Canada’s second largest tobacco company has joined the ranks of business process outsourcing customers by turning to a third party to manage its payroll services.
Rothmans, Benson & Hedges Inc. (RBH) this week signed
a five-year agreement with Ceridian Canada whereby it will handle administration and employee inquiries while developing a tailored payroll process. RBH employs about 750 people in Canada. Financial terms of the deal were not disclosed.
Like ADP, Ceridian is taking on the kind of IT-driven business process typically handled in-house, an extension of the outsourcing trend which saw corporate enterprises farm out the management of data centres and network services.
Mike Frater, RBH’s director of finance, said the company was employing only two people in its payroll department but considered outsourcing a form of risk management. A few years ago the company had implemented SAP’s human resource module, and after reviewing the potential maintenance costs it seemed more logical to hand it over to someone else, he said.
“”The objective is to have the same level of service we have today, which is pretty good,”” he said. “”I imagine we’ll measure number of complaints, on time and accurate delivery of responses from the Ceridian side vis-a-vis special requests.””
Ceridian most recently announced a similar agreement to manage payroll for 3,500 employees at Molson Canada, in which it acquired the existing software platform developed by DLGL and committed to further developing it. In the RBH deal, Ceridian will use its own applications, which vice-president of business development Dave MacKay said helps differentiate the company from its growing list of competitors.
“”If you look at PeopleSoft and SAP, how many applications will they sell? Maybe 20 in Canada? We literally will sell two to three thousand applications a year,”” he said. “”We target all our investments around products in the HR space.””
Ceridian customers can also benefit from its economies of scale, MacKay added. The company has an electronic funds transfer (EFT) network, for example, which already handles more than $100 billion in payments a year.
Other applications might help employees apply for child care or elder care services, he added, and these are synchronized with call centres so that if answers don’t come from the application, they will be connected to a live person. “”It’s a little different than an ERP vendor would do,”” MacKay added.
Frater said he was meeting with Ceridian employees on Wednesday to work out how the two firms will manage the outsourcing relationship. Most likely HR executives will be included as points of contact, he said.
“”They will continue to manage the front end of some of the information that will go into SAP system,”” he said. “”That will then be interfaced over to Ceridian.””
MacKay said that customers are increasingly looking for a single vendor to deal with, which is why companies like Ceridian are increasingly working with large IT services firms like IBM in a sub-contracting relationship to handle HR or payroll functions.