquiring resources in a bid to get contracts from big business (Outsourcing)”. 11. November 2002.com. Steve Bates. in social security contributions. www. p 58 5 “ Bigg fishing for business: HR outsourcing firms are forming partnerships and acquiring resources in a bid to get contracts from big business (Outsourcing)”. it has signed with BP Amoco. It promises clients a “comprehensive solution” of HR outsourcing services.hrotoday. International Paper and Prudential Financial contracts over $100 million.

• IQ Navigator. Melbourne. • Retain and Grow. • Deploy Solutions. • Acquire and Staff.net 144 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . proceeds to: • Over 11 million employee payments. Each year. Sourcing Interests Group. even if it stays the only point of contact for outsourcing companies: • Ceridian. Pitfalls. processes. Exult Inc. including a broad spectrum of process management services grouped into four major categories: • Record and Support. Exult Inc.2 proposes a Service Delivery Model. B] Activities Exult Inc. • Docent.This provider describes itself1 as assuming broad responsibility for the management of its clients’ HR people.exult. Opportunities. • Hire Right.000 professionals. To provide such services. • Recruitment of over 21. concluded partnerships with thirdparty HR service providers. Strategies. technologies and third-party providers and being designed to deliver these services in a more efficient and productive manner. • Over 21 million employee transfers. February 2002 2 http://www. Dave Connaughton (Director Business Development Asia Pacific Region Exult). • Reward. 1 Creating value through HR Outsourcing. promotions and pay changes.

Exult is the most meaningful provider. representing 400.000 learning enrolments. Its strategy is to use its e-HR solution set of applications to enhance HR performance. since it signed the deal with BP developed earlier.2. • Exult closed BP Amoco HR outsourcing in December 1999.500 expatriate assignees. Its value proposition is to provide broadly integrated process management services and improve its efficiencies by sharing resources over a broad client base and standardizing practices.2. • Exult concluded 2001 with 7 clients. • Exult reached $270 million in revenue and cash flow. with $50 million. most of the HRO providers increasingly tend to offer integrated 145 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . targets global Fortune 500 corporations as clients and to establish with them long-term relationships. • Exult completed in June 2000 an IPO (Initial Public Offering) reaching $300 million. • Administration of 250. C] Key facts • In 1998. Other main providers proposing an integrated solution So far. for $600 million. 11.• Relocation of 2. D] Strategy Exult Inc. General Atlantic Partners founded Exult Inc.000 employees. in 2003. As seen.

retail. ACS is a premier provider of diversified business process and information technology outsourcing solutions to commercial and government clients worldwide. and it delivers today BPO. reinsurance and wholesale brokerage.hrotoday.000 employees in more than 600 offices4.acs-inc. pp 56-57 2 http://www. and systems and integration services to hundreds of clients worldwide3. It is a Fortune 500 company comprised of more than 40. It employs more than 44. AON is a Fortune 500 company that is a world leader in risk management. • AON Consulting HR Outsourcing Group.aon.accenture. 20022. Human Resources Outsourcing Today. Canada.000 people in their contact centers. • ACS (Affiliated Computer Services). www. the company generated a net revenue of $11.jsp 3 4 146 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Latin America. It operates in more than 125 countries with over 55.solutions. technology. November 2002. employee care and other industries in more than 40 countries. and 1 “ The 100 Superstars of HR Outsourcing”.com/about/index. data centers and offices in the United States.6 billion for the fiscal year ended August 31. claims management. as for the main other ones on the market1: • Accenture HR Services. the Middle East.000 people in multiple locations around the world.000 people in 47 countries. With more than 75.com. Convergys serves top companies in communications.asp?it=enweb&xd=_dyn\dynamicpressrelease_560.com/about/aon_corporation/history_facts.com/xd/xd. Accenture is one of the world's leading management consulting and technology services company.html http://www.xml http://www. Europe. Inc. and human capital consulting services. financial services. specialty services. • Convergys. IT outsourcing.

• EDS (Electronic Data Systems) BPO.000 business and government clients around the world.2.3 billion1.convergys. As the largest multi-service HR delivery provider in the world. 45 percent non-U. It reaches 9 countries with its more than 800 locations. with an average of 59. • Spherion.mellon.html http://www. Its revenue in 2002 was $2. It provides services to more than 33. including 85% of the Fortune 100. HR consulting & technology. EDS is also one of the leading global IT services company.com/company_overview. Its annual revenue was $2. Mellon HR Solutions is the fourth largest HR services provider and one of the largest financial services companies in the world. It employs 2900 professionals in nine operating locations and administers over $150 billion in retirement plan assets. It employs more than 310. Spherion provides staffing.com/hewitt/about/overview/index.eds. • Hewitt Associates. outsourcing. it handles more than 53 million HRrelated customer interactions a year from more than 13 million participants3.htm http://www. • Mellon HR Solutions.com/about_eds/en_about_eds.000 people worldwide. It provides service over 4 million participants4.5 billion in 2002. Its revenue: $21. recruiting. 1 http://www.com/hrsolutions/aboutus/ 2 3 4 147 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .1 billion in 2002. It employs approximately 137.000 in 60 countries.S.000 on assignment daily. Hewitt Associates’ client roster includes more than half of Fortune 500 companies and more than a third of Fortune Global 500 companies.Asia.hewitt.000 companies. It has more than 35.shtml http://was4.

where everything is being slowed down.1.000 locations. p 12 148 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . the purpose of this last chapter is to discuss IBM’s role as an actor in the field of HR outsourcing throughout Europe and determine what are its contributions and positioning. Louis V.3 IBM EMEA operates in more than 124 countries. we of course cannot be absolutely sure of the previous affirmation. To have a clear idea. seems to have done. HRFOCUS. one may (wrongly) think it is a multinational elephant.000 people working in about 1. with 149 different languages spoken. in fact completely the opposite of the reactivity we generally attribute to start-ups. nearly 60% of revenue is generated outside the U. with more than 325. 12. values.. When one considers IBM. Finally.S. Facts and figures IBM is responsible worldwide for operations in 160 countries.1. 1 http://www.ibm. April 2002.. one may be totally fascinated by the idea of making that huge elephant dance2. and 293 dialects.1. we did not read all valuable business books available. Company Overview 12.Chapter 12. and processes.com Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround. 2002 3 “ Crisis Survival Tactics for HR”. But on the other hand. but it seems that the answer is close to “no” anyway. Gerstner Jr. Gerstner Jr. as Louis V. IBM (International Business Machines) 1 Is there any valuable business book that does not mention at least once IBM as an example to follow? As we have to confess. skills. it also has global standards and levels of services. where IBM works with homogeneous strategies. Harper 2 Business.

it is ranked 8th among all companies ranked and 1st among IT companies in Fortune Magazine “Fortune 500” (fiscal-year revenue). It hires almost 175. assets.asp?sym=msft#body 149 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .msnbc. consultants. and specialists.000 professionals. ranked IBM the third best global brand after Coca-Cola and Microsoft.com/FamulusCom/reuters07-24-140033. BusinessWeek and Interbrand Corp. market value).IBM is ranked 9th among all companies ranked and 1st among IT companies in the Forbes Magazine annual “Super 100” (ranking of sales. architects. • 1st in research and development.1. • 5th in PC. Moreover. helping customers managing IT operations and resources and capitalizing on IT to improve performance. • 1st in IT rental and financing. • 2nd in software. There are four main lines of business: • Business Consulting Services. profits. project managers. • 1st in IT Services.1 12. B] IGS (IBM Global Services) IBM Global Services is the largest business and IT services company in the world. Activities A] IBM IBM is the world’s largest IT company. In July 2003. as it is: • 1st in hardware.. • Integrated Technology Services. 1 http://famulus.2.

IBM helped its customers to become “on demand businesses” by integrating business processes and operations. explains it in the “Chairman’s letter” of the IBM 2002 annual report. IBM’s core business is “e-business on demand”. March 2001 150 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Strategy As Samuel J. That means that the strategy focuses on providing e-business “on demand” for clients. Palmisano.000 in 2002. applications and the underlying IT systems. because the increasing complexity of systems is making them extremely costly to manage and maintain.S. IBM allows its clients to convert fixed costs into variable costs. and by helping them to focus on their core competencies and to outsource or to tightly integrate with strategic partners to supply their non-core competencies.2.3. For the 10th consecutive year.• Strategic Outsourcing Services. patents with almost 3.1. and to reduce inventories. To this purpose. which implies “sense-and-respond” or “real-time”. The last work IBM did to make “e-business on demand” a reality is “establishing utility computing – computing on demand – as a viable and attractive alternative for accessing and paying for IT” so that clients acquire computing and applications and pay only for what they use. 12. To serve its strategy. IBM CEO. 12. IBM also made the computing model evolve to an “On Demand Operating Environment”. Major Outsourcing Provider IBM Global Services has been pointed out as the 1st “Worldwide Professional Management Services Provider”.1 1 “2000 Outsourcing Services: Market Share and Forecast”. IBM received the most U. Gartner. • Learning Services. an extreme responsiveness to the needs of clients.

2. as being completely part of its core competencies.ibm. Most of the time.000 IBMers).12.1. IBM outsourcing deals are at the EMEA or global level. • Knowledge capitalization (Knowledge Management database available by 138. even if a majority is based in the UK. Finally. and offers human and technical means without equal in the market. IBM Strategic Outsourcing manages human and social dimensions of an outsourcing operation. because of the different employments laws and variation of the Acquired Rights Directive (TUPE in the UK. • 133 Data Centers and 73. Indeed. but also an industry pioneer thanks to its experienced methods and tools that are: • Its very large size and its wide range of clients around the world. L 122-12 in France for example) developed in part three.000 servers worldwide for maintenance or development. Strategic Outsourcing Services 1 IBM Strategic Outsourcing Services is the management of companies’ applications and IT Systems.2. • A wide range of solutions on different trademarked products. systems. and softwares (90% of IBM’s outsourcing deals). as will be developed in the next point. or Art. IBM EMEA 2 Strategic Outsourcing Team IBM EMEA implemented a strategic outsourcing team widespread across Europe. and are coordinated by an HR outsourcing specialist in the country where the 1 http://www-1. determines which IT processes and activities should be outsourced for a better competitiveness. It helps its client to assess its operational objectives. one can say IBM is a major outsourcing provider.2.com/services/stratout/ IBM EMEA (IBM Europe Middle-East Africa) 2 151 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . 12.

