EDS, Towers Perrin Create New Outsourcing Company

The new company, which will offer HR outsourcing services to enterprises, will leverage EDS' techno-smarts and Towers' HR expertise. The company is expected to have, at its onset, annual global sales of about $600 million -- with roughly half of that total contributed by each company.

Plano, Texas-based EDS (No. 2 on the 2004 VARBusiness 500) will own 85 percent of the company, which will be run by Steve Bohannon, EDS vice president of HR services, and governed by a board of directors representing both companies. EDS will pay an estimated $420 million to Towers Perrin, Stamford, Conn., as a part of the agreement. The deal is expected to close by the end of March.

The new company, as yet unnamed, will combine Towers Perrin's pension/health/welfare Administration Solutions business and EDS' payroll and related HR outsourcing business. It will offer benefits, payroll, compensation management, work force administration and relocation, recruitment and staffing, and work force development. In addition, Towers Perrin will provide consulting services to clients of the new company in plan design, communication, change management and other areas, a spokesman says.

Separately, Towers Perrin has awarded the Plano-based integrator a 10-year, $365 million IT outsourcing contract to support its global infrastructure. The contract calls for EDS to design, implement and operate a flexible, end-to-end IT solution to support Towers Perrin's global network, desktop and hosting environment. Additionally, EDS will develop and manage selected applications for Towers Perrin.