The race for HR supremacy

Hewitt Associates and Exult, two prominent names in HR outsourcing have recently announced a merger in an apparent attempt to get ahead in the rapidly growing sector.

Hewitt will buy Exult shares reportedly worth $691 million. But more importantly, the merger will boost Hewitt's services with Exult's strength in HR consulting.

According to a report, Hewitt will be the only organization capable of offering total HR BPO services, which includes benefits, payroll, HR information systems, recruiting, training and of course, consulting services.

The merger will have a combined client base of at least 300 companies in benefits management alone plus another 21 large clients with a total of 600,00 employees that avail of various HR services.

There are no acknowledged marketshares yet in the rapidly growing HR services but Hewitt and Exult have gained some recall in the last few months.

Analysts see the merger as strategically positive for both companies which puts them ahead of traditional IT services giants such as Accenture and IBM which have been aggressively going into HR outsourcing.

IBM has landed a major deal with manufacturing giant Procter and Gamble worth $400 million to provide employee services such as payroll processing, benefits administration, and human resources data management.

IBM and Accenture are strong technology-wise and niche companies like Hewitt are looking for ways to counter that with combined expertise.