Example IBM U. But IBM decided to go to the next level. Competitive Human Resources Organization 12. Finally. Smail.1. keeping its quality programs and becoming more efficient.3. IBM U.S. President of FESCo.S.S. HR Service Center IBM created an Employee Service Center in 1994 to consolidate the delivery of all its HR processes across the U.deal is pursued.S. 12. or find a partner who could provide 152 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . • Strict transfer and integration processes realized by HR culture and internal experience concerning outsourcing operations (more than 80 operations in France for professionals. the IBM EMEA strategic outsourcing team looks after human and social aspects of the outsourcing operation thanks to: • Corporate example). said: “Their choice were clear: either make a significant investment over the next three years or more to upgrade systems. As Peter J.3. • Skills development and career opportunities management. A] U. These Specialists are advised by an outsourcing engagement and alliances manager who ensures that the HR solutions for the staff transfer are appropriate and can be managed by IBM. These specialists are responsible for proposals on how the staff can be transferred and treated to increase their comfort level with the transfer operation. already outsourced some of its Human Resources activities. and will also guide the outsourced employees towards a better integration.

and Ford Motor Co. founded in 1998. It offers investment management. FESCo is a division of Fidelity Investments Institutional Services Company. Philip Morris. Inc.500 financial intermediaries. Fidelity Investments3. provides2 retirement. the first provider of workplace retirement savings plans. retirement planning.S. is one of the world’s largest providers of financial services. because it serves many large companies.fidelity. HR and benefits outsourcing services to 17 million individuals and institutions. 11. Inside the IBM-Fidelity outsourcing partnership”.com 2 http://www.fidelity. Moreover. 20th December 2002. Human Resources administration and payroll programs.100 retirement. FESCo can leverage its investments. brokerage. which provides the technology and people required by IBM. Human Resources and benefits strategies to more than 200 companies (including Shell Oil. Fidelity Investments. and 1 “Substantial Benefits.2 million American workers through the administration of more than 11.excellent services and had the technological advancements IBM requires”. ii/ Fidelity Investments Institutional Services Company. health and welfare. The company is the largest mutual fund company in the U. the decision has been taken to sign a partnership with Fidelity Employer Services Company.com 3 153 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . and has experience and capabilities to offer a wide range of services and products.1 As developed later.com http://www. one of the largest mutual fund arrays.).. Inc. B] Deal with Fidelity Employer Services Company a) Company overview i/ FESCo (Fidelity Employer Services Company) FESCo. based in Boston. http://www.fidelity. as well as through 5. Monsanto.

service center to 1 “Fidelity to oversee IBM’s pension plan”.500 or so IBM personnel workers would remain with IBM “to handle hiring.3. health. who provided HR transaction and administrative support to IBM U. 4503 IBM Employee Service Center workers. along with a broad range of HR services. http://www. Boston Business Journal. firing. “ Fidelity and IBM in Venture To Handle Worker Benefit Plans”. pay.A]) to handle questions from its 140. charitable giving. N.000 retirees about retirement. 2nd July 2002 “Substantial Benefits. 20th 2 3 December 2002. 3rd July 2002 4 “ Fidelity and IBM in Venture To Handle Worker Benefit Plans”. b) HR outsourcing deal IBM outsources to Fidelity Employer Services Company (2nd July 2002) the administration of its benefits1: pension and health & welfare plans. IBM’s pension plan is the 12th largest in the U. Towney Kennard.C. announced4 that another 2. employees and retirees. promotions and other issues. became FESCo employees (1st August 2002) and continue to provide HR support to the same IBM population. with assets of $56. Boston Business Journal..2 c) Tangible transfers i/ Staff transfer As a whole.S. Inside the IBM-Fidelity outsourcing partnership”.000 workers in the U.S.. David Cay Johnston.fidelity. and other benefits. 3rd July 2002 154 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .S. Vice President of Alliances. IBM Global Services. FESCo said that it plans to expand the Raleigh. North Carolina.com. The New York Times.a leading online brokerage company. David Cay Johnston. Fidelity Investments.” ii/ Equipment Transfer FESCo leases a call center in Raleigh. discipline. and 120. that IBM opened in 1994 (see 12. The New York Times. 2nd July 2002 “Fidelity to oversee IBM’s pension plan”.5 billion last year.1.

The industry takes in about $12 billion today”.com 155 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . New York. FESCo will also use IBM’s former facilities in Endicott and White Plains.fidelity. d) Business opportunity At the same time1. 1 “Fidelity to run IBM pension and health plans”. David Cay Johnston.3. IBM wanted to go to the next level after the service center becomes more efficient. FESCo was a solution for them to achieve this target. “this agreement enhances our e-HR portfolio and leverages IBM’s expertise in process change management as customers automate more business processes”. Executives of both companies said indeed they saw “a promising business in selling payroll and benefits services to large employers.accommodate growth in its HR payroll and outsourcing solutions. including government agencies and major non-profit organizations”. As mentioned in 12. The Motley Fool. Fidelity Investments and IBM announced that they form venture to market HR payroll and benefits outsourcing services to other companies.3 i/ IBM According to Towney Kennard4.A]. IBM Global Services. experience and capabilities and IBM provides computers and databases. Reuters Company News. according to the New York Times that they expected in 2005 “benefits to grow into an industry with $43 billion to $45 billion of annual revenue. 2nd July 2002. 5th July 2002 “Fidelity Investments And IBM Sign Benefits And Human Resources Outsourcing Agreement”. without losing the level of quality.1. Fidelity 4 Employer Services. http://www. The New York 2 Times. 3rd July 2002 3 “Intel’s No Bargain”. e) Benefits expected by both parties The two parties said.2 Fidelity Investments provides benefits expertise. 2nd July 2002 “ Fidelity and IBM in Venture To Handle Worker Benefit Plans”.

Personnel Today. Fidelity will have phone centers in 6 regional locations altogether.fidelity.com 5 “Web HR frees up time for strategy”.fidelity. but also IBM’s former facilities. Fidelity Investments.5 1 “Fidelity Investments And IBM Sign Benefits And Human Resources Outsourcing Agreement”. Smail1. With this expansion. http://www. e-HR Practice Executive at IBM EMEA. FESCo integrates 450 of the “best Human Resources and payroll people in the business”2. Inside the IBM-Fidelity outsourcing partnership”. employees have the latest available information at their fingertips and the HR function is able to concentrate on critical strategic activities”. http://www.”4 12.com 2 “Substantial Benefits. Fidelity Investments. “Substantial Benefits. we can serve even more large corporate clients efficiently. Fidelity Investments. President of FESCo. http://www.fidelity. As companies evaluate outsourcing options. Inside the IBM-Fidelity outsourcing partnership”. “Substantial Benefits. New York. recognized consulting and technology expertise.fidelity. we think they will seek trusted providers such as Fidelity and IBM to provide end-to-end solutions”. 20th December 2002. Inside the IBM-Fidelity outsourcing partnership”. As Peter J. “we believe that combining our significant HR experience with IBM Global Services. Inside the IBM-Fidelity outsourcing partnership”. as well as in Endicott and White Plains. 20th December 2002. Moreover. “Substantial Benefits. Inside the IBM-Fidelity outsourcing partnership”. Including Raleigh. 20th December 2002. said “By creating a collaborative “self-service” environment for the majority of issues. 31st October 2000 156 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . as “IBM-trained Human Resources staff with a high level of expertise and professionalism”.com 3 “Substantial Benefits. IBM EMEA HR Organization A] Self-Service As Martin Stockton. Fidelity Employer Services. North Carolina.com 4 “Substantial Benefits. will accelerate our clients’ benefits outsourcing plans. Inside the IBM-Fidelity outsourcing partnership”. http://www.2. 2nd July 2002. Smail claimed: “[…] we’ll now have locations in Raleigh.ii/ FESCo According to Peter J.3.3 Not only FESCo gains the best practices and professionals.

because it allocates flexibility to a growing business. Letter of the week. South Africa.K. 157 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . personnel data maintenance. Germany. Czech Republic. Entreprises & Carrières. in the U. based in Portsmouth. and speaks 15 different languages. Belgium. Concerning European countries only.K.000 employees across 40plus countries3. process description and execution.”1 B] EMEA HR Service Center a) Presentation IBM launched an internal centralized HR Service Center called “AskHR” in June 19992. to provide HR services (direct help and information) to all IBM employees and managers across Europe. it supports about 98. The employees and managers have access to formula. Israel. 31st October 2000 “Les RH au bout du fil”.The EMEA HR Service Center implemented by IBM EMEA.000 employees in 20 countries4. is supported by a customized e-HR system for HR staff. HR managers’ manual. Finland. Sweden. etc. it is easy to adapt as the business grows. Personnel Today. employees and managers. Slovakia. 10th July 2001 Austria. Ireland. the Middle-East.2. as developed in a more general way in 3. and Africa. b) Objective 1 “Web HR frees up time for strategy”. Turkey. Indeed. Spain. France. 2 3 4 Netherlands. Norway. U. but also through e-learning (more than 40% of internal training) and erecruitment (70% of applications in France for example). Switzerland. and developed below. Almost all HR administration and paperwork are now electronic and self-service. this is quite a competitive advantage for IBM. speaking many languages. working hours management. holidays management. Italy.1. This center supports over 100. 28th March 2000 “IBM HR caters for over 40 countries”. Moreover. Denmark.. Portugal. as Martin Stockton explained: “Because IBM’s new e-HR solution is based on web technology and best-ofbreed HR solutions.. This e-HR is developed in IBM through the Intranet. Personnel Today.

Indeed. Moreover. The HR specialists form three teams: compensation and benefits. Personnel Today. from the extensive information on the IBM Intranet. 6th March 2001 2 158 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . workforce management and staffing. 6th June 2000 “IBM takes a more general view of global HR delivery”. Personnel Today. EMEA employees and managers can now get help directly by accessing the intranet. as Tim Stevens. through first level (HR Generalists) to HR Specialists.The primary goal is to maximize HR support for all employees and managers and to ensure that clear and consistent information is available from the intranet and by phone. 1 “Service center creation”. sending e-mail or calling the EHRSC.1 He also claimed: “the aim of the service centre at Portsmouth is to ensure HR professionals in each country are not burdened with routine administrative functions”. Of course. c) Organization The center is composed of about 120 employees2. and skills. providing different levels of service responding to different requirements. the aim of such centralization is a reduction of costs and a higher value work and workload. IBM EMEA Employee Relations and IBM France HR Leader said: “its creation followed a major reorganization by a new Chief Executive who also believed that HR had a leading role to play in IBM’s success”. learning and executive resources.

