Florida outsourcing HR services

In a $280 million, seven-year deal, Florida is outsourcing its human resources functions to a Cincinnati-based company, which will, in essence, take over benefits and payroll administration, recruiting and training for the state government's 189,000 employees and elected officials.

In announcing the contract Aug. 21, state officials estimated that privatizing human resources services will avoid $173 million in costs over the length of the contract. The deal is significant because other states may follow suit.

"We think it's the first of many," said Morris Applewhite, sales and marketing vice president for Convergys, which won the contract. "We are talking with a number of states currently. We know a number of states are looking hard at the state of Florida."

A majority of states face massive budget revenue shortfalls, and privatizing some services that are not part of the governments' core competence is being considered as an innovative way to cut expenditures, Applewhite said. By outsourcing such functions, state governments can avoid upgrading aging information systems and save money. He added that service to employees also would be improved.

According to Applewhite, transactional and administrative activities associated with human resources functions are being outsourced along with associated technology, but policy will remain under Florida's control.

He said Florida might be one of the largest states, if not the largest, to comprehensively outsource its HR functions.

The company is building two service centers, one in Tallahassee and one in Jacksonville, so employees have a central point of contact regarding human resources and payroll, he said. They will also have around-the-clock access to information via the Internet.

"The state will be able to take advantage of e-HR technology that we're going to be deploying and, basically, employees will have access to information about their benefits, training that's available, signing up for the training, and maintain inventory of training they've taken," he said.

Currently, Applewhite said Florida has local HR support distributed through the state and no centralized point where employees can get information. He said he expects Convergys to begin offering HR and associated service to state government employees by the second quarter next year.

Convergys, which also handles customer care, customer service, and billing service outsourcing for organizations of 10,000 employees or more, has a number of private-sector clients, including AT&T, General Electric Co. and Honeywell Inc.

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