Review the case and answer the below in detail:
Insurance and investment company Prudential Financial Inc. oldie rock' to Exult Inc. The human resources outsourcer will HR systems and administrative functions in a deal worth $700
The deal calls for Exult to handle all U. S. payroll. HR call-center information systems and support, employee data, staffing, and mord: for Prudential's 47.000 employees. Exult alto will be responsible for the ‘‘. accounts-payable transactions. Executives at Prudential, which Includes • Insurance Co. and other companies, declined to comment on the deal.
Exult chairman and CEO Jim Madden told investors on a conference call th Prudential in Newark, New Jersey, decided to outsouret its HR functions after not ing Esules ten-year, $1.1 billion HR outsourcing contract with Bank of Ametii, in 2000 and its ability to support Ptudential's People Soft human resources sys. tent. Although Prudential didn't say how much money it expects to save over the duration of the contract, Madden says the insurer anticipates being able to operate more efficiently and focus on strategic human resources functions, such as providing employee self•setvice I IR processes.
More companies ate turning to self-service applications as a way to empowet customers and employees and cut down on administrative costs. Cigna Corp., a $20 billion insurance company in Philadelphia, partnered with Yahoo Corp. to provide personalized portals designed to lee Cigna's sixteen mr0ion customers better track claim status, benefit services, and ocher aspects of their health and retirement plans.
les no surprise that companies are outsourcing functions as a way to save money and focus on core business," says David Rhodes. a principal at management-consulting firm Towers Perrin. 1-fe says businesses are -buying expertise and the ability to work very effectively' when they decide to mitsource.
1. What are the pros and cons of oursourting the FIR function!
2. What do you think Prudential should worry about most?
3. How ran Exult make certain that Prudential is happy with its service?