3.000 calls and 46. Personnel Today. the implementation of this service center combined with the e-HR solution allowed IBM to save in 2000 over 57%1 of its previous HR costs.S. Personnel Today. it fielded 190.1. 12. IBM was not sure this would be so feasible and successful (efficiency and service quality improvements) with a group of so many different countries.000 e-mails2). Finally.Illustration 16: IBM European HR Service Center C] Results Even while the Employee Service Center experience had already been applied in the U. Personnel Today. The customer satisfaction was of 90%3 in 2000.4. and allowed HR managers not to answer all calls or e-mails now handled by the EHRSC (in 2000. (see 12. 6th March 2001 2 3 159 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .A]). 6th March 2001 “IBM takes a more general view of global HR delivery”. Human Resources Services Provider 1 “IBM takes a more general view of global HR delivery”. 6th March 2001 “IBM takes a more general view of global HR delivery”.

with business process expertise in areas such as supply chain. BCS is composed of more than 60. learning & development).0001 consultants and employees located in 160 countries worldwide. • Delivering dynamic workplace.1. A] Human Capital Solutions HCS (Human Capital Solutions) aims to help clients achieve business through: • Gaining more from people (people strategy. IBM Business Consulting Services IBM acquired in August 2002 the consulting branch of PwC (Pricewaterhouse Coopers) for $3.4. Indeed. It answers to client’s strategic needs by offering a complete offer. professionals ranging from financial services to healthcare. And doing so in the most cost-efficient manner. 1 IBM 2002 Annual Report. p 16 160 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . HR management systems. but employees expect in turn ever more from their organizations. HCS defined its key drivers as following: • Developing an efficient and effective organization. • Implementing better HR (HR delivery and process. performance leadership. human capital solutions and business transformation outsourcing. organizations require always more from their employees. The purpose was for IBM to combine business expertise with the technology leadership in order to accelerate its clients’ business performance. CRM (Customer Relationship Management). from advise until services implementation. To find the optimum point. operating HR).5 billion and formed this new entity: BCS (Business Consulting Services).12.

• Downsizing painlessly.• Reducing costs. Its value proposition includes a suite of offerings that can provide a foundation for continuous strategic change in: • Finance and administration.). and technology development. transition and long-term support. These services help clients to construct efficient HR strategies and to focus on new HR priorities. and no longer to be reduced only to Personnel Management (that is administrative and transactional activities. IBM accompanies its client to transform its HR in order to manage continuous improvement in people. to set new directions and reduce risks by identifying and delivering future market positions and providing capabilities to capitalize on them (win in existing markets and enter new ones). 12. BTO helps its clients to build a strategic transformation agenda. IBM HR Technological Services IBM Global Services offers new IT solutions to help the Human Resources department to be integrated in the whole company politics in a more efficient way. process. • Customer Relationship Management. • Human Resources. • Aligning people and business strategies. • Ensuring workforce flexibility. • Procurement. Concerning the HR activities.2.4. 161 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . its aim is also to make its clients’ processes run more efficiently. B] Business Transformation Outsourcing BTO (Business Transformation Outsourcing) provides superior business value by an outsourcing multiple business process strategy. at lower costs. etc.

IBM HR technological services has unique process analysis methods. based on optimized procedures like Electronic HR (e-HR) or HR portals for employees. • Products advice. • Support and implementation.com/services/de/pdf/erp_hr-practice. Strategic advice.pdf 162 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . methods and experience in this field. For this purpose. 1 http://www-5.ibm. IBM HR technological services helps its clients to choose the adequate software and recommends adapted IT solutions. and Knowledge Management. IBM HR Practice has built up. thanks to more than thousands worldwide implementations.A] Services overview Illustration 17: IBM HR technological services1 IBM HR technological services offers: • HR Management Consulting and Coaching.

but also tools like competencies management tools. B] Services description IBM HR technological services allows decreasing the time and the money spent in dealing with employees’ data. It indeed sets up organizational measures like culture diagnostics or communities of practice. • Knowledge Management. IBM HR technological services provides several kinds of outsourcing solutions. but also anticipates requirements for a future partnership with an outsourcing provider. to take HR decisions better and faster. and also financing possibilities thanks to IBM Global Financing.Beside this support and implementation services. a) Human Resources management consulting The goal is to optimize HR processes and to make them more competitive and efficient. IBM HR technological services works on the whole IT strategy for its clients HR departments. certified project managers. and training for clients’ employees via “Train the Trainer” or “Computer Based Trainings” (IBM Learning Services). 163 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Its performance in successful knowledge management methods and tools implementations. It not only takes into account the employee self-service opportunity. To this purpose. and on the other hand increasing the level of employee services. like online job offers or online job applications to optimize the workflow or data warehouses and other decisional tools. but also a successful know-how transfer to clients has been proved. IBM HR technological services has a large experience in knowledge management thanks to its numerous clients’ projects in teams. IBM masters the flowing services: • Electronic Human Resources Management.

IBM HR technological services proposes a large array of services in organizational change management. support in communicating important change projects. learning programs including design and implementation of new processes.Knowledge management is reinforced by the context of globalization of transactional activities and of virtual teams (composed by members everywhere in the world who almost never concretely meet). • Outsourcing.com. • ASP with mySAP. Reduction of locations number. • SAP HR. • Organizational Change Management. • Peoplesoft. c) Support and implementation • Learning Services. like for example coaching. organization analysis and redesign. Outsourcing. 164 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . This service is increasingly gaining importance as factors influencing companies through rethinking organizational structures multiply: ~ ~ ~ ~ Change in skills requirements. Processes automation. including: • HR Access. b) ERP (Enterprise Resource Planning) services IBM HR technological services offers the administration of a large range of HR ERP.

As an example. It has chosen to manage its Human Resources with the help of the most modern tools ever imagined so far. • Global Financing. web solutions that enlarge the diversity of training proposed. IBM in Europe. improving efficiency.1 12. IBM Learning Services helps companies to design. 1st February 2000 165 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . thanks to its very advanced teaching technologies. IBM is now evidently focusing on “e-business on demand” in general. 000 brains organized in a dense network. develop.5. we all know that IBM is still unquestionably one of the global leader as far as technological services are concerned and has pioneered in this area the best outsourcing practices. without increasing costs (travel costs and loss of productivity are reduced compared to classic training). IBM opened its pool of applicants and its learning services to its business partners network: an excellent way to encourage their loyalty and to improve their efficiency. and rapidity. To sum up. Through this chapter we have been able to demonstrate that IBM could not be reduced to this computer industry. IBM Learning Services IBM is the 1st e-learning (training technologies and services on line) provider worldwide. and implement training programs to optimize their employees’ potential. as we saw. IBM Europe consists in a huge network of efficiently organized 1 “IBM recrute et forme pour le compte de son réseau”. counts more than 100.4. Conclusion IBM is worldwide famous for being a major actor of the computer industry.3. accumulating one of the greatest experience as far as a successful Human Resources management is concerned. in 2000. In the end. and not on the only technology industry.• ASP with HR Access. IBM offers. Les Echos. 12.

We do not know if IBM will take the lead of the HR outsourcing industry in Europe. 166 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Finally.knowledge workers that stand among the best in technology and outsourcing services. in the long term. we believe that IBM will offer an even wider range of business services with a slogan that could say something like: “you focus on your core competencies and we perform the rest on demand”. but we affirm that IBM has a great potential in this industry and would probably succeed if it choose to get involved in the future.

CONCLUSION In conclusion. however wild it may be. The market is changing and the “take it or leave it” approach is headed to extinction. is nonetheless the most profitable terrain. Individual opportunism is no longer as profitable as brains networks. but it seems to us even more evident that the market. they should immediately start to share it efficiently. 167 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . since no company fully owns its intellectual capital. we would like to reaffirm that we strongly believe that outsourcing Human Resources activities will soon be the best way for small. medium. It is absolutely evident that the Human Resources outsourcing industry still needs some time to position its offerings in a market that is only on its infancy. The only valuable asset of a company is the path it builds to achieve continuous success. provided that it has been well tamed. This is the core of the challenge we propose to confront head-on by outsourcing Human Resources activities. and large European multinational companies to reinforce their competitive advantage in an increasingly demanding environment.

constant support. practical. readings. Writing a thesis alone is already a tough exercise. such as complementarities. 168 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . and enriching new experiences. and writing periods. we finally reached the end to this thesis. it prefigures most of all our professional future. and critical feedback. but we will probably never forget the good (and also the bad) time we had working together. This thesis period helped us tremendously to determine with greater precision the idea we have of what we want to do next: if it indeed sounds the death knell for our initial education. But it also has positive aspects. They are actually one of the most unexpected rewards of the experience. We are now more than motivated to apply our knowledge at the service of our future employers in exchange for ambitious. we could never be completely satisfied with our work. exciting.AFTERWORD After about six months of research. meetings. writing it in couple is incredibly more demanding than anticipated. Of course. It is in fact a real starting point.

Editions Liaisons.. Dunod 1999. 1992. Alliances interentreprises.. 1998. Dunod. and Peretti Jean-Marie. Harper Business Publishing. Cazal D. • Champy James and Hammer Michael. 169 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . Vuibert. Reengineering the Corporation. Les Editions d’Organisation. Stratégies d’Externalisation. Process. Harper Business. STRATEGOR. • Jolly Dominique. Benetton ou l’entreprise virtuelle. Halvey 2000. and Malone Michael S. Le tableau de bord prospectif.REFERENCES BOOKS • • Barthélemy Jérôme. 2001. Strategies and Contracts. entre concurrence et John K. The Virtual Corporation: Structuring and Revitalizing the Corporation of the 21st Century. Strategic Outsourcing. • • Fréry F. Inc. Amacom. Jr. Gerstner Louis V. 1997. 2002.. • Kaplan Robert S. 3rd edition. December 1998. 2001. • • Collectif HEC. 2001.. Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround. Dunod.. and Melby Barbara Murphy. • • Greaver Maurice F. Harper Business. October 1993. Business Process Outsourcing. coopération. John Wiley & Sons. Davidow William H.. L’Europe des ressources humaines. and Norton David P.

• • • Ray Jean-Emmanuel. Quinn James Brian. Restructuring the Human Resource Department. objectives.. Van Ommeren J. 1999. 2000.cgey. Dictionnaire de l’infogérance. Hermès Science Publication. Warner Books. Reissue edition. Intelligent Enterprise: A Knowledge and Service Based Paradigm for Industry.• Peters Thomas. Chandos Publishing. Mercer William M. Droit Vivant. • Quinn James Brian. The Challenge of Outsourcing Human Resources. July 1992.. trends. European trends in HR Outsourcing. Ernst & Young. Intellectual Capital. Intelligent Enterprise: A Knowledge and Service Based Paradigm for Industry.. Vanson Sally. 1997. and Vernon P. Free Press Publishing. In Search of Excellence: Lessons from America's Best-Run Companies.. August 1988. Free Press Publishing.. July 1992. 2002. Research Report. 2001. www. June 2000. Waterman Robert H. Edition Liaisons. Saratoga Institute.com 170 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . • Brewster C. Transformational Outsourcing. PROFESSIONAL PUBLICATIONS • American Management Association Special Reports. • Laigle Pierre.. Stewart Thomas A. L’Avantage concurrentiel. Dunod. Cranfield School of Management. • • Porter Michael. 2001. Changing the course of business services. Droit du Travail. Philips J. methods. • Cap Gemini. Doubleday Publishing 1999.

