British Telecom Drives HR BPO in the Telecoms Sector with 10-Year Partnership with Accenture HR Services.

BOSTON -- BT and Accenture today signed a land-mark deal for global HR business process outsourcing, which will help create a global delivery model for full-service HR deals for many major global enterprises over the next couple of years. Research from the Yankee Group shows that BPO is now firmly entrenched within the telecommunications sector. Accenture has secured itself $575 million over 10 years in the largest-ever contract renewal for HR BPO services. Accenture extends the length and geographic scope of the original 5 year contract signed in August 2000. BT evaluated some alternative competitive BPO offerings as part of the contract negotiation, but ultimately decided to retain and extend its partnership with Accenture HR Services for a further decade. The arrangement puts Accenture's market share in the HR BPO space at 16% - just a percentage point behind current market leaders Hewitt Associates.

Two of Europe's incumbent telecom operators, BT and Telecom Italia, have now adopted HR BPO services and both of them partner with Accenture HR Services. Globally, communications providers such as Nortel, Lucent and Avaya are also engaging with outsourcing their HR processes to companies such as Convergys, Hewitt and ACS. It is only a matter of time before the majority of telecom companies follow BT's example, with a wave of global BPO contracts in the telecoms sector over the next 18 months.

"BT and Telecom Italia are ahead of the game. Both players have recognized the need to strip-out operational expenditure from their business mix and took the decision to streamline business process with a BPO strategy." says Philip Fersht, Yankee Group's lead software and services analyst. "Moreover, they are now recognizing many of the business benefits that can be realized by embracing the HR transformation processes spurred through outsourcing to a third-party provider."

"BT's renewal for HR services validates further the HR BPO decision, especially as they are one of the early protagonists of adopting third-party HR services. As Europe's incumbents struggle against the declining nature of fixed markets they will be monitoring what kind of savings BT has made. For example, Dutch incumbent KPN is the latest to announce a further round of redundancies running to 2,250 job losses in 2004 out of a total of 13,000 at its fixed-line telephone services division where two-thirds of KPN's workforce is employed and we wonder if a BPO strategy could be on the cards. "

Yankee Group's research into employee effectiveness helps executives make decisions regarding whether outsourcing is right for them, and which suppliers provide solutions that can impact enterprise performance, where there is little room for error in transforming their intimate core business processes.

NOTE TO EDITORS

For interviews contact Philip Fersht, 617-880-0263, [e-mail].

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The Yankee Group is the global leader in technology, media and telecommunications research and consulting. The company helps businesses understand the opportunities, risks and competitive pressures of developing, deploying and consuming products and services that drive communication or information exchange. Now in its fourth decade, the Yankee Group is based in Boston with offices throughout North America and Europe.