Regional health-care provider after access to top HR software with no new costs
Another new HR outsource provider has jumped with a splash into the Canadian market — this time by taking over three-quarters of Calgary Health Region’s HR department.
Earlier this month, telecommunications giant Telus completed the transfer of 165 HR employees from the Calgary Health Region into a new subsidiary called Telus Sourcing Solutions.
Telus Sourcing Solutions will provide compensation, benefits, pension, HR systems, recruitment and work analysis, occupational health and safety, payroll, as well as some strategic planning for the health-care provider. For now, the new company will only be delivering HR services to the Calgary Health Region, but it plans to sign up more customers across the country, targeting first other health care providers before moving into other sectors.
“Human resources business processing is the fastest growing outsourcing market in Canada,” said John Maduri, Telus executive vice-president, explaining why they entered the HR outsourcing market, when the deal was first announced last September.
What made the deal so attractive to Calgary Health Region was that it now gets access to top-of-the-line HR software without any upfront capital expenditure, said Duncan Truscott, the region’s vice-president of people and learning.
For the next 15 years, Calgary Health Region will continue to pay the salary, benefits and overhead for the 165 employees (148 full-time equivalents) transferred to Telus Sourcing Solutions. And in return, HR services will be delivered — at service levels defined in the contract — to employees. The health care provider will also get access to the PeopleSoft HR system.
A need to upgrade HR technology at Calgary Health Region started the ball rolling, said Truscott. Through hospital and health services amalgamation, the organization had grown to 22,000 employees with more than 55 collective agreements. But the Calgary Health Region had only a payroll system to manage employee data.
“It was very difficult to function without an HR system,” he said. It was also apparent that with the priorities of the health-care sector being what they were, getting the executive team’s support for a new system would be tough.
“If we went looking for capital we were going to be way down on the priority list. Because of needs in the clinical area, corporate systems are way down the list in terms of priorities,” he said.
With an objective of getting a new HR system with as little capital investment as possible, a request for information was issued. From the first response group of 15, three finalists emerged, all of which proposed putting the organization onto PeopleSoft 8.8.
By the fall of 2002, the regional health authority had settled on Telus. Eleven months of negotiations followed before the contract was signed in September 2003. “Legally it is a limited partnership,” said Truscott.
Jim Westcott, a market analyst with business technology consulting firm IDC Canada, said HR outsourcing, particularly large-scale, multi-process outsourcing like the Calgary Health deal, continues to garner a great deal of interest.
“We characterize it as a growth market,” he said. One reason for this is that more vendors are positioning themselves to provide multi-process solutions, he said.
In the past few years there have been a number of high-profile contracts similar to the Calgary Health Region deal, where a vendor organization effectively takes over a large part of a client’s HR employee base.
“Vendors are essentially buying into the business,” he said. “They buy people and they buy the business then they go out and try to use those resources to not only service the client but get more customers.”
Last year, BMO signed a 10-year HR outsourcing deal with Exult, and CIBC extended by three years its original HR outsourcing contract with EDS.
On the client side, organizations are warming up to the idea of outsourcing, he said. Many HR leaders have been outsourcing bits and pieces of their HR functions for years. They are closely watching deals like that completed by Calgary Health Region and wondering if they can take the next step. Many business leaders may have been put off by some of the catastrophic failures they heard about in the world of IT outsourcing.
“You don’t hear a lot of those stories anymore,” he said. “That probably has to a lot to do with the maturity of the market.”
Crafting well-defined service-level agreements was a big part of the 11-month negotiation process, said Truscott. It required Calgary Health Region to carefully measure the services it was delivering. For now, Telus Sourcing Solutions is expected to at least meet those levels. Over time, the service should improve, as the new software is implemented and as Telus Sourcing Solutions grows and gains new expertise and best practices, which it can apply to the services being delivered to Calgary Health Region, said Truscott.
“So clearly, we have got an interest in (Telus Sourcing Solutions) growing because we don’t want to be the only customer. We know there will be benefits as a result of the different organizations participating.”
The organization will also benefit because remaining HR staff will be able to take advantage of the new HR system, but so too will all other front-line managers. In the next 12 to 18 months, the organization will roll out employee self service through desktops and kiosks installed by Telus Sourcing Solutions.
About 55 employees remain inside the Calgary Health Region HR department. They have responsibility for delivering HR strategy, learning and development, labour negotiations and employee relations. A number of HR generalists remain to work on a daily basis with front-line managers at facilities across the region.
Responsibility for setting the strategic vision remains within Calgary Health Region, but Telus Sourcing Solutions will be expected to come up with the plan to meet that vision, said Truscott.
“Most of the transactional activities have gone — 95 per cent of them have gone — but so have some of the areas which we would consider to be more strategic,” he said. Telus Sourcing Solutions took over recruitment and occupational health and safety, including long-term planning and will be expected to come up with strategies for reducing absenteeism.
“Initially, we considered only moving the transactional components of occupational health and safety and recruitment. But the more we looked at it the more we believed it would be very difficult to separate the functions within those activities that were more strategic from those transactional pieces. So in the end we decided to outsource the whole thing.”