dir/QR000914.• Centre d’Information sur l’Europe. Pratiques et tendances du marché de l’externalisation en France.http://www. 171 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . The Beat Goes On: Outsourcing Your Human Resource. Knowledge@Wharton in collaboration with Aon Corporation. AON Human Capital Consulting. 1997. HR Outsourcing Trends. • • IBM 2002 Annual Report. Sourcing Interests Group.infoeurope.web/document. Commission. Opportunities. Predicting the Workplace of 2010.eu. • EIRO & E. Strategies. 2002. www. http://www.com • Goolsby Kathleen. The Conference Board. Research Report. • Cubiks (a PA Group Company). February 2002.ey. Outsourcing Center. • Coopers & Lybrand Consultants and l’Association Nationale des Directeurs Financiers et de Contrôle de Gestion (DFCG) Study. Industrial relations developments in Europe.U. Creating value through HR Outsourcing. 23rd April 2003. Governing Attitudes: 12 Best Practices in Managing Outsourcing Relationships. 1997. The maturing of outsourcing. 2002.fr/europe. • KPMG. • Dell David and Gelman Lisa. Melbourne. 2002. Dialogue dans l’entreprise: consultation des travailleurs et comité d’entreprise européen.int • Ernst&Young en collaboration avec Taylor Nelson Sofres Baromètre Outsourcing 2002.eiro. between March and May 2001. Pitfalls.htm • Connaughton Dave (Director Business Development Asia Pacific Region Exult).eurofound. May 2002.

and Paxton Meredith A. Inc. http://www. Buck Consultants. Ressources Humaines : l’externalisation en Europe. Spring 2001. 2002.org/etudes_statistiques/Rapport_économiŠl_2002_SETT. Sloan Management Review. für die Wirtschaft im Wandel. Le management des Ressources Humaines en Europe: les professionnels RH doivent développer de nouvelles compétences face aux défis du e-business. Human Resource Effectiveness Practice. Comment évoluent les stratégies de rémunération en Europe.com • SETT (Syndicat des Entreprises et de social Travail Temporaire). “The hidden costs of IT Outsourcing”. Volume 42. • Poinas Jean-Pierre.outsourcing. 172 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .. • Rosenthal Beth Ellyn. Business Village. Interimsmanagement.. Agence ARCA publishing. http://www. • PricewaterHouseCoopers. ADP.p Towers Perrin. November 2000. Number 3. Chaîne logistique globale: l’externalisation en marche? Etude sur l’externalisation de la chaîne logistique globale dans les entreprises industrielles en France. 1996. February 2002. • Management Angels GmbH.de • Mazor Arthur H. 2002. Transforming the Human Resource Function.• Logistique et Management. April 2003.requests. Study of January 1998. ARTICLES • Barthélemy Jérôme.sett. économique df • http://www.managementangels. Converting the Managers Makes Self-Service HR Work. annuel Rapport 2002.

HR Outsourcing Today. “Fidelity to oversee IBM’s pension plan”. December 2002. • BBC News Online. 18th February 2002. • CBI Press. 173 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . 2002. Adecco veut gérer les ressources humaines de ses clients”. “Organizational downsizing: a convergence and reorientation framework”. • Bates Steve. 1993. temping law”. BBC News Online. 7th September 1999. 30th May 2003. “Au-delà de l’interim. 2001. • Business The Ultimate Resource. “CBI launches new bid to block irreparable damage from E. • Boston Business Journal. 20th April 1999. Organization Science. • Bierce William. “India warns U. and Freeman Marcia S. “Le prix réel des nouvelles organisations d’entreprise”.U. over outsourcing”. “ Bigg fishing for business: HR outsourcing firms are forming partnerships and acquiring resources in a bid to get contracts from big business (Outsourcing)”. HR Magazine. Le Monde. • Baudet Marie-Béatrice. “Legal Eagles of HR Outsourcing”. 2nd July 2002.S. April 2002. 4. “Bosses war against rights for temps”. Bloomsbury Publishing. “Dictionary”.. • Beary Habib. • Belot Laure. Le Monde. European Management Journal. • Cameron Kim S. 12th June 2003. “IT outsourcing: finding from an empirical survey in France and Germany”.• Barthélemy Jérôme and Geyer Dominique.

http://www. http://www. Volume 37.com 174 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .com/printarticle/0.com • Cohen Don and Prusak Laurence (Executive Director IBM Institute for Knowledge Management).fidelity. http://www. The Economist. June 2001. Sloan Management Review. Feeny David F. “They’re not Employees. Harvard Business Review. April 2002.. “Les RH au bout du fil”. • Drucker Peter F.eiro. “The Value of Selective IT Outsourcing”.html • Drucker Peter F.. “Strategic intent for IT outsourcing”. and Sayer Per. “The Near Future (Part II)”. Law Gillian. Info World. http://www.5642%7C.00. February 2002. 15th April 2003. Number 4. • Fidelity Employer Services. • EIRONLINE...journaldunet. Summer 1998. • Ferranti John Blau Marc. 2nd July 2002. Lacity Mary C. They’re People”. Harvard Business Review. • DiRomualdo Anthony and Gurbaxani Vijay.eu. and Willcocks Leslie P. Le Journal du Net. Spring 1996.cfo. “Fidelity Investments And IBM Sign Benefits And Human Resources Outsourcing Agreement”.int/2002/04/feature/EU0204205F. 9th November 2001. “Protectionism hits the outsourcing industry”.html • • Entreprises & Carrières. 11th February 2002. Sloan Management Review. Volume 97. “How to invest in social capital”.• Claire Fabien. Number 3. “Commission proposes directive on temporary agency workers”.5317.. 28th March 2000.eurofound.

Sloan Management Review. INSEP CONSULTING.com. November 2002. Weser Kurier Online. December 2002. “Strategic Outsourcing”. Summer 1994. Les Echos. “Substantial Benefits. “Trends to Watch in HR’s Future”. 3rd October 1995. • Hilmer Frederick G. “Ces entreprises qui externalisent leurs salariés”. HRFOCUS. • Genelot Dominique. The New York Times. November 2002. • • HRFOCUS. Inside the IBM-Fidelity outsourcing partnership”. • Gartner. “Substantial Benefits. “2000 Outsourcing Services: Market Share and Forecast”. • Gundel Elke. “7 conseils pour… réussir une demarche d’externalisation”.com • Galez-Rovan Anne and Lévi Catherine. September 2002. The New York Times. Les Echos.• Fidelity Investments. Human Resources Outsourcing Today.fidelity. 175 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .“Zeitarbeit als Brücke auf dem Weg zum neuen Job”. • • HRFOCUS. “Le délicat volet social de l’externalisation”. 3rd July 2002. “How Outsourced Recruiting Saves Time and Money – and Gets Quality Hires”. 20th December 2002. 6th June 2003. http://www. www. and Quinn James Brian. “The 100 Superstars of HR Outsourcing”. “ Crisis Survival Tactics for HR”. 3rd July 2002. March 2001. “ Fidelity and IBM in Venture To Handle Worker Benefit Plans”. 26th October 1999.hrotoday. April 2002. Inside the IBM-Fidelity outsourcing partnership”. • Johnston David Cay. • Grandadam Sabine. • Johnston David Cay.

10th July 2001. “BP”. • Miliotis Patrick J. Liaisons Sociales. February 2002. National Management Association Boeing Space Coast Chapter. • Marchant Catriona. • Les Echos. 26th September 2000.• Kiely Thomas. “Business Process: Consider Outsourcing”. • Niedercorn Frank. Personnel Today. • • Personnel Today. “Oil giant flies the flag for keeping HR skills in-house”. 18th April 2000. • Koellner Laurette (Shared Services President). “L’externalisation à toute vapeur”. 23rd April 2002. “IBM takes a more general view of global HR delivery”. June 2003. 6th March 2001. “IBM HR caters for over 40 countries”. Personnel Today. 17th October 2000. “Service center creation”. Personnel Today. Letter of the week. 176 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . The Boeing Company. un mouvement de fond”. 2nd May 2001. Les Echos. “L’externalisation. Personnel Today. • • • Personnel Today. 1st February 2000. Harvard Business Review.. “The cautious approach”. “La CES prend l’accent britannique”. May-June 1997. • Moreaux Isabelle. 6th June 2000. “IBM recrute et forme pour le compte de son réseau”. 29th August 2001. • Personnel Today. “Change Management”. “The evolving Role of Managers and Leaders”. Les Echos.

• Richards Lance. “Web HR frees up time for strategy”. 14th February 2003. • Quélin Bertrand. • Shaw Pittman (Attorney at). For Buyers’ Eyes Only”.chiefofficer. 28th November 2000. Les Echos. http://www. Les Echos. September 2002. “Common Problems. “Y a-t-il un marché du travail européen?”. Thévenet Maurice. Perz Alain. Everest Group. “L’irrésistible montée de l’externalisation”.• Personnel Today. • Ritter Laurence. Les Echos. July-August 1997. Summer 2002. 26th June 2001. • Rosencrance Linda. 19th February 2002. “Externalisation: les solutions de BP Amoco et d’IBM”. Personnel Today. 31st October 2000. Computerworld. 2nd July 2002. “Building a Case for BPO-Part 2. 2003. “ The odd couple produces model for HR outsourcing”. 177 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . • Rosenhan Damon. “L’outsourcing : une approche par les coûts de transaction”.php?t=25 • • The Motley Fool.com/particle. “Be seen and heard or face extinction”. “How to succeed at HR outsourcing – by really trying”. • Reuters Company News. “Intel’s No Bargain”. “Fidelity to run IBM pension and health plans”. 5th July 2002. 21st October 1998. Réseaux. • • Personnel Today. Legal and Otherwise With Outsourcing Deals and How to Avoid Them”.

pdf • http://europa.asp?sym=msft#body • • http://was4. Number 1.eu.jsp?page=/cont ent/EU/en_US/overview/glance.html • http://europa. Human Resource Management. Spring 1997 • Willcocks Leslie.com/NASApp/dupontglobal/eu/index. Village Mondial.dupont.int/eurlex/pri/en/oj/dat/1998/l_201/l_20119980717en00880092.• Ulrich Dave.int/eurlex/pri/en/oj/dat/1998/l_024/l_02419980130en00010008.eu. L’Art de l’entreprise globale.hewitt.com/hewitt/about/overview/index.eu.eu. Volume 36.pdf • http://europa.int/eurlex/pri/en/oj/dat/2001/l_082/l_08220010322en00160020.com/ http://eu.msnbc. 1999.htm http://www.xml 178 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .pdf • http://europa.eu.dupont.int/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CEL EXnumdoc&lg=EN&numdoc=31995L0046&model=guichett • http://famulus.com/xd/xd.com/FamulusCom/reuters07-24140033.accenture. “L’externalisation maîtrisée des systèmes d’information”. WEB SITES • • http://eu.int/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CEL EXnumdoc&lg=EN&numdoc =31977L0187&model=guichett • http://europa.asp?it=enweb&xd=_dyn\dynamicpre ssrelease_560.

aon.xml • http://www.net/clients/contract_boa.asp?it=enweb&xd=_dyn/dynamicpre ssrelease_563.shtml • • • • http://www.boeing.com/about_csfb/company_information/about_csg/ind ex.com/companyoffices/aboutus/brief.html • • • http://www.eds.com/xd/xd.exult.eurofound.net http://www.jsp?page=/cont ent/EU/en_US/overview/glance.html http://www.com http://www.jsp http://www.int/2002/11/feature/EU0211206F.html http://www.accenture.asp http://www.• http://www.com/company_overview/profile/index.exult.dataquest.eiro.accenture.xml • http://www.com/xd/xd.com/NASApp/dupontglobal/eu/index.acs-inc.com/about/index.com http://www.com/about_eds/en_about_eds.exult.convergys.asp?it=enweb&xd=services%5Chp%5 Chrservices%5Ccase%5Chrs_bt.com/about/aon_corporation/history_facts.asp?it=enweb&xd=_dyn%5Cdynamic pressrelease_560.dupont.html http://eu.accenture.html 179 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .com/company_overview.html http://www.shtml http://www.bp.com/xd/xd.boeing.html http://www.csfb.net/clients/contract_bp.xml • • • • • • • http://www.eu.

html http://www.ibm.kelloggs.html http://www.fidelity.com/services/stratout/ http://www-5.exult.net/clients/contract_pru.ibm.com http://www-1.net/clients/contract_ip.com/services/de/pdf/erp_hr-practice.exult.com http://www.com/company/ http://www.pdf 180 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .ibm.• • • • • • • • http://www.mellon.com/hrsolutions/aboutus/ http://www.

