When Cynthia Henderson, secretary of Florida’s Department of Management Services, began evaluating ways to replace the agency’s antiquated, paper-based personnel processes with an appropriate software system, it quickly became clear that the price tag would hover around US$80 million. However, Henderson realized that by hiring someone else to handle the information and processing, the agency would save $173 million over a seven-year period. After that, the decision-making process became much easier.
“With outsourcing, we don’t have to buy software, servers or worry about maintenance,” she told CRM Buyer Magazine. “It is so much easier to hire a vendor that does all that as part of its core mission.”
After the usual bidding process, Convergys (NYSE: CVG) was awarded a $280 million contract last month to provide human resource services to the state of Florida.
“It was a very rigorous process,” Morris Applewhite, sales and marketing vice president at Convergys, told CRM Buyer. “Our tech and management approach was exhaustively vetted, as were all the other bidders.”
Convergys will use SAP (NYSE: SAP) as its base technology platform to handle Florida’s employee care services and to operate employee care service centers in Jacksonville and Tallahassee.Performing such services may seem like a stretch for the vendor, which has focused primarily on outsourcing billing services to telecom providers. But Convergys executives said that outsourcing employee care is the latest permutation of the CRM industry, and they intend to claim an early lead.
New Trends in Outsourcing
Companies, not to mention governments, are on a mission to cut costs. This is bad news for the CRM industry, which has experienced its share of setbacks over the last 18 months. But many businesses are cutting costs by outsourcing services to third-party providers, and that is good news for providers active in this space, such as Convergys.
Convergys has long been one of the leading outsourcers of billing and customer care services. Now, the company is carving out a role for itself in the related space of customer care, which is increasingly regarded as part of the CRM family.
“The nature of CRM is that customers can be perceived in a variety of ways,” IDC program manager Brian Bingham told CRM Buyer. “Constituent management and partner relationship management fall within the realm of CRM. The same thing applies to employees, too – technically, they are internal customers of a company.”
Certainly, Convergys is banking on this trend as it weathers the current infotech downturn. “I think we will see more companies outsource entire functions of their business,” including customer service and human resource management, Randy Mysliviec, Convergys senior vice president of marketing, told CRM Buyer.
Same Tech, Different Space
Fortunately, shifting into new service areas did not require that much change management on the part of Convergys. The technology for which it is known – integrated billing services, contact center and self-service applications – is easily transferable to the human resource space.
Convergys’ framework is based on XML (extensible markup language) and embraces a wide variety of CRM platforms and Web services, as well as WAP (wireless application protocol) and CTI (computer-telephony integration). The company has spent considerable effort on integration between its back-end systems and customer-facing front end. According to Debashish Sinha, a senior analyst with Gartner Dataquest, Convergys’ ability to integrate back- and front-end customer service is “fairly critical in the telecom space.”
The Immediate ‘Wow’
For the state of Florida, for example, Convergys’ human resource service centers will integrate Web-based employee service technologies with traditional channels, such as telephone, fax, mail and interactive voice response. It will handle processes that range from recruitment to retirement, benefits administration, general HR administration, payroll, learning administration and staffing – and it will give employees access to these services via a number of channels, including the Web.
Indeed, it was Convergys’ online capabilities that stood out for Henderson and her staff. “We were looking for a high-tech solution to attract the best employees,” she said. “One of the things we have found is that it can be very difficult for us to compete with private-sector companies for new graduates in IT,” who tend to be unimpressed with static Web sites.
“We wanted our recruits to hit our Web site and get that immediate ‘wow,'” she said.
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