Earlier this month, telecommunications giant Telus completed the transfer of 165 HR employees from the Calgary Health Region into a new subsidiary called Telus Sourcing Solutions.
Telus Sourcing Solutions will provide compensation, benefits, pension, HR systems, recruitment and work analysis, occupational health and safety, payroll, as well as some strategic planning for the health-care provider. For now, the new company will only be delivering HR services to the Calgary Health Region, but it plans to sign up more customers across the country, targeting first other health care providers before moving into other sectors.
“Human resources business processing is the fastest growing outsourcing market in Canada,” said John Maduri, Telus executive vice-president, explaining why they entered the HR outsourcing market, when the deal was first announced last September.
What made the deal so attractive to Calgary Health Region was that it now gets access to top-of-the-line HR software without any upfront capital expenditure, said Duncan Truscott, the region’s vice-president of people and learning.
For the next 15 years, Calgary Health Region will continue to pay the salary, benefits and overhead for the 165 employees (148 full-time equivalents) transferred to Telus Sourcing Solutions. And in return, HR services will be delivered — at service levels defined in the contract — to employees. The health care provider will also get access to the PeopleSoft HR system.
A need to upgrade HR technology at Calgary Health Region started the ball rolling, said Truscott. Through hospital and health services amalgamation, the organization had grown to 22,000 employees with more than 55 collective agreements. But the Calgary Health Region had only a payroll system to manage employee data.
“It was very difficult to function without an HR system,” he said. It was also apparent that with the priorities of the health-care sector being what they were, getting the executive team’s support for a new system would be tough.
“If we went looking for capital we were going to be way down on the priority list. Because of needs in the clinical area, corporate systems are way down the list in terms of priorities,” he said.
With an objective of getting a new HR system with as little capital investment as possible, a request for information was issued. From the first response group of 15, three finalists emerged, all of which proposed putting the organization onto PeopleSoft 8.8.
By the fall of 2002, the regional health authority had settled on Telus. Eleven months of negotiations followed before the contract was signed in September 2003. “Legally it is a limited partnership,” said Truscott.
Jim Westcott, a market analyst with business technology consulting firm IDC Canada, said HR outsourcing, particularly large-scale, multi-process outsourcing like the Calgary Health deal, continues to garner a great deal of interest.
“We characterize it as a growth market,” he said. One reason for this is that more vendors are positioning themselves to provide multi-process solutions, he said.
In the past few years there have been a number of high-profile contracts similar to the Calgary Health Region deal, where a vendor organization effectively takes over a large part of a client’s HR employee base.
“Vendors are essentially buying into the business,” he said. “They buy people and they buy the business then they go out and try to use those resources to not only service the client but get more customers.”
Last year, BMO signed a 10-year HR outsourcing deal with Exult, and CIBC extended by three years its original HR outsourcing contract with EDS.
On the client side, organizations are warming up to the idea of outsourcing, he said. Many HR leaders have been outsourcing bits and pieces of their HR functions for years. They are closely watching deals like that completed by Calgary Health Region and wondering if they can take the next step. Many business leaders may have been put off by some of the catastrophic failures they heard about in the world of IT outsourcing.
“You don’t hear a lot of those stories anymore,” he said. “That probably has to a lot to do with the maturity of the market.”
Crafting well-defined service-level agreements was a big part of the 11-month negotiation process, said Truscott. It required Calgary Health Region to carefully measure the services it was delivering. For now, Telus Sourcing Solutions is expected to at least meet those levels. Over time, the service should improve, as the new software is implemented and as Telus Sourcing Solutions grows and gains new expertise and best practices, which it can apply to the services being delivered to Calgary Health Region, said Truscott.
“So clearly, we have got an interest in (Telus Sourcing Solutions) growing because we don’t want to be the only customer. We know there will be benefits as a result of the different organizations participating.”
The organization will also benefit because remaining HR staff will be able to take advantage of the new HR system, but so too will all other front-line managers. In the next 12 to 18 months, the organization will roll out employee self service through desktops and kiosks installed by Telus Sourcing Solutions.
About 55 employees remain inside the Calgary Health Region HR department. They have responsibility for delivering HR strategy, learning and development, labour negotiations and employee relations. A number of HR generalists remain to work on a daily basis with front-line managers at facilities across the region.
Responsibility for setting the strategic vision remains within Calgary Health Region, but Telus Sourcing Solutions will be expected to come up with the plan to meet that vision, said Truscott.
“Most of the transactional activities have gone — 95 per cent of them have gone — but so have some of the areas which we would consider to be more strategic,” he said. Telus Sourcing Solutions took over recruitment and occupational health and safety, including long-term planning and will be expected to come up with strategies for reducing absenteeism.
“Initially, we considered only moving the transactional components of occupational health and safety and recruitment. But the more we looked at it the more we believed it would be very difficult to separate the functions within those activities that were more strategic from those transactional pieces. So in the end we decided to outsource the whole thing.”