...... 2002 ............33 Illustration 8: Average collectively agreed normal weekly hours..41 Illustration 12: French HR outsourcing market shares in 2000.....................................................................................................................................58 Illustration 15: The Cone of Core Competencies ..39 Illustration 10: HR Self-Service: resource reallocation on higher addedvalue activities ................................................................................................47 Illustration 13: Porter’s Value Chain.......................39 Illustration 11: Shared services model .......................................................................... 162 181 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY ........................................................................................................................................... 159 Illustration 17: IBM HR technological services................62 Illustration 16: IBM European HR Service Center............. member States ........................................................................30 Illustration 5: Unemployment in the EU.....31 Illustration 6: Fixed-term work in E.......... 2001 and 2002 (in %) .................................. % of workforce in December 2002 and December 2001.........................27 Illustration 4: Activities crossing HR functions ...............................TABLE OF ILLUSTRATIONS Illustration 1: The four types of outsourcing situations ....................................................U........ seasonally adjusted ..........32 Illustration 7: Average collectively agreed pay increases..................................................34 Illustration 9: The four processes that are mostly managed by Self-Service in Europe ..............................................................21 Illustration 3: HR Organization ......54 Illustration 14: Customer Relationship Management evolution .....15 Illustration 2: European outsourcing practices in 1998 ........................................................

.. . .. ... ............... ... .... . ..... . . . . . . ... . . .. . ... 15 b ) T r a d i t i o n a l o u t s o u r c i n g wi t h d i s i n t e g r a t i o n .. . . ... . .. ... .. . . .. . ... . . . . . Out sou rc in g adv a nt ages .... ... ... . . . .. . . . . .... . . 14 A] Different outsourcing situations . .. .. .......... . . . . .. ...... .... .... ....... .... .. . ... . .. .. . . .... . ..... 18 ii/ Total BPO .. . .. .. . . .. ...... .. .. ... . .. . ........ .. ...... . . .... ..... ....2 .. . . ... . ... . .. .. ... .. . .. . . . 14 a) Traditional outsourcing . . . ... . 18 1 .. . . . .. . . ... .. .2 ... . ... .. .. 18 182 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY ... .. ... .. .1 ... ........... . .. .. . .... .... . ... . . .. 1 4 1 .. .. . . . .. .. . 12 1 . . . ... . .... . ...... . . .... . ..... ... ... .. ... . . ....... .. .. .. 1 5 d) Strategic outsourcing .DETAILED TABLE OF CONTENTS A CK N O W LE DG MEN TS .... . . . ... ... .... . .. . .. . .. ... OUTSOURCING OVERVIEW . ... . . .... . ... .. ... ..... .. .. . .. . . .. . .. . . . .. .... .. ... ... . .... .. .. . .... . . ..... .. .. ..... ... ... ... .... ... ... .... . . . . ... ... 18 c) Total outsourcing . .. ..... ... .. . . . 9 P A R T I..... ... ... ... .. .. . . ... . ... ..... ... ... .. . . . .. . . ..... .. . . ... . .... . .. . ... .. . . . . ... ... . ... ... ... . . . .2 ... ... ... ... . . ... ... . . . ..... . . . ... .. . .... ... .... .. . ... ... . .. . . . .... Out sou rc in g de fin it ion ... . ... .. .... .1 ... . .. . .. . ... . .. ... . . .. .. . . .2 . ..... .. ..... .. .... . . .. ... .. . 2 G EN E RA L TAB L E OF CO N T ENT S .. . . . .. . . . .. .. . . .. .. S CO P E & DE FIN I TI ONS .. . . . ... .. .. ... . .. .. . 1 5 c ) S t r a t e g i c o u t s o u r c i n g wi t h d i s i n t e g r a t i o n .. . . . .... .. .... . . 1 1 CHAPTER 1..... . . ... .. ... .. .. . . . ... . .. . .. ... . . ... ... . .. 7 IN TR OD UCT I ON . . . .... Ou t sou r c in g Si t ua t io n s A nd A pp r oac he s .. . ... .. . . . ..1 . ... .. . ..... ... .... . . ... .. .... . . . . .... ... 1 8 i/ Selective BPO .. . ... .. ...... 3 F O RE WO RD . ... . . . . . .. . ..2 .. .. ... . . Ou t sou r c in g Defi n i ti on A nd Ob j ec tive s .... ...... . .. 17 a) Automotive and administrative/operative outsourcing . . ... . 1 6 B] Different outsourcing approaches ... .. ... .. . . ... ..... .... . 12 1 . . . . .. .. . . . .. . . .. . ... . .. ... ..... . .1 ... .. Ma in ob ject ives of a n out sou r c in g st r at egy .. ... . ..... . ........ . ....... .... .. . .. .. .... . . .. . ...... . . . . . ...... . . ...... . . .. ..... .. ... . . ... .. .. .... .. ... . . . ..... ... .. . .... . 16 C] Different uses of outsourcing . . . . . .. D iffe rent k in ds of out sou rc ing ope rat ions ... . . . ..... . .... .... . . ..1 . 16 e ) O u t s o u r c i n g wi t h a s s e t s l e a s i n g .. 17 b ) B P O (B u s i n e s s P r o c e s s O u t s o u r c i n g ) .. ... . . . . .. . .. .... ..... .. . . .... .. ... ..... ... 12 1 . . ... . ... . . ...... .. . 13 1 . .. ... . .. ..

...... Ma in B PO p r ov ide rs ... .... ... . .. . .. .. Ke y Hum an Res ou rce s fun ct ions ........ ...............3 ...... ..1 .. ........ Gl ob al ev olutio n of out sou rc in g ........ .. .. ........ ............. ............ ............... .........2 .3 . 22 b) Development of information technology .. . .... ..... ...... .... ................. .. ... ...2 . Huma n Re s ource s or gan iz at ion ...... ..... ............. ....... .... .......... . ........... . 25 2 ..... . The Eu ropea n labor m a rket and int er cult ural m ana gement issues .......... ......... 22 c) Benchmarking... 3 0 2 .... ..1 .2 ................... . . ... ............. ................. ................ 25 2 ... ................... . 26 2........ 34 2 ... .. .....2 .. 22 A] Internal factors ............ ........ .. 26 2 . .. . S t ructure Of Hum a n R e source s Organiz a ti onal Ac tiv i ti e s .. .. ..... . ..... . Ou t sou r c in g T ren d s ........ . .......... . 30 A] Figures ....... ... 22 a) Supply pressure ...... ..... ....................... ...... ... 2 5 2 ..... . ....... . ....... ...... .. ....... .. . 1 9 1 . . ................ . ................ .... ... .......1 . . ..2 ......... ... 21 1 . .1 . ... ....1 .. 3 .. .... ... ........ ...3 .... ... ....................... ..................... ............. .. .3 . H um an R e so u rce s I s s ue s O f T he Mul t i na ti o na l C om pa ny I n E u ro pe ..... ...... ...... .. ........1 ............ ........ . ..... ...... ...............1 ... .......... ..... .......... ......... . 29 2 .. ... ...... .. 30 B] Trends .. ... .3 .. .. . 32 C] Challenges . .................. 23 CHAPTER 2..... .......... ....... ...... ....2 ... . 28 2 ... ................. ............2 ........... ......1 .... Fa ctor s fav or ing t hese boom in g out sou r c in g t ren ds ........ ...... ............3 ....... .. ... ...................... .... . 19 1 ............. . ............ .. ... 23 d) Mimicry .. ........ .... Act iv it y t ypes c r os s in g HR funct ions ........ ... Oper at ional r oles . ..... . ..................... .... ..... ............ ... .................... ... ...........3 ..... ....... .... 28 2 . . ...... Out sou rc in g r isk s ..... ... . H um an R e so u rce s De p a rtm en t Ro les . . ....... . . ... . . .......... HUMAN RESOURCES DEPARTMENT OVERVIEW ... ..........2 ... ...3 ... . ...... ............ ......... ... 35 183 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY .. 22 B] External factors ....... .. ...... ..... .. ..... ...... ........ . O rga n iz at ion al role s ....... ........... ......3 ................... .. ..... ....... 23 1 ... ...1 ............... An ev er more or gan ized s oc ial dia logue in Eu r ope ...... .................... ........ ....... .... 35 A] The European social integration process . . . .

. ............. De fin ing Huma n Re s ource s a ct iv ities ou t sour c ing.......... .... ..............1 . .. ...... .......... ... ........ .................. 4 0 b) Objectives .................. ..... .............. ..... ...... 45 B] HR outsourcing trends . ........1 .... or HR services center....................2 ........... ....... .................. ....... ... .... .............. 44 C] Reasons to outsource trends ... ......... F rance ov erv iew ... .... ....... .... ............................................ 47 a) Small and medium-sized companies .. H um an R e so u rce s O u t so u rc i ng De fi ni t io n . Eu r ope ov erv iew ...... ................... ....... ....... U.. 42 3 ............ .. ......................... .. ................ 44 D] HR outsourcing future .... ............. ........... .................... ..... . .. ..... 47 b) Large companies ............. .... ... 41 C] HR processes outsourcing ............. ..... Huma n Re s ource s out s ou rc ing levels .......... ........ .... ................ 38 A] Self-Service (e-HR) .................................................... 36 CHAPTER 3......... 44 B] HR outsourcing trends ... ov e rv iew ................... 38 B] Transactional HR outsourcing......... .... .... . .... ................ ........ 45 A] HR outsourcing expenses trends .... 46 3 .................... . 4 3 3 .................... 3 8 3 .. ......2 .. ........ 41 D] Totally HR department outsourcing .............. ................................. 47 3 ..... H um an R e so u rce s O u t so u rc i ng S pec if ic i tie s A nd T re nd s ....... . ........ ........ shared services centers... ...............4 ...................... ...... ..... ........ ............. .... .. ........ .. ..................... ............... ................. 43 A] HR outsourcing expenses trends ....... 38 3 ..... ............................ .. ...2 ......... Gl ob al ov erv iew . ..... .............. . ..... ........1 ...................... . 47 A] HR outsourcing trends ...................................3 ............... ........ 45 3 ....... .. ... 40 a ) D e f i n i ti o n . ...........2 .1 .. ... ... ...... . . ..... 46 A] HR outsourcing trends ... ..... ...2 .......1 ..... .................... ................. ...... ............... ......................... 38 3 ... .......... ...........................B] European Works Council ............. 45 C] HR outsourcing future ............. ......... .....2 ...2 ...... ............. .......... 48 184 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY ......... HUMAN RESOURCES OUTSOURCING OVERVIEW .............. ................................... .... ......S ... ........ .. ............... 46 B] HR outsourcing future .......................... .. .... ....... ..... ................ ............. . ...

