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Published: 4/2/2005

Dana outsources human relations

BY JULIE M. McKINNON
BLADE BUSINESS WRITER

Toledo's largest corporation has outsourced the administration of its human resources to International Business Machines Corp. in a 10-year deal that will affect an unknown number of Dana Corp. employees.

The deal announced yesterday is to cut costs, and mirrors moves by large firms nationally.

The arrangement will cost Dana about $170 million, based on a filing it made with the U.S. Securities and Exchange Commission. The company is to pay IBM $15.6 million annually, plus $15.4 million in other fees. Dana has about 70,000 employees and retirees.

Under the agreement, IBM will provide administrative services for payroll and benefits, recruitment and training, and other tasks, starting in North America.

Dana will continue to oversee human resources operations, spokesman Gary Corrigan said. When hiring a professional, for example, the company will do the interviewing and make the selection, but IBM will recruit and identify top candidates as well as handle salary discussions, he said.

It has not been determined how many jobs will be affected, Mr. Corrigan said.

He declined to say how many employees the firm has in that field in the Toledo area.

IBM also will operate service call centers where employees and retirees can get help with benefits and other information, IBM spokesman Jenny Galitz said.

The contractor will hire Dana human resources employees, but how many is part of ongoing discussions, she said.

"A lot of decisions are still being made," Ms. Galitz said.

The agreement is part of Dana's ongoing efforts to reduce costs, Mr. Corrigan said. He declined to say how much the company expects to save. The Fortune 500 firm has been centralizing departments in the past year under its chief executive, Mike Burns.

Such outsourcing helps companies become more competitive because they can focus on their primary business and not have to spend money on technology to maintain employee records, an outsourcing expert said.

About 100 similar human resources outsourcing agreements have been reached since 1998, nearly half since January, 2004, said Michel Janssen, managing research director of Everest Research Institute in Dallas.

"We've seen explosive growth here," he said. "There's a lot more getting done than there was just even a few years ago."

IBM acquired PricewaterhouseCoopers' consulting arm a few years ago in part to expand into human resources, and the company has similar agreements with more than a dozen companies, including Procter & Gamble Co., Ms. Galitz said.

Contact Julie M. McKinnon at:

jmckinnon@theblade.com

or 419-724-6087.



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