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EDS and Towers Perrin Create New Outsourcing Company

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EDS and Towers Perrin are creating a new company to deliver HR outsourcing services to enterprises, HR departments, employees and retirees.

Towers Perrin also awarded EDS a 10-year, $365 million IT outsourcing contract.

The newly created company will combine the technology and business process expertise of EDS — leveraging its global, scalable and secure Agile Enterprise Platform — with the benefits administration and HR domain expertise of Towers Perrin. This combination uniquely positions the new company to help clients optimize their investment in human resource processes and programs, and better align their HR agenda and delivery model with their business objectives.

“Our clients want us to be their HR advocates, listen to their challenges and deliver results that matter to the bottom line,” said EDS Chairman and CEO Mike Jordan. “This new company will lead the market with smart HR business processes that drive efficiencies and integrate with business intelligence.”

The new company emerges as a major player in the rapidly growing HR outsourcing space, with annual global revenues of about $600 million, about half contributed by each company, and more than 400 clients in the U.S., Canada, Europe, and Central and South America. In total, the new company will serve more than 33 million active and retired plan employees and participants.

EDS will own 85 percent of the new company, and Towers Perrin will own the remaining 15 percent. It will be led 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 as a part of the agreement. The transaction is pending approval by Towers Perrin shareholders, and expected to close by the end of the first quarter of 2005.

The new entity combines Towers Perrin’s Administration Solutions business, which provides pension and health and welfare administration services, and EDS’ existing payroll and related HR outsourcing business. EDS will own the management of Towers Perrin Administration Solutions facilities, staff and intellectual property.

The new company’s portfolio extends well beyond these offerings to present a comprehensive set of HR outsourcing solutions across the core areas of benefits, payroll, compensation management, work force administration and relocation, recruitment and staffing, and work force development.

In addition, through a marketing alliance, Towers Perrin will provide consulting services to clients of the new company in plan design, communication, change management and other areas as appropriate, to help enhance the value and cost-effectiveness of the outsourced solutions. The combination of Towers Perrin’s HR consulting expertise with the new company’s outsourcing expertise offers clients a seamless and integrated way to meet their needs across the entire HR spectrum.

“In the current market, clients are increasingly buying on an integrated basis. They recognize they can better optimize their total investment in people and HR by connecting the design of their HR programs with the delivery of those programs,” said Towers Perrin Chairman and CEO Mark Mactas. “Through our alliance with the new company, clients can ensure their outsourcing solutions are shaped and informed by the right strategy, program design and implementation. Giving clients the ability to address these issues in tandem is core to the power of the new company and our alliance with the new company. Our organizations share this vision, as well as an enduring commitment to excellence in client service.”

“Aligning with EDS provides Towers Perrin with a flexible IT environment that will allow us to meet our current business requirements as well as future challenges,” said Tony Candito, Chief Information Officer of Towers Perrin. “EDS brings open, best-in-class technology, resources and innovation to manage complexity and rationalize costs within our IT program.”

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EDS and Towers Perrin Create New Outsourcing Company
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