.. .. .........1 .. Temp ora r y empl oyment in dust r y dev elopment ... . 5 0 CHAPTER 4. .. .. .... ..... ....... ....... ... ... ... The v irt ual or ga n iz at ion .... ...... .. ..... . .. 59 B] Segmentation of activities....... . .... . C ore c ompet en c ies a nd c ore bus iness ... 56 C] CRM.. 60 4 .. .. .. . . .. ...... .. ..... .. 48 P A R T I I .. .. . .... .... ..... 5 1 4 .. ..... . . ...... .... ... ... . . . .. .. ... .2 . ... .. ..... . .... . . . 66 B] Trend .... ..... ..... 66 5 ...... ... ...... .... . . ... .. ... ...... .. ........ .... ....... . ...... . 6 4 CHAPTER 5. .... ... .. . .... .. . ... . ........ .. ... ..... .. ...... . ..... .... 5 3 4 . .... .... ... ...... ...... . .... . . ... . . .. Temp ora r y w or k s c ope ex p ans ion ... .. . . .. Two Fa s t ..... .. . ........... .. . .... ......4 .... ... . ... ... ... ....... . ......1 .. .. .... . .. .... .. ... The v alue ch a in .. .. . .. .. .. 6 9 5 .... ...... .......... ..... . . ...... ......1 .......... .. . .. . .. . .... .... .2 ... . .... 48 B] HR outsourcing future ..... .. .. ... . .... .......... . . . ..... . .. ....2 ..... ... ... ........ .. .... . .. ... .... ..... ....... .. ............. .. . ....... B o rd erl e s s O r gan i za t io n s ..... . 56 B] Alliances ... . .....1 ..... . 6 6 5 ... . 67 5 .. .. . .. 6 3 4.... ......... . .. ..... .. ... .. . 68 5 ... .. .. . .... ........... . ... .... ... .... . ...... . .... . . ... . 59 A] Definition ... ... S TR A TE GI C A P P R OA CH . .. .. .. 53 4 .......... . ...1 . ... .......... .. .... . .. .. ........ ...... ..... 51 4 .... . .. ..... .. ....... ... . . ... . ... .. . ........ . .. . . .. . . ... ... .2 .. . ..... ... .. ..... . ... .... . K now le d ge w o rke r s ..... ... .... . . .... . 57 4 ... ... .......... ........ ...3 ... ...... . . .. .1 .......... .... .. 69 185 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY ....... . ... ... ... .. . ..........3 . .. ....... .2 .... ... ......... On go in g C om pet i t io n . ... . . ......... ... . ..... ..... ...... . .. 66 A] Figures . . ........ .... .... . ... ........ . . . ........ . .2 ...... .. ... . ... ......... .. ... .. . 55 A] Clover leaf .... .. ... .. ..... .. .....2 .. .. .. . ................ . . ..... . ..... .. . N TIC (New T e c hn ol o gi e s of I nfo rma t io n an d C om mu n ic a ti on ) ....... .... ..... ..... . HUMAN RESOURCES OUTSOURCING AND THE NEW CHALLENGES ............... S co pe Exp a n si on s ....... .................... ........ .. .1 . ......... .. .... . ..... .... ....... .. ... . ......... ...... ... .. .......... ... ..... . .... ......... ......... .. .....Mov ing T re nd s . . ... . ... .... .. ...2 ... . . .. ......... .. ......... ..... . ... ..... . . ..... .. ..... ... .. .. .. . . . .... HUMAN RESOURCES OUTSOURCING AND THE NEW COMPETITIVE ENVIRONMENT ... ... .c) New market companies ..... ...... 67 C] Threatened flexibility... ... . H RO (H u ma n Res ou rce s Out sou r c in g) in du st ry dev elopment .... . .. ........ .. ..... ....... .. .... . . .. .. .. . ....

......... . ... .......... 78 i/ The assets specificity . .. 80 186 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY ................... .... 78 c) Transaction attributes ..... Meet st o ck hol de rs ex pectat ions t hr o ugh cost s r e duct ion . ...............1 .... 80 ii/ Outsourcing with classical contract law.........3 .. ..... ..........5 ............ 7 3 5 ..... .............. 70 5 .......3 .. .... ............ Ou t sou r c in g Dec i s io n Th eo r y ... 69 5 ... . ........ . Ba ses... ....3 .... 79 d) Governance structures ........... . ... .. H RO p r ov ider s s c ope ex pans ion ......5 ..2 .... 79 iv/ The difficulty to measure the provider’s performance . .. ....... .. ..................................... ....................... .......... .. ... ..... .......... ....... Seven que st ion s t o ch allen ge ob ject iv es ........... ........... ..... ............... Ex p ansi o n s Ex p la n a ti on s ........ ............ ................. .....1 .......... . ....3 .......5 .... I s s ue s Fo r T he Ou t s ou r ci n g Co mp a ny .. . ...... ....... .........2 ................. ... . .. .... ....... ...3 .... 75 CHAPTER 6................. .. 78 ii/ The uncertainty ............ .. ............ ... . 72 5 ................ ..3 .. ..... ............... ........... . ..... . ... 77 A] The transaction costs theory ..... ...... .. .. .. ...... . .................... ..... ........ ............. . 69 5 .. 72 B] People development ............... . ... . 71 5 .... Mana ging kn owle dge wor ke rs ..... 77 b) Fundamental hypothesis ........ ..... .. ......... ............... ...... ... ..2 .... ... . ..... .1 .... ....................... ................. . . .. . ... ............... ...... ..... .. .. .. .5 .... ... 7 7 6 ...... ..... ............... ...... ..... ... ... ..... 70 A] Costs reduction . ............. 75 5 ..... .. .................. ...... .... ............. .... .............................. 6 9 5 .......... ....... 74 5 ..... .. 7 2 A] Temporary workers motivation and management ... ..... .... . ......... .................... H um an R e so u rce s N ew Ob j ec t ive s ... ... 77 6 ...... .1 .. .............. ........... . .................... ...... ... ............ .... . .... .... 79 iii/ The frequency ........ ...... . ............ .......... ................. . . Ge ne rat in g v alue for t he c omp an y ..... ... ........ ........... ....... ................. ... HUMAN RESOURCES OUTSOURCING STRATEGIC APPROACH ...................4 .......... ........... ... .......... ............................. ..... ... ....5 ..... ............................... ......... 77 a) Principles ..... .. .... ......... ................. ........ ...... ... C osts re duct ion an d t ime ga in s ... 79 i/ Insourcing ... .... . ......... 70 B] Time gains .. ..... . ........ Flex ib il it y .. . . ....1 ........... .. ..... .........2 . .. .......

. .. 87 6 . . I M P LE ME N TA TI ON .. 88 CHAPTER 7..... . ... ... .. .. ..... . H igh une xpe cte d c ost s . .3 .. . 8 3 6 . .. ... .. Mana geme nt c omm it ment ....... . . .. . .. .. . .. ....... . ... . ....... .... . .. ...... . .. . ... .... .. 81 6 .. .......... ... ...... . .. .. ....... ... ...... . 81 C] Conclusion of the two theories .... ... ........... ... . .. .. O rga n iz at ion’s ab il it y t o a bs orb ch an ge . . 82 B] The level of performance .... .... . .. . . ... .. . .. . .....1 .... . .. ......4 ...2 . Wh a t S ho u ld Be O u t so u rc ed .... .. ..... ... ... 87 6 . ... ........ ... ... . . .. I n te rna l I s s ue s . ..... . . .. . ................. .. ..... . . ... ...... ... 91 7 .. ....2 ......... ...... . ... . . .. . ........ .. ..2 .. 90 7 . . .. . .... .. . ...... .. ..... .. . ...3 ......... ...1 . ... Qu al it y dec rea se an d l os s of cont rol . .3 . .2 . ............ .. ...4 . ....... 91 7 .... .. ... .... ... ..... . .. .. 8 9 7 .......... ...... 86 6 ... . .... ... MANAGING THE HUMAN RESOURCES FUNCTIONS OUTSOURCING PROJECT ...... ...4 .. ... ...... .. ..... . .. ...2 ......... ..............4 . ... . ... .. .. .. P ro j ect Te am . . .. .. . .......2 . ... . ...... .. .. . ..... ... .... 82 C] The level of transaction costs . . . .. .. . .... .... .. .. . .. .... .. ... .... ................ .. ... .. .. .... . . ...... .. . . ........ . . .. .... . .. .... . ... .. 83 6 ... .... ... . ...... 80 iv/ Outsourcing with relational contract law ...... . . ... . .... . . .. .. . Risk a sse ssment . . .... . 81 A] The belonging of the activity to the core business . ..... . 87 P A R T I I I .......3 .. . ............ 80 B] The resource-based theory .. . . . .. . .. H ig h c omm it ment r equ ired du r in g o ut sou rc in g impleme ntat ion .. . . .. P ro j ect D ef in it ion .. ... . ... ... ...... 91 7 .. .. .. . ....3 ...... .. 8 6 6 .. .. ....1 .. ..1 ...4 . .... . . .. . .. .. .. ........ .. 92 187 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . ........ . ... . .. ..2 . .. .... .. .. . . ......... ... ... .. .2 . ..3 ..... .. ... ... . ... .. A dv an t a ge s . . ... . .. . ...... 8 5 6 .. . ..... . .. . . . .. . .. .. ... .. .... .. ......... Pr oject pla n . .. .. .. . .. . ... ....3 .. . .... ..... . . 90 7 . .... ...... . . ... ... .... . ..... . . . . .1 . ...... ... . ... .... . ... .... . . ..... .. 89 7 . . . .. 9 1 7 .. . . .......... ... . . .. ............. . . .. ..... .. .... ...... .. .......... . . .. . ... ........ ... . ... .. ... . ...... . . .. ... . .. ... ....... ..... ...... .. .... .... ... ..... ........... ... ... .. .. ..... .... . . .... ..... .. ..... ... ..... .. ...... . . ..... . ...... ....... .. . ......... . ... ......... ... . . ......... .......... ...... . . . ....... . .. . ... Secu r it y is sues ... ... . ...... ... . .. ....iii/ Outsourcing with neoclassical contract law ... St a ffin g re or gan izat ion ... ........... .... .... .. . . The dec is ion itsel f .. ...2 .4 .. .. . ...... . ....... . . C ost a nal ys is ... . .... .. 90 7 . ... .... . D r aw ba ck s . .... .. .3 .. ...... . .... . ...

