HR Outsourcing Providers Eye Buying ExcellerateHRO

By Staff Report

Jun. 24, 2009

A number of HR outsourcing providers are interested in buying ExcellerateHRO from Hewlett-Packard if the firm is in fact up for sale, insiders say.

“We know a number of people are interested, but we don’t know if any of them have gotten discussions going with HP,” said Lowell Williams, executive director of EquaTerra, a Houston-based information technology and business process transformation consulting firm.

Earlier this month, Hewlett-Packard bought Towers Perrin’s shares of ExcellerateHRO, causing industry experts to speculate that the Palo Alto, California-based company is preparing to sell the HRO provider. HP bought EDS in May but hasn’t shown any interest in ramping up its HRO business.

“Our assumption has been that ExcellerateHRO is dead since no attention has been paid to it since the EDS acquisition,” said Stan Lepeak, managing director of global research at EquaTerra. “They hadn’t been getting much traction in the market anyhow, and reviving it would require a significant investment.”

In the four years since ExcellerateHRO was established, it has made only two end-to-end HR business process outsourcing deals and a number of benefits administration deals, experts say.

Still, the company could be a great addition to an HRO provider that is strong in benefits administration, Williams said.

“ExcellerateHRO had about 10 to 15 benefits deals, so they would be a good fit for companies that are big into benefits like Hewitt Associates, Affiliated Computer Services or Fidelity Investments,” he said.

Calls to a spokeswoman at Hewitt were not immediately returned. A Fidelity spokesman and an ACS spokeswoman declined to comment. An HP spokeswoman declined to comment.

ACS, in particular, could be a likely candidate to purchase ExcellerateHRO because it has been ramping up its HRO business in the past several months, said Phil Fersht, an analyst at AMR Research.

In May, the Dallas-based company launched SynchHRO, a self-service standardized HRO service targeting the midmarket as well as larger employers.

“ACS does seem to be doubling down on HRO,” Fersht said.

Other possible buyers could be the Indian HRO providers, such as Infosys, which are looking to gain market share in the U.S., Lepeak said.

“This could be a way for them to gain a local presence in terms of HR acumen and connections,” he said.

—Jessica Marquez

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