BP Amoco Taps Irvine Firm to Do Personnel Chores

In an unprecedented move to use the Internet for personnel operations, BP Amoco has tapped a new Irvine-based consulting firm to handle training, hiring and other human resources chores in a five-year deal worth $600 million.

As part of an effort to trim $4 billion in expenses, BP Amoco said Thursday that it is turning over its human resources operations to Exult Inc., which opened shop just 14 months ago.

By the end of next year, most of the oil giant’s 82,000 employees worldwide will be able to use the Internet to handle a multitude of tasks, from checking in-house job opportunities to changing benefits, Exult executives said. Such chores now require telephone calls or a raft of forms.

“It’s going to be cutting edge,” Exult Chief Executive James Madden said. “I’m not aware of any company of substantial size, let alone an oil and gas company, that has gone to a Web-based system.”

Though Exult is new, its executives are hardly newcomers to human resources. Madden, its founder, was president of MCI’s $2-billion outsourcing unit. Vice President Barbara Williams helped manage human resources for Pacific Gas & Electric Co. The company was financed with $50 million from fund-management company General Atlantic Partners.

“They are a new company, but the people inside it aren’t ingenues,” BP Amoco spokesman David Nicholas said. “We didn’t just look in the Yellow Pages and sign them up.”

Thursday’s announcement instantly made Exult a player in one of the fastest-growing sectors in the outsourcing business--human resources specialists.

The market for such specialists is expected to jump 88% between 1998 and 2003, when it will exceed $12 billion, the market research firm Gartner Group/DataQuest reported recently.

Many corporations look for outside help to upgrade human resources departments, particularly to provide services over the Internet. Moving to a Web-based operation is capital-intensive and requires expertise that corporations do not have, analysts say.

Exult’s contract is a good example of how a new player can win a comprehensive global contract, said Cynthia Doyle, an analyst for Massachusetts research firm IDC’s outsourcing group.

“Exult is well-positioned to meet the growing demand for comprehensive HR services, as opposed to niche players who offer only payroll or benefits administration services,” she said.

The agreement with Exult is part of a broader program by BP Amoco Chief Executive John Browne to cut $4 billion in expenses over three years. Last month, the company agreed to outsource its U.S. accounting operations to PricewaterhouseCoopers in a 10-year agreement worth $1.1 billion.

BP Amoco has about 1,100 human resources employees. Nicholas acknowledged a significant chunk would be affected by the changeover to Exult but could not say how many.

While Exult will take over the administrative duties--”the engine-room stuff,” as Nicholas termed it--human resources policy still will be managed by BP Amoco.

Should its technology falter, Exult also plans to open two 24-hour service centers, Madden said.

Exult, which started with one employee--Madden--last November, is up to about 80 and expects to grow to more than 400 by the end of 2000, one-third of them based in Southern California, Madden said.