.... . ... .. .1 ......... . .... .... 94 a) The ordinary invitation to tender . .. 97 A] Assets leasing ....................... . . .. ...... St a ff t ra ns fe r ..... 103 8 ... ... ... .. ...................... .. .... ... 9 3 7 ..... .... . .2 ... ............ ... . ........1 .... . ..... .......... ..... .... ....3 ... . ..2 .... ..... . .. . ..... Ou t sou r c in g L ega l A c to r s . . Rel oc at ion of se rv ice loc at ion s . . ..4 ... ................ .....2 .. ........ ....... .. . . .. . .. .... .. 102 8 . . Ex te r na l I s s ue s ....1 .......... .............. .... . 104 A] European context .. ... ............. ... . .... .... .... .. ..... 1 0 0 7 ... ... . ....... ........3 ...... . . . .... ... 1 0 1 CHAPTER 8... .............. ... 98 C] Staff transfer ..... 98 B] Equipment transfer ............................ .. G ove rn in g l aw ............ . . C ommun icat ion .. ........1 ... . ............. . ... .............. .. .. . .... . ...... . .2 ............6 ...... ... . ....... ..... .. ......... . ..... ... .. . ...... . ... ... ...... .. ........ . ..... .. LEGAL ASPECTS OF A HUMAN RESOURCES OUTSOURCING OPERATION .... 106 B] French context ... .......... P ro b lem s Li ke ly T o Oc cu r ...... .. ..... ...... .. .. . .... .... ........ Fa ct o rs de te r mi ni n g t he s uc ce s s .... .. ...4 .. 96 7 . . .. . . ..... . .. . ......... ... ........... ................. ..... .. ........ ..... . 92 7 ... ........... .. ........ ...... .. .. .... ... . ..... ..... ....4 .. ... . ....... ..... . . .. .. ...... ... ... ......... ..... . ....... ...... ..... 107 188 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY ... ....2 .. ... ............. ...... .... ................ Pr ovide r’s select ion issues .......... .......... ....... 93 7 ..... . . ..... 99 b) Staff transfer: a good bargain . ...... .. .... ...... ... ... Le ga l pr ofe ss ion al ........ ............. . .. ...... .. ...... .... .. ..... ... . ... 94 b ) T h e i n v i t a t i o n t o t e n d e r wi t h p r e s e l e c t i o n s ... .... . . ..... ......2 ..... 96 B] The selection criteria . ........... ........ . ....5 . .... .. ... 102 8 ......... .. .. ........ . ...... ....... ... ........4 ..... .. 9 5 c) The direct provider’s selection ..... . .. ........ 100 7 . 98 a) Transfer perception ........... ............. ........ ........... .......... .. ...... .. . ........... .... ..... ..... Asset s t r ans fe r ... ... ..... ....... ... .. .... ... .. .......7 ........ .. 103 8 ............ . ...... ......... ... ..... 93 A] Three different selection processes ......... ..3 .. .. .......... . .......... C ommun icat ion . ..... ... ............ 1 0 2 8 . .....1 ..... .. ............ Out sou rc in g ne got iat or . ...... .. ......... ........ ..... .. ...... . .... .... ........ .. 104 8 .. ........ . ... . ..... . . .... ..2 .... ...... ....1 .. ...... .. .............. ....... .. . 1 0 3 8 ........... .. ... .. Le g al F r a mewo rk . ....... ... . ... .......4 ........ .. ... ... .

.............. 115 J] Governing agreement ..... 108 A] Informal dispute resolution .......... ........ Ou t sou r c in g Con t r ac t s ................ 115 G] Assets transfer ......... 117 O] Reports and documentation....... ............................ ............. . ............ ........ ..a) Individual transfer .................. ........................ .................................. ................................... .................. ........ ....................... 117 189 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY ...... 115 I] Roles and responsibilities... 116 M] Data flow ........................ Directives ....................................... ...2 .......... 1 1 1 8 ................................... ......... ....................................................... .............................. .............. . 114 E] Transition ..................... ............................... Ov erv iew ........................................... .... .. 113 B] Scope of services .......................... ........... 112 8 ................................................. ....5 .............................................................. ......... 109 B] Data security ....... ... ........................................ .............................................................. 116 L] Confidential information .................. ... .... .......... 117 N] Data security ............ 114 F] Staff transfer ..................... ........................... ........................... .............................................. D ata issues ............. 113 A] Structure of the agreement ........................................ 116 K] Intellectual property ........................... ................ 110 8 ........................................................... . 109 A] International data flow ........... 113 C] Service level agreements ..... .. ................................. ........................ 113 D] Term/Effective date ............................ 110 C] E.......... .. ........ ...2 ............. .............. .............................. ..................... ........................ .......... .... .......... 108 B] Formal dispute resolution .......... Ke y c ont ra ct is sues .................. 109 8 .... 108 8 ............................................. ..... 117 P] Pricing / Method of payment .............. 107 C] English context ............................... .. .....4 ........1 ..... ............... ..........3 .....3 .......U.......... D is put e res olution ...................................................................................... 107 b) Collective transfer .........3 ...2 .... .................................... 115 H] Integration of methodologies/technologies ............. ................

......... ..... .... ....... ...... ........ 124 9 .... ............ ........... .. . .... 1 2 5 9 .2 ... . ... .................. 125 9 . ..2 ......... ....... .. ........... ... ........ .. .. ...... .. . ...... .... ..... .... ..... .. 123 9 . .... .2 .2 ...... ... .... .......3 . ...................4 ..2 .. .2 . ....3 ............. I n fluen c in g a nd c on fl ict m ana gement sk ills .. .. .......... .. . ........ 119 X] Termination .. ...... ......... . 121 9 ............. P ro b lem s Li ke ly T o Oc cu r ........2 ...... Trans fe r of specific assets .... . ................. .... ....... .... Sp in-off st ructu re .. ........ ...... ....... .. ........ 121 9 .. ...... .. ... . .. ..... ..... ... ..... .... .... MANAGING OUTSOURCED HUMAN RESOURCES ACTIVITIES ................2 .... ...... . .1 .. 123 9 ........ ... .......... 119 W] Indemnities . ... .....1 . . P ilot in g c omm itt ee ... .. ......... . .... ........ ... ... ........ ...... . .... .. . .... .... ..... .. ..... .. 125 9 ... ...... .... ..... St rat e gic v is ion s k ills .. ..6 .. ....2 ...... .......... ... .. .. . ... ... .. .. ..... .. ......... ....... .... ... ........2 .... . .............. ... ... ....... ..... .... ......... ........ . .............. . 125 9 .... . .... ..4 . .. .. 123 9 ..... . 1 2 0 CHAPTER 9...... .... . 118 U] Governing law ... 124 9 ..... ..... ... .. .... Mala dapt ed se rv ice s ............. ..... .. ..4 .. .. ... .1 ....................... ....... .. . . ..... .... 124 9 .. Out sou rc in g impleme nt ation s k ills ... ........ ... .......... ...... ..... ......... .........4 ... .. . ..... 117 R] Taxes .......... ... P ro b lem s Li ke ly T o Oc cu r ....... ..... ............. ... . 123 9 ... ......... .. ... ..3 .......1 .....1 ......... ...... . 118 T] Business variability .. 119 8 .. .5 .. ..... ..4 .... ... ... 1 2 4 9 .. C han ge ma nagement s kills .. .....2 .................3 .... . .... .. ... ... .. . All ian ces ma na geme nt sk ill s .. .. .. ........ .. ......... R eq u i re d Sk il l s ........ ... .. 121 9 .. ......... .. 1 2 1 9 ......... .....1 .... . ....... .. . .... S oc ia l ca p it al dev elopment sk ills ........... .... .... Mana ge r ial act iv it ie s ..... . .... .. ... .. ..... .... I nt erest ac qu isit ion ... ..... . ..... . .3 .. ..... .. ......... ..... .. .. Ba d st a rt ...... ....... 118 V] Dispute resolution. .. .......................3 . E le men t s T o K e ep I n te r na l ly ................... .... .. .. ... . ....... ......... ........ ....... ...................... Ot he r S ol u ti on s To K ee p Con t r ol ............ ... ...................... ... .. ... .1 .......... .. .. 1 2 3 9 ...... ..... ......... .......... ..... . .......... .. .. .. .. .. .. ....................Q] Currency risk .. . 126 190 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY ....... ........... . . ....... 118 S] Audit . ... . ....

............... .......... .. .................. . .... . N o ev olut ion pe rs pect iv es ....4 .. ... ... 132 B] European shared services center example: DuPont Europe ..... .. 134 D] Other outsourcing companies that applied this model . ..... . ...................... .... ............ .... ....... ...... .......... ............. ............. .. ....... . 130 10 ..... . ........... ...... .. 1 ... 1 2 8 C H A P T E R 10. ............... .. . ... 133 C] French shared services center: France Telecom .. . ... .................. .. ...... 126 9 . 132 a) Company overview .. . ......... ......... .... . ................ .. .......... ... .... .... 130 b) Implementation overview ..............1 ..... ..... ... 129 B] Other outsourcing companies that applied this model. ...... 129 b) HR outsourcing deal ...... ........... .. ........... E xte rn all y out sou r ced ..... 131 c) Results .. I nte rn all y out sou r ced t hr ou gh t he sh ared se rv ices ce nt er m odel .... ........ ... ..... ....1 .......... ..... .3 . ........... ........ . ...... ....... 129 a) Company overview .. . .. 129 A] Credit Suisse First Boston Group ..... 1 2 9 10 ......... ............. Com p an ie s T h a t H av e O u t so u rc e d T h e i r T r a n s ac t io n al A c t iv i ti e s .... ......... ... ..... . .. ...................... ... .... . .................. ........... CAS E S TU DIES .... 126 9 .... ......... .... .......4 . .... .................9 . ... .... H U M A N R E S O U R C E S O U T S O U R C I N G E X P E R I E N C E D C U S T O M E R S ... ....... . . .... ..... ... .. . ..... .. .......... .. ... ............. ....2 ..... 132 b) Implementation overview .. .... .. ..... .. . 1 3 6 191 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . . .... 134 c) Results .. 134 b) Implementation overview .. . ... ... ........ ... ............. .. ...... 130 A] Global shared services Center example: Boeing...4 ................ ... .. .. ... A Co m p a ny Th a t H a s O u t so u rc e d S o m e O f I t s H um an R e so u rce s P r oce s s e s: K e ll og g Fo od s .. . ... 134 1 0 .......... ...... ........ ........ .. ..... . 130 a) Company overview .......... ......1 ... ...... .... ....... ......... . ............. ..................... ........ ........ .. .. ...... .......... ....... .. .. ... .... .. ............ ..... . 134 a) Company overview ... ................ .... ............ .. ....... ....... .............. . 1 2 9 1 0 ..... ......... .... .. 2 . .......... .................... ........ .. .. .5 ... ..... ....... . ... .... ........ ... .. 129 c) Results .. ... ....... ... ........ .... .............. .. .. ... N o res pect of p r ic in g ...... .... 126 P A R T IV....... .. . ...... ...... .. ... ........ ...................... ..... ....4 ... . .. ........ ... Ov er la pp in g le gal framew ork .............. . ....

