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P & G and IBM Sign $400 Million Employee Services Outsourcing Agreement

Press release from the issuing company

CINCINNATI, OH and SOMERS, NY --Sep 9, 2003 -- The Procter & Gamble Company and IBM today announced a 10-year, $400 million global agreement with IBM Business Consulting Services for Human Resources Business Transformation Outsourcing (BTO) services. IBM will support nearly 98,000 P&G employees in close to 80 countries, providing services including: payroll processing, benefits administration, compensation planning, expatriate and relocation services, travel and expense management, and human resources data management. IBM will also provide application development and management of P&G's HR systems, leveraging P&G's existing leading-edge global SAP implementation and employee portal. Approximately 800 P&G employees will be offered employment with the IBM HR BTO team, which, along with the Human Capital unit of IBM Business Consulting services, comprises one of the world's leading HR professional services organizations. The initiative between the two companies will provide the opportunity to leverage best practices across their combined employee population and future customers of IBM's HR BTO operation. The agreement is expected to become effective on January 1, 2004 when IBM will take operational responsibility for three HR shared service delivery centers in San Jose, Costa Rica; Newcastle, England; and Manila, Philippines, along with professionals in more than 25 other countries, which will be integrated into IBM's global network of BTO service centers. Among other benefits, the agreement will enable P&G to improve services and reduce HR costs through process transformation, technology integration, and best practices; further improve decision making by providing executives real-time access to employee reporting information that is consistent, accurate, and standardized; and deliver employee services in a more real- time, flexible, on demand manner. "IBM brings strong business process knowledge, deep technical expertise and a flexible, responsive business model to employee services at P&G," said Filippo Passerini, P&G's global business services officer. "IBM's vision for combining our capability with their own to lead the BTO marketplace is a win for P&G and IBM, its future customers and the many employees who will benefit from strong future career potential." "Leading companies such as Procter & Gamble are increasingly using business transformation outsourcing as a tool to drive strategic value, allowing them to become more flexible and adaptive while focusing employees on the company's core competencies," said Ginni Rometty, Managing Partner of IBM Business Consulting Services. "For IBM, this agreement significantly expands our global HR BTO capabilities, and solidifies our leadership position at a time when many companies are examining the benefits of comprehensive HR outsourcing." P&G selected IBM as its employee services partner after a competitive evaluation process that included other leading business process outsourcing providers.