Monday, March 24, 2008

Tata Joins Large Market HRO

India's Tata Joins the Large-Market HRO Fray
Established vendors for large-market HRO soon might have to make room for a new player with a considerable pricing advantage: Tata Consultancy Services.
By Fay Hansen

stablished vendors for large-market HRO soon might have to make room for a new player with a considerable pricing advantage: Tata Consultancy Services.
    With its huge global footprint and 99,246 India-based employees—the largest IT workforce in that country—Mumbai-based Tata is now going head-to-head with the largest HRO suppliers with a new model that is already scoring wins against the big players.
    Tata has five end-to-end HRO deals with major global companies in process. In October, it landed a $1.2 billion, 10-year IT and HRO contract with Nielsen, the global information and media company.
    The initial offering is for global work­force administration for Niel­sen's 40,000 employees, plus payroll administration in the U.S. and Australia.
    "We fully expect to expand this contract to cover all global end-to-end HR administrative work," says Caroline Brown, head of Tata's global HRO practice, based in London.
    The company's deals are coming in under the radar.
    "We decided from the outset that we will be successful in HRO by taking on some big deals and proving to the market that we can be successful, instead of setting off fireworks before then," Brown says. "Without really taking our HRO offering to the market in a big way, we have already been placed on the lists for RFPs for most of the major potential HRO deals, along with IBM, Accenture and other major vendors, and have been selected over them in several global transformational HRO deals."
    Tata is entering the HRO market with substantial advantages. The company is prepared to offer HRO services to more clients without a proportionate increase in its headcount. "Part of this has to do with our entry-point timing," Brown says. "In addition, we will deliver as much as possible from India." Because the company is able to handle more work with fewer full-time equivalent employees, and because a high proportion of its workers are based in India, where wages are lower, Tata is able to offer lower prices, according to Brown.
    To move from a company focused on IT to one that can handle technology and processes as well as collaborating with clients to transform the HR function, Tata is building staff internally and hiring HR consultants, including some from the largest HRO vendors. To lead its global HRO initiative, the company pulled Brown away from Accenture. Its new head of HRO for the U.S. is from Hewitt. "We have the scars to show that we've grown up in HR outsourcing and we've seen the issues and can mitigate the risks," Brown says.
    The use of offshore labor is the centerpiece of cost savings from HRO, and Tata is in a prime position to tap the offshore element. It already runs 50 global IT and BPO delivery centers. It has HRO delivery centers in India and the U.K. and will open new centers in China and Uruguay by the end of 2008. In January, it launched an emerging-markets HRO strategy. The company "has a broader global base than the other vendors to build HRO," Brown says. "We are not tied primarily to clients in the U.S. or Europe. The great thing about HRO is that every company can outsource HR if it chooses to. It's an unlimited market."

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