IBM'S EMPLOYMENT RESPONSE

IBM'S Employment Response

IBM'S Employment Response

On 2 July 2002, Fidelity Investments of Boston and IBM of Armonk, N.Y broadcast and agreement under which IBM will outsource the management of its pension program and health and welfare designs, as well as a very wide variety of its Human resources and payroll services, to Fidelity boss Services Company (FESCo). FESCo is a enterprise unit of Fidelity Investments. IBM has moved roughly 750 of its own HR employees to Fidelity, where they will initially have the same responsibilities of overhauling IBM's employees and their $56.5 billion pension plan.

This sets a new tendency in the enterprise world, where every step is taken to reduce functioning charges and maximize profit. The three major benefits that IBM hopes to realize with this partnership are an increase in professional services for their employees, a decrease in costs associated with not having to manage a health care and pension program for 800,000 people, and an increase in new customers by offering its outsourcing HR skills to other businesses. Of these the biggest benefit is that IBM Global Services and Fidelity announced that they are forming a relationship to market HR payroll and benefits outsourcing services. Areas of joint cooperation will include supplying purchasers with consulting services around evaluating and implementing HR and advantages outsourcing solutions.

So the blueprint of the deal looks like this: IBM hands over all of its pension, health care, and human resource program to Fidelity Investments. IBM also throws in 750 of their own human resource people who transition from being IBM Blue to Fidelity Red. This allows IBM to concentrate on its core business of technology and not have to worry about employee satisfaction or trivial things like that. In the mean time, IBM and Fidelity begin to see that this partnership has additional value by being offered to other companies as an outsourcing alternative. Their thinking is that if this partnership can solve IBM's problems, maybe it can be used to solve other companies problems and turn some more profit IBM's and Fidelity's way.

The first benefit that IBM expects to see is handing over its human resource services over to a professional and respectable company that does that sort of thing for a living. Fidelity has been offering human resource services to other companies since early 1990's. This service offering only made sense for Fidelity due to its knowledge of ...