IBM in talks for P&G outsourcing deal

Big Blue is in exclusive negotiations for a multiyear contract to handle Procter & Gamble's employee services.

Ed Frauenheim Former Staff Writer, News
Ed Frauenheim covers employment trends, specializing in outsourcing, training and pay issues.
Ed Frauenheim
IBM may be close to pinning down a multiyear deal with Procter & Gamble to handle the consumer product giant's employee services.

"We have entered into exclusive negotiations with IBM for our employee services," Damon Jones, a spokesman for Procter & Gamble, said. Jones said the company hopes to sign a contract within a few weeks.

The deal would involve the management of the Cincinnati-based company's payroll, benefits, travel services and relocation services, among other tasks, Jones said. An estimated 700 Procter & Gamble employees would shift to being employed by IBM if the contract goes through, according to the company. In outsourcing deals, it's not uncommon for the services provider to take on employees from the customer. Those employees could be assigned to do their previous work or be directed to work for another client altogether. Jones said the agreement with IBM would be for at least five years and could last as long as 10 years.

The negotiations are the latest sign that information technology service providers are keen to snag so-called business process outsourcing deals, which involve taking over responsibility for tasks such as employee services, call center operations and finance operations.

Procter & Gamble already has a deal with IBM rival Hewlett-Packard to outsource IT operations. The 10-year, $3 billion deal was signed earlier this year. However, HP didn't submit a bid for the employee services contract currently under negotiation, according to Jones.