Five Questions for Ernest Lareau

By Staff Report

May. 30, 2006

In October, DuPont announced a 13-year HR outsourcing deal with Convergys estimated to be worth $1.1 billion, the biggest such deal ever. Convergys will handle all of the HR processes for the company’s 60,000 employees in 70 countries worldwide. Following his speech at HRO World in New York last month, Ernest Lareau, DuPont HR director, portfolio and program management, spoke to Workforce Management staff writer Jessica Marquez.

Workforce Management: How did you narrow down your search to one provider?

Ernest Lareau: We developed a tool that asks questions based on five criteria and ranks each provider based on those criteria. The criteria were price, global capabilities, maturity of their business in the HRO space, technology and how adept they were at the processes we needed handled. This tool removes emotion and subjectivity from the process.

WM: Why did you decide on a 13-year contract?

In effect, it is a 10-year contract. In the first year, we are taking our highly fragmented infrastructure, which consists of over 150 HR processes, and applying standards. The next step is implementation, which will start later this year through 2007. So it’s two years into the process before we really have the global infrastructure running. And then I view the first year of operations as a settling into the environment.

WM: You anticipate 20 percent initial cost savings from the deal and 30 percent within five years. How did you come up with those numbers?

We set objectives based on external benchmarks. … We said from where we are today we want to see a certain amount of improvement on Day 1, and then continuous improvement year over year. We added a benchmark clause to our contract with Convergys that states that in the event that benchmarks change over time, we have flexibility to move with the benchmarks. We also put a clause in the contract to provide incentives to both sides to pursue those future benchmarks.

WM: Some analysts are skeptical that Convergys can handle a deal of this size. What do you say to that?

We have been with them now for six months, and so far they are meeting our expectations. We are having the normal ups and downs that you have with any large HR BPO relationship, but we are feeling good about what they have done to date.

WM: The Florida attorney general recently filed a case alleging that Convergys failed to protect the personal information of Florida state employees. Have you spoken to Convergys about this?

We have a very open dialogue, and they have told us everything they can tell us about the situation with Florida. My personal opinion is that the issues with the state of Florida are more of a Florida problem than a Convergys problem, and it’s an election year, so they are getting sucked in.

Workforce Management, May 22, 2006, p. 7Subscribe Now!

Schedule, engage, and pay your staff in one system with