... ........ .....1 ... ... ...... E xult I nc ........2 .............. ........ . .....2 ........ . ....... ...... ....... .... .... .... ............ ..... ...1 ............................ 140 C H A P T E R 11..... 137 10.... 143 B] Activities ........3 ...... 2 .... .......... 142 11 .. ..... O t her ma in p r ov ide rs p r opos in g an int e grated s olut ion .. .............. ..1 .. . ... .................... H R out sou rc ing de al .. ........... ......... .. ...... ................ ........... .. Empl oyee hea lt h a nd Pen s ion bene fit s ..... ......... ...... ........... St affin g an d Recru it ing . 142 11 .... . ... 143 A] Company overview .......... . . 1 4 2 11. .......... H U M A N R E S O U R C E S O U T S O U R C I N G E X P E R I E N C E D P R O V I D E R S ..................3 .. HR O P rovi de rs S p ec ial ize d In Som e H um an R e so urce s F u nc t io n s O u t so u rc in g Se rv ic es .. .... Specific p r ov ide rs in spe c ific count r ie s .............. .2 .. . .2 ......... .................1 .. ... 145 11 ... .. ... ....1 .. ....... ....... .2 . .......... ...... .... ..... .......... .............. ......... ........... ....... .3 ... ..............1 .. ... .. ... . ......... ... ............. ............... ....... 145 D] Strategy ... ..... .......2 .. BP Am oc o (B r it ish Pet r oleum Amoc o) ... Out sou r c in g impl eme ntat ion re sult s ... 136 10 ... ............ . ........ 138 A] Company overview ....2 ......... ....... .... . H R O P rov i de r s P ro po s i ng A n I n te g ra t ed So l uti o n I nc l udi n g T h e Wh ol e Ra n ge Of H um an Res o u rc e s P ro ce s se s ... 139 D] Outsourcing implementation observed results . ........ ........ .... .... .. ...1 . .... ... .....1 .. . ............. . .. . . . ............ .. 143 1 1 ....... ... ....................10 .. ....... 1 4 3 11 ............ . ... .3 . . ................. .............. . .. ........ ... .... ......... 138 C] Comments ......... ....... ... ......... .............. ......... .2 ....... ... 139 a ) P o s i ti v e o n e s ........... .. .... .......... ... 1 4 2 11 ............... . ..... ... ........ ....2 ... Comp an y ove rv iew .. ... 143 11 ........ .. .. 1 3 8 10 .. .... ...... ..... ....4 .. ....... Othe r ma in c om pan ies w h ich ap pl ie d t h is m odel ...... .... ..... 138 B] HR outsourcing deal ... .......... 145 192 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY ...................................... ....... .. . 1 3 9 b) Negative ones . . .... ......1 .3 ................... . ........ .. ... .................. ....... ...... ........ 140 10 ....... . . .. 144 C] Key facts ......... 136 10 ..... ... Companies That H ave Outsourced A ll Of Their H uman R e so u rce s Bu s i ne s s P ro ce s se s Ex ce pt M an a ge r i al On e s ............... . .. ......... . Payr oll an d Bene fit s ...... ...... . . ...

..... ..... 149 12 ...... .1 .... ...... 149 B] IGS (IBM Global Services) ............. .... 1 4 8 12 ............ E x ample ... Act iv it ie s .. ................... ............... .. ............ .............. ... 151 1 2 ... ........... ...... .. ... ....... . .... .... ..... ..2 . 152 B] Deal with Fidelity Employer Services Company .............. ................ 154 c) Tangible transfers .2 ................................. 156 12 .. ..... 151 12 ...........2 .. ........... ..... ....... ... I BM EME A HR O r ga n izat ion ......C H A P T E R 12...... ...... ...........1 . .. ....... ........ St rat egy ........ 149 A] IBM . . .............. ....... .. . .. .............. .............. 156 A] Self-Service . .......................3 ............ ......................... ...... ..... . ... ........................ . ... ................................ 156 B] EMEA HR Service Center ... ..............................2 .... Ma j or O ut s ou r ci n g P r ovi de r ...................... .. ....................1 ............ ... .. . ............. ............. Fact s a nd figu res ................. ..... 153 b) HR outsourcing deal ....... .... ..... 152 A] U......... ...... I BM U......... .. ..... ... .... ...... HR Service Center ............. .3 ................. ......... .... ............... .... St rat egic Out sou r c in g S erv ices .... 154 i/ Staff transfer .... 148 12 ......... 154 ii/ Equipment Transfer ..... . .... .. 155 e) Benefits expected by both parties ...1 ...... ............... ....... .................. . .............. .. ... Comp a ny Ov e rv iew ... 153 a) Company overview ............ .................................. 153 ii/ Fidelity Investments Institutional Services Company........................ .... .... . 154 d) Business opportunity .2 ..... ...1 ......... .. ........ ....... ........... 157 193 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . .... ........ IBM (I N T E R N A T I O N A L B U S I N E S S M A C H I N E S ) ..... Inc.. ................................... . .......................... 1 4 8 1 2 ... 1 5 0 12 ... . .. ....... . I BM EME A Str at egic Out sou r c in g Te am . ... .......... .............. 155 i/ IBM .......................... .. ... .. .....3 .......1 ...S ...... ..... . ........... ... ................ ................... ............3 ... ................. 1 5 2 12 .. ......... 153 i/ FESCo (Fidelity Employer Services Company) . .... .....S....... ........ .............. .. ................................ ........... ........ .. ... . ...... ......1 ..... Comp e ti t ive Hu m an Re so u rc e s O rg a n iz at io n .......... ... ......... ......... .. .......... . .. 157 a) Presentation . ... ..... .... . ........... .......... .......... . ....2 ................................ ........ ......... .. .. 155 ii/ FESCo........ .... . . ..... ...... .... ....................... . ........ 150 1 2 ...........

165 1 2 . . .. . . .... .. ... . .. ... . .... . .. . .. . 164 12 ... .. . ...... . ..... .. ... .. .. .. .... ... . .. . ...... . ..... . .. ... . . . . . . .. . ... .. .. .. . ........ ..... . .. . . 159 1 2 ......... .. . 1 6 9 T A B LE O F IL L U ST RAT IO N S .. ... .. ...... . . . .. ... ...... ... . . . .. ... .. ... . . . . ........... ... . . . . . .. .... . 1 8 2 D EC LA RA TIO N S .. ... .. . ... . . . .... ... ..... . .4 .. .. ... . I BM Bus iness C onsult ing Se rv ices .. .... .. . .. ... ... 1 6 7 A FT ER WO RD . ... ..b) Objective . . 160 B] Business Transformation Outsourcing .. . .. . . Co nc l u si on ... 157 c) Organization. .. . . . . .... .. ..... . . . .. .. . .. . .. .. .. .... . .. . . . . .. ... ... . ..... . . .. . ... . .... .. .. . ... . ... .. . . . .... ... ..... ... . . ... . ... . .. 1 6 5 C ON C LU SIO N . .. . ... .. . .. .. . ... .... . . . . ... .. .. . . . . . . . ... . ... .. .... . . . .... ... .. .. . ........ . .. . .. 1 6 4 c) Support and implementation . . . ... .. .. . . 158 C] Results .... . .. .... 163 a) Human Resources management consulting .. . . . . . .. .. .. .. ... . . I BM Le a rn ing Se rv ices . . . . ... . H uma n Re s ou rc e s S e rvi ce s P rov id er .. ... . . . ....... . ... . . .. . .. .. . .. ... .... .. .. . .. 1 5 9 12 . .... . . ... . .. . . .. . . . . ... ... . . . .. .. . . . . . ..4 . . . .. ... . ... . . .... ... ... .. . .. . . . .... . . . . . .. . . . .4 ... .. . .. .. . .. . .. .... . .. ....... ... .. . . . .. . .. . ... ... ........ ..... .. . 160 A] Human Capital Solutions .. .. ... . 161 A] Services overview . . . . . 163 b ) E R P (E n t e r p r i s e R e s o u r c e P l a n n i n g ) s e r v i c e s .. . .. . . ... ............3 .... .. . . .. . .. . ... .. .... . . . . . . . .. . .. ... . .... . . . . .... .... . .. ...... ... ... . .. . ...... .... . . . . .. .. .. . . ... .. . .... ... .. ...... . . .2 ... . I BM H R Te chn ol ogic al S erv ices . . .. . ... . . ... .. .. . . ..... . . .. ... . .. . . . .. . . . .. .. ... ..... .. ... . . .. . . . ..... . . . ... . .. .. ..... . . . . . . ........ . .. ... .4 . . . .... .. .. . 1 6 8 R EF EREN CES .. ... . .. .. . .. ..... .. . ... . . . ... ... . ... . .. ...1 . . ... .. ... . ... . ... ..... . . ... .... ...... ..... .. . . . 161 12 ... .... . .... . .. ..... .. ..... . .. ... . . ..... . . ....... .. ... .. . . . 1 9 5 194 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . .. . . . ... .. .. .... . .. . .. 1 8 1 D ETA I LED TAB L E OF CO N T ENT S .... .. .. .... .. . .. .. .. . .. ... .. ..... .. . . . . . ... .. . ... .... . . .... ... ... ... .. . .... . . 162 B] Services description . .5 ..... ... .. .

This paper has not been submitted in the same or a similar form to another examination authority. Crach’.DECLARATIONS Mathilde RENAUX I herewith declare that I completed the thesis submitted on my own and that I applied only those resources as indicated. I marked as such all quotations I used from published and non-published writings. I marked as such all quotations I used from published and non-published writings. Crach’. 31st July 2003. Eloi MALTA-BEY I herewith declare that I completed the thesis submitted on my own and that I applied only those resources as indicated. 195 OUTSOURCING HUMAN RESOURCES ACTIVITIES OF A MULTINATIONAL COMPANY IN EUROPE Mathilde RENAUX & Eloi MALTA-BEY . 31st July 2003. This paper has not been submitted in the same or a similar form to another examination authority.

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->